NGLs and Feedstock Market Overview Platts Inaugural Petrochemical Seminar Kelly Van Hull Manager Energy Analytics
Processing & Fractionation Additions 45 129 1778 1845 553 232 6 4 17 695 * Expansions Through 215 Processing Capacity Fractionation Capacity 2
Significant Portion of Incremental Production Will Flow to Mont Belvieu Infrastructure Build Out Essential To Maintaining Growth (Announced Increases Through 214) PADD IV +73 75 Mb/d PADD II +561 PADD I +76 Planned Pipelines & Expansions ONEOK Bakken (75) MAPL Rockies (75) Front Range (15) ONEOK Sterling III (2) Texas Express (28) Enterprise ATEX (19) Vantage (4) Mariner East (7) Crosstex Cajun Sibon (5) Bluegrass (2) or KM/MarkWest (2) PADD III +568 Online 212/213 ONEOK Bakken (6) Overland Pass (115) DCP Southern Hills (15) DCP Sand Hills (2) Enterprise A (5)ETX ETC Lone Star (13) ETC Justice (34) Eagle Ford Yoakum (45) Mariner West (5) Cajun-Sibon (7) 212 to 218; Source: RBN 3
Actual U.S. NGL Production from Gas Processing to Increase by 1.5 MMb/d 212 218 4,5 4, Mb/d 3,5 3, 2,5 2, NGL Production Ethane Rejection 4
PADD 3 Will Remain the Largest Producer of NGLs from Gas Processing Plants Mb/d 5 45 4 35 3 25 2 15 1 5 PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 5
Basin Production Growth 35 3 25 Mb/d 2 15 1 5 DJ Basin Anadarko Permian Williston - ND Eagle Ford Marcellus Utica 6
Mb/d U.S. Ethane Market Long With Rejection Exceeding 2 Mb/d Starting in 213 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Gas Plant Supply Refinery Supply Petchem Demand Exports Rejected Volumes 7
U.S. Propane Market Length to be Relieved by Exports 16 14 12 1 Mb/d 8 6 4 2 Gas Plant Supply Refinery Supply Imports Petchem Demand Heating Demand Exports 8
Exports Required to Keep Normal Butane Balanced 6 5 4 Mb/d 3 2 1 Gas Plant Supply Refinery Production Imports Petchem Demand Isomerization Demand Refinery Inputs Exports 9
Isobutane Market Balances by Reducing Isomerization 3 25 2 Mb/d 15 1 5 Gas Plant Supply Isomerization Refinery Production Imports Octane Enhancement Refinery Inputs Exports 1
Demand For Diluent to Keep U.S. Natural Gasoline Market Balanced 6 5 4 Mb/d 3 2 1 Gas Plant Supply Petchem Demand Refinery Demand Imports Renewable Fuel Demand Exports 11
Gulf Coast Export Capacity 12 1 8 Mb/d 6 4 2 Propane Butane Rio Grande Pipeline Capacity 212 U.S Gulf Marine Export Capacity Enterprise 213 Exp Targa 213 Exp Targa 214 Exp Enterprise 215 Exp Targa 215 Exp Mariner South 215 Oxy 215 Williams/Boardwalk 216 Vitol 215 12
Propane Exports Majority of Propane Leaving PADD 3 35 3 25 Mb/d 2 15 1 5 U.S. Exports of Propane and Propylene Gulf Coast (PADD 3) Exports of Propane and Propylene 13
Destinations for U.S. LPG Exports Mb/d 4 35 3 25 2 15 1 5 Venezuela Panama Netherlands Mexico Japan Dominican Republic Chile Canada Brazil Total U.S. Exports of Liquified Petroleum Gases 14
Natural Gasoline Exports Majority of Natural Gasoline Leaving PADD 2 Mb/d 2 18 16 14 12 1 8 6 4 2 U.S. Exports of Pentanes Plus Midwest (PADD 2) Exports of Pentanes Plus 15
Destinations for U.S. Natural Gasoline Exports Mb/d 2 18 16 14 12 1 8 6 4 2 Canada Total U.S. Exports of Pentanes Plus 16
Crude Oil and Natural Gas Outlook $/Barrel $12 $1 $8 $6 $4 $2 $ WTI $/MMBtu $5. $4.5 $4. $3.5 $3. $2.5 $2. $1.5 $1. $.5 $. Henry Hub 17
Ethane and Propane Price Outlook $/Gal $1.6 $1.4 $1.2 $1. $.8 $.6 $.4 Price 7% 6% 5% 4% 3% 2% Ratio to Crude Oil Propane $.2 $. Ethane Propane 1% % 18
Feedstock Margins Ethane Returns to Most Favored Feedstock Position Cents/LB 7 6 5 4 3 2 1-1 -2 Ethane Propane Natural Gasoline 19
Olefin Prices Sept 211- Sept 213 Cents/LB 1 9 8 7 6 5 4 3 2 Ethylene PG Propylene 2
NGL Feedstock Prices Sept 211- Sept 213 c/gal 18 16 14 12 1 8 6 4 2 Ethane Propane 21
Theoretical Ethane Trading Range»Ethane ceiling: The maximum price for ethane before flexible olefin crackers begin to switch to the next best alternative feedstock (typically propane)»ethane floor: Natural gas price at the plant tailgate, adjusted for ethane transportation and fractionation costs Price Ceiling Price Floor 22
Ethane Infrastructure Rejection Build Out Essential Economics To Maintaining Growth (Announced Increases Through 214) Bakken Rockies Anadarko Marcellus /Utica Eagle Ford Mont Belvieu 23
Pipeline Transportation Rates and Natural Gas Prices Determine Ethane Prices While Market is Long -26.3-18.3 8. -15.5-1.6 8.6 24 24
Conclusions»Actual U.S. NGL production from gas processing to increase by 1.5 MMb/d from 212 218»Marcellus, Utica, Eagle Ford, and Williston Basin are driving U.S. NGL production growth»u.s. ethane market will remain long through 218 with rejection exceeding 2 Mb/d starting in 213»More distant locations from Mont Belvieu will experience highest levels of rejection»exports will be required to keep propane, normal butane, and natural gasoline markets balanced 25
http://www.rbnenergy.com/daily-energy-post Kelly Van Hull Manager Energy Analytics 3333 Allen Parkway, Suite 187 Houston, TX, 7719 kvanhull@rbnenergy.com 26