Friday, July 6, 2012

Natural Gas Liquids: You Can Buy a Gallon of 80/20 Ethane/Propane Mix for Three Cents

 A story of microeconomics.
From Platt's:
The bizarre case of the gallon of a petroleum liquid that costs less than a US nickel
There is a hydrocarbon out there that you can buy for less than three pennies per gallon.

But that's something that has just happened in the past few days. And while the decline in the price of ethane-propane mix in Conway, Kansas is in a very minor niche market, it's still like nothing anybody has seen in a long time. The price is down close to 88% since April 1.

Further, it's not just some fluke thing that has occured because of a busted unit or a pipeline explosion, an incident that knocks the normal market balance out of whack.

Instead, the price of EP mix in Conway is a microcosm of just how the shale surge is pumping out huge quantities of natural gas liquids alongside natural gas, and how the supply is starting to overwhelm the infrastructure that exists.

EP Mix is an 80% ethane/20% propane blend. Like purity ethane, it's used as a feedstock in olefin crackers, primarily to make ethylene....MORE