U.S. HGL: RECENT MARKET TRENDS
Over the past five years, rapid growth in U.S. onshore natural gas and oil production has led to increased volumes of natural gas plant liquids (NGPL) and liquefied refinery gases (LRG). The increasing economic importance of these volumes, as a result of their significant growth in production, has revealed the need for better data accuracy and transparency to improve the quality of historical data and projections for supply, demand, and prices of these liquids, co-products, and competing products. To reduce confusion in terminology and improve its presentation of data, EIA has worked with industry and federal and state governments to clarify gas liquid terminology and has developed the term Hydrocarbon Gas Liquids, or HGL.
Hydrocarbon gas liquids (HGL) refers to both the natural gas liquids (paraffins or alkanes) and olefins (alkenes) produced by natural gas processing plants, fractionators, crude oil refineries, and condensate splitters but excludes liquefied natural gas (LNG) and aromatics.
HGL is both fuel and feedstock in various markets (petrochemicals, residential heating/cooking, agriculture, and motor fuel blending). Seasonal and regional fluctuations in these end-use sectors, including export markets, affect investment and production decisions throughout the upstream, midstream, and downstream sectors of the oil and gas industry. Billions of dollars have been invested recently in the field gathering systems, lease separators, crude/condensate stabilizers, natural gas processing plants, fractionation facilities, refineries, condensate splitters, pipelines, storage caverns, rail terminals, port facilities, ethylene crackers, and other petrochemical plants that constitute HGL infrastructure.
Since HGL is co-produced with natural gas and petroleum fuels, HGL production and prices are affected by changing production and prices of natural gas and petroleum fuels, including crude oil prices. General economic and market-specific disruptions, including severe weather, also affect HGL production and prices.
The domestic HGL market is growing dramatically, with supply increasing faster than domestic demand. In 2011, the United States switched from being a net importer to a net exporter of HGL, and investments in export terminal projects and associated pipelines and storage facilities are occurring on the U.S. Gulf, Atlantic, and Pacific coasts, as well as along the U.S.-Canadian border.
This report provides an introduction to HGL, defining key terms, describing and mapping key assets, and providing 2000—2014 data on important trends, as well as some insight into the short-term outlook. This report provides a reference that supports and explains changes to EIA's real-time analysis and outlooks, data presentation on EIA's website, and, ultimately, survey data collection.
From a supply-side perspective, HGL constitutes liquids produced at both natural gas processing plants (natural gas plant liquids, or NGPL) and refineries (liquefied refinery gases, or LRG). From a demand-side perspective, HGL is marketed as natural gas liquids (NGL) and refinery olefins. From a chemistry perspective, HGL includes the alkanes (paraffins) – ethane, propane, normal butane, isobutane, and natural gasoline (equivalent to pentanes plus and nearly chemically identical to plant condensates) – and the alkenes (olefins) – ethylene, propylene, butylene, and isobutylene. However, HGL does not include liquefied natural gas (LNG) or aromatics.
As defined above, HGL captures the complete set of gas liquids marketed by midstream and downstream companies. Production of HGL by natural gas processing plants, fractionators, refineries, condensate splitters, and other facilities can be surveyed and analyzed with consumption data to build a clearer HGL picture. Figure 1 provides a simplified view of supply, demand, and chemistry of HGL.
This taxonomy was developed to clarify which elements to include when retrieving data from EIA reports, to highlight refinery olefins, and to define more specifically NGL, LRG, and condensate terms used loosely in many publically-available reports.
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