US NGL supplies to grow as oil output exceeds forecast – Enterprise

HOUSTON (ICIS)–US oil production will likely exceed the forecast that Enterprise Products made in 2023, and that should lead to more natural gas liquids (NGLs) that petrochemical producers can use as feedstock, the midstream company said on Thursday.

The Permian basin will account for the most of that new production forecasted by Enterprise, said Tony Chovanec, executive vice president, fundamentals and commodity risk assessment. He made his comments during an earnings conference call.

That forecast published in 2023 called for US oil production to grow by a total of 1.8 million bbl/day in the three-year span ending in 2025.

As a general rule, 1 million bbl of oil translates to 400,000-500,000 bbl of NGLs and, for rich gas, 3.25 billion cubic feet to 3.5 billion cubic feet, Chovanec said.

The country will need more plants to process the additional gas produced in the US. Natural gas processing plants remove impurities from the raw gas coming out of wells, resulting in natural gas and NGLs.

In the US, NGLs are the predominant feedstock used to make ethylene.

NEW NGL PIPELINE
To handle those additional NGLs, Enterprise is building the Bahia NGL pipeline, which will ship product from the Delaware and Midland basins in the Permian to the company’s fractionation complex in Mount Belvieu, Texas.

A 30-inch (76 cm) segment will connect the Midland basin to Mount Belvieu.

Bahia will ship up to 600,000 bbl/day of NGLs when it starts operations in the first quarter of 2025.

After operations start, Enterprise has the option to expand the capacity of the 30-inch segment by upwards to 1 million bbl/day by adding more pumps.

Enterprise estimates that each natural gas processing plant can provide Bahia with 40,000-45,000 bbl/day of NGLs.

ENTERPRISE PROJECT LIST
Bahia is one of several NGL projects being developed by Enterprise.

The following table summarizes the projects and the timelines for those projects.

Source: Enterprise

US LPG EXPORT CAPACITY TO BE TIGHT
US NGL production has grown to the point where the country is relying on exports to ship out excess supply.

The growth in the production of liquefied petroleum gas (LPG) will likely lead to exports approaching maximum capacity until expansion projects start operations in 2025, Enterprise said.

Shipping constraints at the Panama and Suez canal have not disrupted LPG shipments because of growth in the fleet of very large gas carriers (VLGCs), the company said.

Enterprise estimates that there are about 380 VLGCs in the water. The fleet grew by mor than 40 ships in 2023. More than 20 could be added in 2024.

(adds Enterprise forecast, paragraph 3)

Thumbnail shows a pumpjack, which is used in oil production. Image by Olaf Doering/imageBROKER/Shutterstock.