NGLs 101Primer on the natural gas liquids (NGL) market
What are NGLs?
Natural gas, a naturally occurring hydrocarbon gas mixture used as a source of energy for heating, cooking, and electricity generation, can be broken down into two categories: “Dry” natural gas, comprised mostly of methane and “Wet” natural gas, comprised of ethane, propane, butane, and natural gasoline (condensate). The gases found in the latter category are collectively referred to as natural gas liquids, or NGLs.
The NGL content of natural gas is measured in gallons per thousand cubic feet of gas (gPm). Dry gas contains approximately 1 gPm. On the other hand, the ngl content of wet gas varies widely depending on the source.
How are NGLs produced?
Wet gas and dry gas are separated at gas processing plants. From there, the dry gas is sent through a pipeline to consumer markets, whereas the raw wet gas mix is sent to a fractionation facility for further processing into different NGLs (butane, propane, ethane, natural gasoline, etc.). In the United States, natural gas liquids are not always consumed at the site of production. As such, NGL storage sites play an important part in the U.S. natural gas supply chain.
What industries use NGL products?
In the United States, NGL products are sent by pipeline to various types of consumers, and for various purposes. For instance, virtually all ethane and approximately 30% of propane produced in the U.S. are destined for the petrochemical industry, which uses them to manufacture plastics and an array of other products. Most of the remaining propane supply (>50%) is used to produce heating and other fuels.
According to analytical chemistry service provider Envantage, the 5 largest NGL consumer by sector are: Petrochemical (55%), space heating / fuel use (19%), motor gasoline and blending agent (19%), fuel exports (6%), ethanol denature (1%).
What role does the NGL market play in the U.S. economy?
Domestic NGL production is highly beneficial to the economy of the United States. It enables large U.S.-based petrochemical manufacturers to cheaply and reliably access the raw materials required to create ethylene (a critical component in plastics manufacturing) and other important compounds. This creates a significant competitive advantage for American petrochemical companies over their European and Asian counterparts.
Targray’s team of NGL marketing professionals are focused on securing reliable and cost-effective rail, barge, truck, and pipeline access. Our long-standing relationships with natural gas producers, midstream companies and other industry stakeholders enable us to help customers in several markets unlock value while minimizing supply chain risk.
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