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Hidden in Plain Sight

How the Industry’s Models Broke and Obscured True Ethane Supply


By developing a wellhead level NGL model which was calibrated with data provided by producers across the country, BTU Analytics has discovered that ethane rejection estimates have been widely understated.   Throughout this 60-page study, we examine NGL production and infrastructure outlooks for the most influential basins across the US and present the findings of our new, ground-breaking model which are materially different than what an EIA-based, PADD level model would imply.

Key Takeaways:

  • BTU Analytics has developed a new detailed natural gas liquids supply model based on wellhead NGL gallons per Mcf (GPM), composition, and processing plant recovery efficiencies, which sheds light on NGL production and potential ethane recovery from key areas in the US.
  • In August 2017, BTU Analytics estimates 857 Mb/d of technically recoverable ethane was being rejected, nearly 300 Mb/d higher than market consensus.
  • Permian alone could supply 100% of new Gulf coast ethane demand.
  • Ethane prices will remain capped by delivered costs.
  • Even by 2022, more than 400 Mb/d of technically recoverable ethane will be rejected, incentivizing the development of new steam crackers or export facilities.
  • The DJ Basin will need to expand NGL takeaway to support current upstream activity levels.
  • Oklahoma gas processing no longer expected to limit growth in SCOOP and STACK as new processing and rich gas pipelines facilitate growth in 2018 and beyond boosting ethane supply.
  • Incremental Marcellus ethane will not be needed to meet Gulf Coast demand.
  • LPG export capacity could be fully utilized by 2020.

This study includes 5-year prices forecasts for WTI, Henry Hub, and NGL purity products at Mont Belvieu, production forecasts and infrastructure analysis for: the Permian, the Marcellus, the Utica, Oklahoma (including the SCOOP and STACK), and the Rockies (including the DJ Basin), and wellhead GPM maps for these major regions as well.

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