When talking Marcellus, Eagle Ford, Granite Wash and other gas-liquids-rich plays, here’s a guide to the NGLs producers and end-users are talking about.

Increasingly, U.S. oil and gas producers are growing their weighting to surfacing liquids—crude oil but natural gas liquids (NGLs) too. In the mix of NGLs are higher-value gases—higher value in that they fetch more per Btu (or energy) content than dry gas, which is methane. NGLs are priced based on a percentage of crude oil.

Ethane, for example, has received 46% the Nymex price of West Texas Intermediate (WTI) crude oil in the past two years, on a Btu basis, according to Robert Mackenzie, managing director, energy and natural resources, for FBR Capital Markets. Methane? Only some 9%.

Thus, the NGLs- and oil-rich rush.

Here’s an “NGLs 411” as reference as producers of wet gas from Midcontinent, Eagle Ford, Marcellus and other wells discuss them in quarterly conference calls. According to Mackenzie, a “liquids-rich” well may make gas condensate, NGLs or oil. Some may make dry gas too, which is methane and which is what is traded on Nymex. Methane is known as C1 for its single carbon atom.

--Condensate (C10+). Mackenzie says, “This condensate is comprised of higher-order hydrocarbons (C10+) that assume a liquid state at surface temperature and pressure. Its pricing is fundamentally equivalent to WTI crude oil, and it has many of the same end markets. It is a high-quality feedstock for the petrochemical industry, but it is most commonly refined into various types of fuel.”

--NGLs (C2-C5+). “’Natural gas liquid’ refers to the components, other than condensates and dry gas, that are refined out of the gas stream at a processing plant before the gas is sent to market.” Among the NGLs, Mackenzie says, are:

--Natural gasoline (C5+). “Natural gasoline is the heaviest segment of the non-condensate liquids, but it is still extremely light relative to crude. Natural gasoline is the collection of hydrocarbons that remain once the lighter segments of the stream are collected. The typical gravity of natural gasoline is around 80 degrees API, and its boiling point is in the same range as that of commercial gasoline. It is frequently used as a fuel additive, as well as a petrochemical feedstock. When viewed on a Btu basis, natural gasoline typically receives a price premium to WTI crude.”

--Butane (C4). “Butane enjoys robust demand, with varied end markets and pricing per Btu very similar to WTI crude. Butane has industrial and residential heating applications and is frequently blended with propane to produce liquid petroleum gas (LPG). For simplicity’s sake…N-butane and isobutane (may be regarded as) butane…, a blend of the two.”

--Propane (C3). “Propane use is predominantly split between heating and petrochemical applications, but it is also used as a fuel for certain types of vehicles. Demand is seasonal and subject to weather.”

--Ethane (C2). “Ethane has the most inherent pricing risk among the NGLs. Demand for pure ethane is driven by the ethylene-production industry, which utilizes the gas to meet 38% to 51% of its feedstock need. If insufficient demand for ethane exists in the ethylene-cracking value chain, a refiner has the option to reject a certain amount—and regulations vary by region---of excess ethane. Upon rejection, the ethane is simply left in the gas stream and sold to customers as extra-Btu natural gas.”

Mackenzie and the research team at FBR Capital Markets estimates that new NGLs-rich production across the U.S. will make more than 200,000 extra barrels a day of ethane by next year.

“Ethane only has one true end market, which is growth-constrained in the short term due to the time and capital required to bring new refining capacity online. Most additional midstream capacity is not slated to come online until mid-2012 or in 2013, and this is a particular problem in the Marcellus (wet-gas window) due to the lack of ethane-processing capacity in the region.

“Many believe that U.S. fractionation plants are operating nearly at full capacity, and there are concerns that the refining infrastructure will not be able to accommodate the more ethane-intensive stream that is likely to be produced as a result of (producers’) rush to liquids. Only a limited amount of ethane can be legally rejected by the refiner, because if excessive quantities are transmitted via pipeline it can damage the infrastructure and cause safety hazards. This could limit the efficacy of the natural gas price as a lower bound on ethane prices.

“For the other NGLs, the petrochemical sector acts as a price stabilizer. For example, if propane is in oversupply, its price will fall and it will temporarily displace other hydrocarbons as a petrochemical feedstock. Because ethane already holds the position of petrochemical feed of choice, it lacks this price control.”

–Nissa Darbonne, Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, OilandGasInvestor.com Today, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at ndarbonne@hartenergy.com.