Thursday, February 19, 2015
The global energy market intelligence consultancy Genscape (Louisville, Ky.) has dropped its expectation for year-on-year NGL production growth by roughly 100,000 bbld, or 25%, for 2015, and 125,000 bbld, or 60%, for 2016. Growth in 2016 is now expected to be only 40,000 bbld, most of which is additional ethane recovered to meet commitments in the Northeast. Even in 2015, production growth is front-loaded in the first half of the year, with slight decreases expected in the third and fourth quarters as the impact of lower rig utilization is felt.
Genscape notes that lower oil and gas prices have contributed to rapid declines in rig counts throughout the Lower 48, with total rigs down 595 from the peak in late October, and an additional decline of 699 expected by August. This shift is the key driver for the consultancy’s forecast for lower oil and gas production, impacting expectations for NGL production as well.
Not all regions are feeling the same impact from lower prices, Genscape comments. NGL production expectations in the Marcellus/Utica region have been revised higher, with growth of 170,000 bbld in 2015 and 130,000 bbld in 2016, from increased natural gas production in the liquids-rich western portion of the plays. Ethane production in particular is expected to rise over 60,000 bbld in both 2015 and 2016, in line with commitments on the ATEX and Mariner East pipelines. The Bakken region has been resilient as well, with the 2016 forecast virtually unchanged. South Texas and the Permian, on the other hand, are the biggest contributors to the overall decline in Lower 48 NGL production, with regional declines of 65,000 bbld expected between 2015 and 2016.
The drop in NGL production expectations in late 2015 and 2016 comes at a time when infrastructure for the consumption of NGLs is rapidly rising. Genscape estimates that LPG export capacity and propane demand for propylene production will nearly triple between 2014 and 2016, with continued expansion to occur in later years. So far, midstream companies have announced fairly minimal changes to capital investments in NGL infrastructure. Blue Racer Midstream (Dallas, Texas) decided to shelve its Petersburg Processing Complex in Ohio and Enterprise Products (Houston) delayed completion of its ninth fractionator.
Genscape notes that lower oil and gas prices have contributed to rapid declines in rig counts throughout the Lower 48, with total rigs down 595 from the peak in late October, and an additional decline of 699 expected by August. This shift is the key driver for the consultancy’s forecast for lower oil and gas production, impacting expectations for NGL production as well.
Not all regions are feeling the same impact from lower prices, Genscape comments. NGL production expectations in the Marcellus/Utica region have been revised higher, with growth of 170,000 bbld in 2015 and 130,000 bbld in 2016, from increased natural gas production in the liquids-rich western portion of the plays. Ethane production in particular is expected to rise over 60,000 bbld in both 2015 and 2016, in line with commitments on the ATEX and Mariner East pipelines. The Bakken region has been resilient as well, with the 2016 forecast virtually unchanged. South Texas and the Permian, on the other hand, are the biggest contributors to the overall decline in Lower 48 NGL production, with regional declines of 65,000 bbld expected between 2015 and 2016.
The drop in NGL production expectations in late 2015 and 2016 comes at a time when infrastructure for the consumption of NGLs is rapidly rising. Genscape estimates that LPG export capacity and propane demand for propylene production will nearly triple between 2014 and 2016, with continued expansion to occur in later years. So far, midstream companies have announced fairly minimal changes to capital investments in NGL infrastructure. Blue Racer Midstream (Dallas, Texas) decided to shelve its Petersburg Processing Complex in Ohio and Enterprise Products (Houston) delayed completion of its ninth fractionator.
