Newsroom

Reject Me Not: Ethane Steps Into the Spotlight

byEnverus

Austin, Texas (December 9, 2020) — Enverus, the leading energy SaaS and data analytics company, has released its latest FundamentalEdge report that explores the company’s current view of the oil, natural gas and natural gas liquids (NGL) markets.

“NGLs don’t always get the attention they deserve despite the fact that they form the building blocks of the modern petrochemicals industry and, consequently, many of the goods we use on a daily basis. What we are seeing with surging NGL production amid this year’s slump in oil and gas production should make people sit up and take notice,” says Jesse Mercer, senior director of Crude Market Analytics at Enverus.

“Over the past decade, the petrochemicals industry became accustomed to ever-growing supplies of low-cost NGLs from the United States. Ethane, in particular, was priced so cheaply that as much as 1 MMBbl/d was never converted to ethylene and instead burned as fuel at various points last year. Those levels of ethane rejection now seem like a distant memory. What is interesting about this year’s surging NGL production in the U.S. is just how much this is being driven by the desperate need to recover increasing amounts of ethane from places that were previously uneconomical to do so.”

Today’s FundamentalEdge report release follows a string of announcements and product offerings made by Enverus aimed at helping all segments of the industry manage a challenging energy market wrought with price drops and demand destruction tied to the COVID-19 pandemic. Members of the media can download a preview of the full report or contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

Key takeaways from the report:

  • Although crude oil and natural gas production in the United States remains below pre-pandemic levels, production of natural gas liquids (NGLs) is setting record highs. This increase in NGL production has happened despite much weaker upstream drilling and completion activity than witnessed at the start of 2020.
  • Given lower oil and gas production since the beginning of the year, sharply reduced ethane rejection is the key driver behind the increase in overall NGL production. In April 2020, ethane rejection was in excess of 970 MBbl/d. In contrast, ethane rejection was estimated at just over 630 MBbl/d in October.
  • The drop in ethane rejection was initially widespread, but after the initial shock of upstream production shut-ins, high levels of ethane rejection returned to the Appalachian and Williston basins. Ethane rejection, however, remains subdued in the Permian basin as well as in the Rockies and Midcontinent regions.
  • The economics of recovering ethane in the Rockies and Midcontinent improved substantially starting in May, as demand from the petrochemical sector remained robust over much of Q2 and into mid-Q3. Hurricane-related impacts on steam cracker operations (such as power outages) and turnarounds have since tamped down domestic ethane demand and put downward pressure on ethane prices. Recently, higher natural gas prices have worked to chip away at the economic incentive to recover ethane in the Rockies.
  • The weakening economic incentive to recover ethane in the Rockies and Midcontinent since late September is concerning. The outlook for gas plant ethane production given current commodity pricing (oil, gas, and NGLs) suggests a plateauing of production in the final weeks of 2020. Without further increases in upstream activity (drilling and completions) or additional increases in gas plant recovery rates, ethane production may slowly decline in 2021.
  • Also, with hurricane season winding down, steam cracker operations are expected to return to normal in the coming weeks and to lift ethane demand out of the slump it has been in since Hurricane Laura. Incremental demand growth from upcoming capacity additions and the imminent start of the Orbit ethane export terminal are only going to increase near-term demand even further. Forward ethane prices, however, are not currently high enough to support increasing ethane recovery beyond current levels.
  • Against this backdrop, it is important to note that higher natural gas prices have raised the threshold for ethane prices to clear if increased recovery rates are to happen. Given Enverus’ supply/demand outlook for both ethane and natural gas, Enverus sees upside potential for ethane prices heading into the early months of 2021, potentially extending through the end of the year.

 

Reject Me Not - Ethane Steps Into the Spotlight

DOWNLOAD PREVIEW

About Enverus
Enverus is the leading energy SaaS company delivering highly-technical insights and predictive/prescriptive analytics that empower customers to make decisions that increase profit. Enverus’ innovative technologies drive production and investment strategies, enable best practices for energy and commodity trading and risk management, and reduce costs through automated processes across critical business functions. Enverus is a strategic partner to more than 6,000 customers in 50 countries. Enverus is a portfolio company of Genstar Capital. Learn more at Enverus.com.

Enverus

Enverus

Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Related News

Enverus Press Release - Enverus selected for NET Power’s commercial initiative
News Release Newsroom
ByEnverus

AUSTIN, Texas (May 31, 2023) — Enverus, a leading energy-dedicated SaaS platform, is pleased to announce that clean energy technology company NET Power has selected it as its trusted data source for its business intelligence and analytics functions. Under terms...

Enverus Press Release - Enverus releases annual Top 100 Private E&P Operators list
News Release Newsroom
ByEnverus

CALGARY, Alberta (May 24, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, has released a list of the most prolific 100 private oil and gas producers in the U.S. based on gross operated production last year. Continental Resources,...

Enverus Press Release - Recession fears weigh bullish oil fundamentals down, higher natural gas prices needed
News Release Newsroom
ByEnverus

Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its latest quarterly FundamentalEdge report focused on global drivers for oil and gas prices to 2030, the five-year oil and gas supply and demand...

Enverus Press Release - Welcome to Enverus EVOLVE: The future of energy
News Release Newsroom
ByEnverus

Enverus, the most trusted energy-dedicated SaaS company, is inviting members of the media to EVOLVE, its annual conference that will be held virtually May 16 and 17. Enverus EVOLVE is the only conference that explores the future of energy through...

Enverus Press Release - Upstream M&A slides to $9B in 1Q23
News Release Newsroom
ByEnverus

CALGARY, Alberta (May 2, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, is releasing its summary of 1Q23 upstream merger and acquisition (M&A) activity. In Q1, U.S. upstream M&A saw $8.6 billion...

Enverus Press Release - Introducing CCUS Play Fundamentals
News Release Newsroom
ByEnverus

Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its inaugural CCUS Play Fundamentals report evaluating the full, source-to-sink value chain of carbon capture and storage at the national, regional and projects levels.

Enverus Press Release - Electric vehicles: A call on capital
News Release Newsroom
ByEnverus

Enverus Intelligence Research (EIR), a subsidiary of Enverus, the leading global energy data analytics and SaaS technology company, has released a report covering electrical vehicle (EV) infrastructure, battery supply chain, demand for metals and the anticipated recycling boom that should...

Enverus_EIR_Press_Releasse_Renewables_Thumbnail
News Release Newsroom
ByEnverus

Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a report that analyzes the impact of wind and solar project design decisions made by developers and quantifies the choices that result in the...

Enverus Press Release - OPEC cuts and bank failures rattle oil markets in a new kind of March Madness
News Release Newsroom
ByEnverus

Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a new report following OPEC’s surprise cuts Sunday, April 2, 2023. Roughly two weeks after Silicon Valley Bank's (SVB) collapse rocked oil markets and...

Find Out How Enverus Can Help Your Business

Subscribe to the Energy Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Access Tour

Speak to an Expert

Book a Demo