By Warren Wilczewski
This article was published by the US Energy Information Administration on June 4, 2019.
US production of hydrocarbon gas liquids (HGLs) reached 5 million barrels per day (b/d) in 2018, an increase of more than 0.5 million b/d (13 per cent) over 2017 levels. HGLs accounted for over a quarter of total U.S. petroleum products output in 2018.
The increase in HGL production since 2010 is largely a result of growing domestic natural gas production. In 2018, U.S. natural gas production, measured as gross withdrawals, averaged 101.3 billion cubic feet per day (Bcf/d), a 38 per cent increase over 2010 levels and the highest volume on record. As natural gas production has grown, an increasing share of HGLs are produced at natural gas processing plants, from about 75 per cent in 2010 to nearly 90 per cent in 2018.
Hydrocarbon gas liquids produced at natural gas processing plants are called natural gas plant liquids (NGPL), which include ethane, propane, normal butane, isobutane, and natural gasoline. A smaller share of HGLs are produced at petroleum refineries, which include refinery olefins and refinery liquefied petroleum gases (LPG). HGL production has been relatively flat at petroleum refineries since 2010, averaging about 630,000 b/d.
Ethane and propane account for two-thirds of HGL production. Ethane production reached 1.71 million b/d in 2018, a 20 per cent increase over 2017 levels. Ethane, the lightest NGPL, can (within some limits) be left in the processed natural gas stream at natural gas processing facilities—a process called ethane rejection—or it can be recovered from natural gas if ethane’s value is sufficient to cover the additional costs to produce and distribute the ethane to markets.
Demand for ethane in 2018 was driven by increased use in the petrochemical sector, which converts ethane into ethylene for use in the production of plastics, resins, and fibers that go into the production of many consumer goods. Several new petrochemical crackers were commissioned in the United States in 2018.
Chevron Phillips Chemicals and ExxonMobil each commissioned facilities that process an estimated 90,000 b/d of ethane as feedstock. Indorama Ventures commissioned a smaller petrochemical cracker estimated to consume 20,000 b/d of ethane as feedstock.
International demand for ethane also increased, and new export infrastructure—the 50,000 b/d Utopia pipeline to Canada—has increased the capacity to ship ethane abroad.
Besides the petrochemical sector, where demand growth has been robust, the capacity of the U.S. domestic market to consume HGLs has not expanded at the pace of growing supply. The international market has become the preferred destination for most of the incremental growth in U.S. HGL production. HGL exports have been growing rapidly, particularly for propane, increasing 14 per cent over 2017 levels. In 2018, nearly a third of U.S. HGL production was exported.
Propane production grew from 1.54 million b/d in 2017 to 1.70 million b/d in 2018, a 10 per cent increase. Changes in domestic demand for propane, which is used in the residential and commercial sectors as a heating and cooking fuel and in the industrial sector as a petrochemical feedstock, are mostly driven by weather and consumption. Propane demand has been fairly flat on an annual basis in recent years.
U.S. production of butanes, natural gasoline, and refinery olefins also increased in 2018. Domestic markets for normal butane, isobutane, and natural gasoline have experienced relatively slow growth, meaning much of the production increase has been exported.
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