NGL prices were largely down for the second straight week as crude prices continued to stutter amid concerns for the worldwide economy. The lone exception for this NGL price drop was once again Mont Belvieu ethane, but began to lose value as October began.
Overall for the week of Sept. 28, ethane prices increased 9% to 86¢ per gallon (/gal) at Mont Belvieu. The price peaked at 90¢/gal on Sept. 29 before plummeting to 82¢/gal on Oct. 4. This was the highest price at the hub since it was 95¢/gal the week of Sept. 3, 2008. The Conway price fell 3% to 41¢/gal, its lowest price in more than a month as NGLs remain stranded in the region because of two NGL pipelines being offline.
The effect that stranded volumes are having on prices was most evident in the cases of Conway butane and C5+. Butane prices were down 6% to $1.55/gal from the previous week. This was the lowest price at the hub since it was $1.55/gal the week of Nov. 17, 2010. Meanwhile, C5+ prices continued to take a downturn as they dropped 2% to $1.86/gal, which was the lowest price at the hub since it was $1.85/gal the week of Oct. 27, 2010.
While Mont Belvieu butane performed at a better rate, the same could not be said of C5+ in Texas. Mont Belvieu butane’s price fell 3% to $1.81/gal, its lowest price since the last week of June. However, Mont Belvieu C5+ experienced a 4% drop in price to $2.21/gal, which was a steeper drop than its Conway counterpart. Although the Mont Belvieu price remained the most valuable of any NGL, it fell to its lowest price since it was $2.20/gal the week of Feb. 9.
Propane prices continued to hold firm at both hubs the week of Sept. 28, but there appears to be headwinds to prices maintaining this strength. According to the EIA, propane exports were down to 102,000 barrels per day (b/d) in July. This was the lowest that propane exports had fallen to in 2011 due to overseas propane markets taking a downturn.
On the positive side, En*Vantage reported that the propane crop drying season may face challenges with a late harvest and higher moisture content. “The National Agricultural Statistics Service reported that as of Sept. 25, only 19% of corn in Ohio and 50% of corn in Indiana had reached physiological maturity. The later in the season the corn reaches maturity, the less time farmers have before weather conditions prevent further dry-down in the field, and the more propane drying will be necessary. Because overall propane inventories are at five-year lows, any decent crop drying season this fall could further tighten the propane markets before winter heating season arrives,” the company said in its Weekly Energy Report.
Prices are up for all NGL except ethane at both hubs.
Energy Transfer played by the rules, built its pipeline and still emerged as the poster child for oil and gas industry villainy. What’s the lesson here?
Surpluses are building for ethane and propane, with export options to China stymied.