Short-Term Energy Outlook Feature
Short-Term Outlook for Hydrocarbon Gas Liquids
Release date: March 16, 2016
U.S. liquid fuels production increased from 7.43 million barrels per day (b/d) in 2008 to 13.75 million b/d in 2015. However, the Short-Term Energy Outlook (STEO) expects liquid fuels production to decline to 12.99 million b/d in 2017, mainly as a result of prolonged low oil prices. The liquid fuels production forecast reflects a 1.24 million b/d decline in crude oil production by 2017 that is partially offset by a 450,000 b/d increase in the production of hydrocarbon gas liquids (HGL)—a group of products including ethane, propane, normal butane, isobutane, natural gasoline, and refinery olefins.
HGL production happens at natural gas processing plants and petroleum refineries, but between 2008 and 2015, almost all of the growth in HGL production occurred at natural gas processing plants as a by-product of the growing supply of natural gas from shale gas and tight oil formations. Investment projects that increased the capacity to produce, store, transport, export, and consume HGL enabled the supply of HGL to expand at a faster rate than natural gas production (Figure 1). STEO expects HGL production growth to continue to outpace natural gas production in 2016 and 2017, as more HGL infrastructure projects are completed.
Each HGL product serves a different market with a unique set of supply and demand drivers. Recently expanded export facilities have allowed excess propane, butane, and natural gasoline production to be shipped to foreign markets. Unlike the other HGL products, ethane production has been constrained by lack of demand and low prices. This analysis will discuss the outlook for each of these four HGL streams and related infrastructure projects through 2017.