Editorial comment

Adrienne Blume, Editor

A trend is seen in North American supplies of NGL, which have increased significantly over the past five years, as production has expanded in liquids-rich shale and tight gas plays. Although the ongoing energy price decline will cap growth in NGL supply over the short term, recent forecasts anticipate moderate growth through 2035.

The US Energy Information Administration (EIA) reported a 39.87-MMbbl increase in domestic gas plant production of NGL and LPG between January 2010 and January 2016, a 63.8% increase. By 2014, US NGL production alone had reached the same level as the next four largest producers combined—Saudi Arabia, Canada, Qatar and the UAE. Over the near term, the EIA expects US NGL output to increase from 3.86 MMbpd in 2015 to 4.33 MMbpd in 2017, with 95% of this output growth coming from gas processing plants.

This NGL production trend is spurring investment in domestic petrochemicals expansions, particularly ethane crackers, as well as in fractionation capacity and export infrastructure. One forecast calls for the US and Canada to jointly invest around $333 B in new gas processing infrastructure and roughly $49 B in new NGL infrastructure by 2035.

Europe and Latin America will benefit from increased North American exports in the short term, but the widening of the Panama Canal is anticipated to encourage greater shipments to Asia in the remaining years of this decade. The burgeoning growth in NGL output will also impact price spreads for other products, encouraging refiners to produce more middle distillates at the expense of naphtha. GP