HGL production, exports rose in 2018

U.S. production of hydrocarbon gas liquids (HGLs) rose 13%, or by more than 500,000 barrels per day, to 5 million barrels per day in 2018, from 2017, according to the U.S. Energy Information Administration. HGLs accounted for more than 25% of U.S. petroleum products output in 2018.

The rise in HGL production since 2010 can be attributed to the increasing production of natural gas in the United States. The natural gas production, which is measured as gross withdrawals, rose 38% to a record 101.3 billion cubic feet per day in 2018, from 2010. The share of HGLs produced at natural gas processing plants has risen to nearly 90% in 2018, from about 75% in 2010, as natural gas production has risen.

HGLs produced at natural gas processing plants are called natural gas plant liquids, which include ethane, propane, normal butane, isobutene and natural gasoline. Petroleum refineries produce a smaller share of HGLs, including refinery olefins and refinery liquefied petroleum gases. HGL production has been flat at petroleum refineries since 2010 and has averaged about 630,000 barrels per day.

Ethane and propane comprise two-thirds of HGL production. Ethane production rose 20% to 1.71 million barrels per day in 2018, from 2017. Ethane is the lightest natural gas plant liquid and can be left in the processed natural gas stream at natural gas processing facilities, or it can be recovered from natural gas if the ethane’s value is great enough to cover the additional costs to produce and transport the ethane to markets.

Ethane demand in 2018 was driven by its use in the petrochemical sector, which converts ethane into ethylene for the production of plastics, resins and fibers that are used to produce consumer goods. Several new petrochemical crackers became operational in 2018 in the United States, including two facilities that can process 90,000 barrels per day of ethane as feedstock and one that can handle 20,000 barrels per day of ethane as feedstock.

International demand for ethane has risen as a new pipeline to Canada has become operational and has the capacity to transport 50,000 barrels per day. The international market has become the preferred destination for the increased supply of ethane because U.S. demand has not risen at the same rate of the rising supply. HGL exports rose 14% in 2018, from 2017, and nearly one-third of U.S. HGL production was exported in 2018.

Propane production rose 10% to 1.54 million barrels per day in 2018, from 2017. U.S. propane demand has been flat in recent years while propane exports have risen.

U.S. production of butanes, natural gasoline and refinery olefins rose in 2018. With domestic demand flat for these HGLs, much of the increased production has been exported.