Natural gas liquids (NGL) account for a significant portion of what many international organizations refer to as “oil production” from the United States, according to analysts from the Brookings Institution.

In a 15-page report, Charles Ebinger and Govinda Avasarala of the Brookings Energy Security Initiative Natural Gas Task Force also found that NGLs will play an important role in generating revenue for producers, especially during periods of low natural gas prices.

The analysts cited data from the U.S. Energy Information Administration (EIA), which found that domestic NGL production had increased from just over 1.7 million b/d in 2005 to nearly 2.5 million b/d in October 2012, a 47% increase, and now accounts for around 20% of the global market. They project that NGLs will account for about 25% — nearly 3 million b/d — of U.S. liquids supply by 2025 (see related story).

According to EIA data and NGI’s calculations, NGLs extracted from gross U.S. natural gas production grew at a trend-line rate of 0.8% per year from 1983 to 2011. However, from 2003 to 2011, that growth rate more than tripled to 2.6% per year.

Ebinger and Avasarala said the U.S. exports of NGLs were occurring because of an excess domestic supply and weak demand from the petrochemical sector. They said exports would become increasingly important to maintaining domestic NGL and, by association, dry gas production.

Data from Veresen Inc. and Energy Policy Research Foundation Inc., which was included in the Brookings report, showed the various shale plays in the U.S. differ in terms of gallons of NGL per Mcf (GPM). The Bakken Shale led the way with 6-12 GPM, but three shale plays — the Eagle Ford, Niobrara and the Marcellus/Utica — had 4-9 GPM. The Green River formation had 4-6 GPM, followed by the Barnett Shale with 2.5-3.5 GPM.

The report also cited figures from Envantage Inc., which found the petrochemical industry consumed 55% of NGLs, followed by space heating and fuel uses (19%), motor gasoline and blendstocks (also 19%), fuel exports (6%) and ethanol denaturing (1%).

Ebinger and Avasarala said that although some of the major, vertically integrated oil companies dabble in NGLs, the market “is dominated by a number of less-familiar companies, which own much of the processing, fractionation, pipeline and storage capacity.” They said those companies include Enterprise Product Partners LP, DCP Midstream LLC, Targa Resources Partners, Williams and Oneok Partners LP.

The analysts also point out that NGL infrastructure, both midstream and downstream, has not been able to keep pace with the increase in supply. They cite figures from the Interstate Natural Gas Association of America, a midstream trade association, which estimated that energy companies need to spend at least $7.8 billion on pipelines by 2016.

“Although exports have been increasing…export capacity is still constrained by a ‘lack of suitably equipped terminals,'” the analysts said, They citedresearch conducted by RBN Energy LLC, as well as projects in Mont Belvieu, TX, and in Marcus Hook, PA (see NGI, Oct. 1, 2012; Jan. 30, 2012).

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