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EIA Reports Record NGL Production in 2010

Production of national gas liquids (NGL) set an all-time record last year, exceeding 2 million b/d, the Energy Information Administration (EIA) reported Thursday.

Ethane and propane production account for most of the increase in NGLs: 40% and 30%, respectively, of the volume of NGLs extracted in natural gas plants each year, according to the EIA. Other NGLs include normal butane, a petrochemical feedstock and refining blend stock for gasoline; and iso-butane, a refining feedstock and a component of gasoline octane blends.

The quality standards approved by the Federal Energy Regulatory Commission for interstate pipelines require that liquids be stripped from the natural gas mix before the gas can be delivered by pipelines. "[Quality] restrictions vary from pipeline to pipeline and are usually a function of a pipeline system's design and the markets that it serves," the agency said.

"Once NGLs have been removed from the natural gas stream, they are typically sent to a fractionation unit and separated into [various] components...Because NGLs sell at a premium to natural gas, there is often an economic incentive for operators to focus exploration and development activities on areas that have natural gas with high liquids content.

"This 'liquids boost' is especially important in the development of shale gas plays due to the relatively high cost of drilling and completing a shale gas well. The high NGL content of many shale plays has made it economical for operators to continue to aggressively develop...shale gas resources during periods of low natural gas prices," the EIA said.

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