Growing US Natural Gas Liquids Production: New Opportunities for Refiners

摘要

North American refining and petrochemical markets have undergone rapid and significant changes since 2008. Robust growth in tight oil production is dramatically increasing supplies of natural gas liquids, naphtha-rich light crude oils, and condensates. The shale revolution and its resulting increase in North American NGL production has led to advantages for US NGL and petrochemical feedstock supply, refiners, petrochemical companies, and traders. These market participants are evaluating opportunities domestically and abroad to utilize ethane and LPG. Additionally, the same players are evaluating options for condensate exports as well as naphtha and natural gasoline end uses as diluent. These market changes will affect the traditional interfaces between the refining and petrochemical industries. Several new petrochemical feedstock export terminals have been announced recently and both domestic demand and exports are expected to grow rapidly with the industry's feedstock advantage. Increasing supplies of NGLs may create opportunities for refiners to monetize surplus butane. Additionally, blending operations will evolve as supply changes the dynamics of domestic US NGL fundamentals. New international end-users of US NGL feedstocks as well as domestic olefin crackers will reduce output of heavier olefins and aromatics while refiners will face growing naphtha supply in a declining gasoline market. This paper describes the effects of evolving and dynamic NGL supply on demand and operations. It will address the issues of how market participants are positioning themselves in this new era and create new models for integration and investment. In addition to discussing NGL supply, demand, and fundamentals the paper will cover exports, diluent expectations, blending, and alkylation for 2014 to 2020.