Natural Gas Liquids Spending on the Rise in North America

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite small gains this week, natural gas prices remain low. The low prices have been caused by a number of factors, including a lack of demand because of mild winter temperatures and increased shale gas production, leading to a surplus of supply. As a result, plants and drilling in dry-gas heavy or isolated markets such as the Rocky Mountains are facing difficult times. However, liquids-rich plays, such as the Eagle Ford Shale in south Texas, are facing no such problems, and have, in fact, seen an increase in spending and infrastructure development.

The key to the success of the liquids-rich plays is--as the name would imply--natural gas liquids (NGLs). NGLs, also called condensates, are the heavier hydrocarbons such as ethane, butane, and propane that are found as liquid contaminants in some natural gas fields. These compounds are typically sold to commercial customers, such as chemical processors, where they are used as feedstock. One of the more profitable is ethane, which is used as feedstock for ethylene, a base chemical in many petrochemical processes.

With this new potential for profit, many natural gas companies are shifting resources and investing more heavily in NGL infrastructure. According to Industrial Info's project database, about $500 million in NGL capital projects were completed in 2011. That number is expected to increase by more than 600% in 2012, when capital project completions will represent more than $3 billion in investments, nearly half of which, roughly $1.4 billion, is taking place in the state of Texas alone. This is a significant jump, especially when compared to the much smaller $57 million difference between 2011 and 2010. So far this year, $46 million in projects have already been completed, while most of completions are expected in the third quarter.

The majority of projects set to be completed in 2012 began construction in 2011, the year after natural gas prices fell sharply. The trend of increasing investment in NGL infrastructure continues into 2013 as well. While the jump between 2012 and 2013 is not as shocking as that between 2011 and 2012, the more than 100% increase to $6.25 billion in total investment, with more than $3.5 billion in projects in Texas alone, is still impressive.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.