The growth of natural gas liquids production: Is this good news? 
Published: Jan-12-12
 
The outlook for gas production and supply is still looking strong but one of the big concerns for the growth picture is infrastructure challenges in key markets. An interesting new trend—increased drilling for gas to access natural gas liquids (NGLs) such as ethane, propane and butane—is set to add to the pressure on industry infrastructure, at least in the United States.
 
Recent figures from the Energy Information Administration (EIA) show that gas production from the US lower 48 has gone up by 10.5 percent from a year ago¹. Much of this increase is due to improved recovery rates at the "liquids-rich" gas plays, which offer producers robust economics as gas prices languish and chemicals prices strengthen.
 
Production of NGLs topped 2 million b/d in 2010 in the United States and is set to grow faster, with ethane and propane contributing much of the increase. Even OPEC production of NGLs, unfettered by quotas, could rise by more than 7 percent this year to 6 million b/d in 2012.
 
As long as the margins are good, use of gas to produce NGLs is likely to increase, leading to another positive. As the value of gas increases, the flaring of gas is likely to reduce—notably in OPEC countries, leaving more gas for use in petrochemicals instead of the more traditional naphtha or gasoil.
 
All this indicates a switch in focus among some companies to liquid rich assets and production, notably in the United States. However, what will be increasingly needed are substantial investments in gas processing, pipelines, liquids fractionation and petrochemical facilities. This growth of NGL production along with growing production generally in unconventional oil and gas—the bridge to a low-carbon future—means a real focus on infrastructure investment in our industry in the short term. The ability to operate gas infrastructure and pipelines safely and efficiently will become an important differentiator in the future, triggering hopefully an emergence of “smart” infrastructure.  Accenture has identified a number of factors driving the need for operational improvement at pipeline operations in The Intelligent Pipeline: Accelerating the path from data to decision making.
 


¹ Source: “Short Term Energy Outlook” November 8th 2011, US Energy Information Adminstration, © EIA

 

 

 
 
 

Comment Form

CAPTCHA code image
Speak the codeChange the code
 

Please type in the characters displayed above.

  
 
* Please note that your name and email address are required
  to submit a comment. Your email will not be published.
About the Authors

Arthur Hanna
Mr Hanna is the Industry Managing Director of Accenture's global energy practice. He has led a wide portfolio of work for a variety of international ...
 

Richard Holsman
Mr. Holsman is the Global Energy Technology Managing Director and leads Accenture’s Europe, Africa and Latin America technology business for resource...
 

Brian Richards
Brian Richards is a Senior Manager and Senior Technical Architect in Accenture’s Energy industry group. He is the Energy Innovation Lead for North Am...
 

Zahra Bahrololoumi
Zahra Bahrololoumi, managing director, Accenture Energy, is based in London. Zahra has deep transformation and delivery experience spanning multiple ...
 

Tracey Countryman
Tracey leads Accenture’s Plant and Commercial Business Service in North America helping to deliver transformation improvements in client manufacturin...
 

James Arnott
James Arnott is managing director, Accenture's Resource Operating Group, and leads Accenture Capital Project Services for Europe, Middle East, Africa...
 

Susy Tamminga
Susy Tamminga is a senior manager in Accenture’s Resources group. She has extensive experience in global business transformation, talent, change mana...
 

Dean Forrester
Dean is a Managing Director in Accenture’s Energy industry group based in Houston. He has been involved in many major upstream programs including imp...
 

Colin Sloman
Colin Sloman is a managing director, leading Accenture’s Global Human Capital Strategy Group. He has over 25 years’ experience spanning a number of s...
 

Julie Adams
Julie Adams leads Accenture’s Resources and Energy global research team and provides original research support and market insight for the Accenture E...
 

Jeff Miers
Jeff Miers, managing director for Energy—Analytics, is based in Houston, North America. He has 16 years of experience leading consulting and systems ...
 

Kevin Donaldson
Kevin Donaldson, managing director for Energy—Analytics for Europe, Africa and Latin America is based in London. He has responsibility for the coordi...
 

Senthil Ramani
Senthil Ramani, managing director for Analytics—Technology for Asia Pacific, is the Accenture Enterprise Services (AES) Business services and Digital...
 

Valerie Jalufka
Valerie is a Managing Director in Accenture’s Energy industry group based in Houston. She has over 14 years of experience in the Energy industry incl...
 
 
Most Popular Tags

 

 

 

By using this site you agree that we can place cookies on your device. See our privacy statement for details.