Gas liquids supply to be pinched by high natural gas prices

LAKEWOOD, N.J., Dec. 8, 2000 (PRNewswire)— High natural gas prices could actually pinch the availability of gas liquids such as propane, butane, isobutane and chemical feedstocks this month, an analysis by OPIS Energy Group shows.

Tight supplies are predicted in Louisiana and other markets where gas processing plants have been shut down recently. The plants have been closed because natural gas prices are higher than the gas liquids that are usually extracted from the raw gas stream. The usually more expensive liquids can be sold for much more if they remain in the natural gas that is then sold downstream.

A survey by Oil Price Information Service reveals that upwards of 50 percent of all gas plants in the Louisiana region could be completely shut down for December, with the rest of the plants operating at reduced level. Fractionators, which turn the raw gas liquids feed into propane, butane and other products, will be shut down since there will be little "raw feed" to process into these gas liquids. Two of the largest fractionators have already committed to shutdowns this month.

Because of the tight supply, prices have soared by as much as 20% for propane and other feedstocks produced by the gas plants. The surge in prices has in turn led chemical plants that make ethylene to consider partial cutbacks since they can't afford the additional cost of feedstock in a market that has ample supplies of ethylene.

Currently, monthly contract negotiations between gas liquids suppliers and petrochemical customers are underway for December volumes. Early deals for ethane, a key feedstock, have been done around 51cts gal, a 25% rise from five weeks ago. There are predictions that ethane prices could rocket as high as 60cts gal before the negotiations are completed.

The gas plant closures could even impact gasoline prices. The shutdowns have led to tighter supplies of normal butane, a key component that raises octane and vapor pressure in Winter gasoline blends. OPIS confirmed that some Louisiana refineries are scrambling to find normal butane in Texas markets where the gas plant closures haven't yet impacted supply.

It's not just the Gulf Coast that has witnessed an upsurge in gas liquids numbers. In the Pacific Northwest, refiners are actively burning gas liquids, particularly propane, as refinery fuel. Spot prices and wholesale prices for propane in California are running at about 91-95cts gal, which is as much as 50cts gal under its value to refiners as a boiler fuel these days.

Sponsored by FLSmidth

Related Articles

Areva EVOPRO Hungary nuclear power renewable energy Paks nuclear power plant I&C instrumentation and controls

Areva, EVOPRO team on nuclear, renewable energy

Areva and Hungarian engineering company EVOPRO signed a memorandum of understanding to form a global cooperation in nuclear and renewable energy.

West Virginia state carbon plan OK House bill passes EPA Environmental Protection Agency

WVa House passes bill letting lawmakers OK state carbon plan

The House of Delegates has passed a bill letting lawmakers approve state plans to meet proposed federal carbon emission standards.

Follow Power Engineering on Twitter
Latest News
Siemens signs contract with Thailand for 18 industrial gas turbines

Siemens signs contract with Thailand for 18 industrial gas turbines

The units -- purchased by TEC Project Services Corporation (TPS), a subsidiary of the Japanes...
GE is supplying two sets of high-efficiency steam turbines and generators for Petrovietnam’s new coal-fired thermal power plant in Soc Trang.

Petrovietnam selects GE's high-efficiency steam turbines for new coal-fired power plant

GE is supplying two sets of high-efficiency steam turbines and generators for Petrovietnam’s ...
Duke Energy Renewables acquires 50-percent stake in Mesquite Creek Wind

Duke Energy Renewables acquires 50-percent stake in Mesquite Creek Wind

Duke Energy Renewables has acquired a 50-percent stake in Mesquite Creek Wind, a 211-MW wind ...
Co-op signs power purchase agreement for solar project in Colorado

Electric co-op signs solar power purchase agreement

Tri-State Generation and Transmission Association Inc. signed a 25-year power purchase supply...
US construction spending at highest level in seven years

US construction spending reaches highest level in 7 years

U.S. construction spending in July climbed to its highest level in more than seven years, boo...
GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE is launching its latest aeroderivative gas turbine, the LM6000-PF+, which employs technolo...
Sendai nuclear Unit 1 in Japan connects to power grid Kyushu Electric Power Co.

Sendai nuclear Unit 1 connects to grid

The Sendai 1 nuclear power unit in Japan is expected to reach commercial operations, almost t...
EPA allows one claim to stand in Sierra Club appeal of Schiller air permit

EPA allows one claim to stand in Sierra Club appeal of Schiller air permit

U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy signed a July 28 order...

Power Engineering Current Issue

01/01/2015
Volume 119, Issue 1
1501pe-cover-lg
Products Showcase
GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE is launching its latest aeroderivative gas turbine, the LM6000-PF+, which employs technologies from four GE businesses, bringing power online faster and more efficiently than ever before.

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015

Buyers Guide Categories

Power Industry Wire News

KPIT Selected by UPPCO to Deliver New SAP(R) Software Implementation and Electric Utility Transformation Project

KPIT Selected by UPPCO to Deliver New SAP(R) Software Implementation and Electric Utili...

Pacific Energy Development Announces Restructuring of Debt Facilities in Anticipation of Previously Announced Merger

Pacific Energy Development Announces Restructuring of Debt Facilities in Anticipation o...

Neah Power Systems, Inc.: August 2015 Update to Shareholders

Neah Power Systems, Inc.: August 2015 Update to Shareholders

Scorpio Bulkers Inc. Announces Purchase of 552,481 Common Shares by Scorpio Services Holding Limited

Scorpio Bulkers Inc. Announces Purchase of 552,481 Common Shares by Scorpio Services Ho...

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>