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US midstream companies are racing to expand natural gas liquids export capacity as global buyers show interest in American barrels, but analysts warn that a processing squeeze could slow the system long before cargoes reach the docks.
While production of natural gas liquids, or NGLs, continue to reach new record highs — soaring to 7.7 million barrels a day in August — the so-called fractionators that turn the hydrocarbons into usable products such as ethane and propane aren’t able to keep pace. Across the US, the facilities can only process 6.8 million barrels a day.
“If NGLs begin accumulating more quickly than they can be fractionated, we risk backing up the system, which could eventually force gas and even oil production to slow or shut in,” said Julian Renton, an analyst at East Daley Analytics.
Source: Energy Information Administration
The bottleneck threatens to hamper President Donald Trump’s energy ambitions even as a wave of new export facilities are planned for this decade. More than 3 million barrels a day of NGLs are currently being shipped abroad, with exports expected to continue booming in the coming years.
“I have never seen such an appetite for US hydrocarbons,” Enterprise Products Partners’ Co-Chief Executive Jim Teague said at a Houston conference recently.
Recent and upcoming additions tracked by East Daley include Enterprise’s Neches River Phase 2 project– which can handle 180,000 barrels a day of ethane or double that in LPG– along with Targa’s planned 200,000 barrel a day expansion at Galena Park in 2027, and a 400,000 barrel a day Texas City terminal jointly developed by ONEOK and MPLX.
That export capacity is “sufficient and even overbuilt at this point,” warned Renton.
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