HGL consumption rises 12%, price falls 47%

Between 2010 and 2016, consumption of hydrocarbon gas liquids (HGL) in the United States rose 12% to 928 million barrels as HGL prices fell 47% and HGL expenditures fell 41%, according to the U.S. Energy Information Administration. In 2016, HGL expenditures declined to $32 billion, the lowest since 2003.

Texas and Louisiana industrial sectors have the greatest HGL consumption, expenditures and price formation in the United States. The two states accounted for about 75% of HGL consumption and 58% of HGL expenditures in 2016, and nearly all of this could be attributed to the industrial sector. The HGL pricing hub in Mont Belvieu, Texas, has a significant influence on prices of U.S. HGL products, according to the EIA.

HGLs include natural gas liquids, such as ethane, propane, normal butane, isobutene and natural gasoline; and refinery olefins, including ethylene, propylene, normal butylene and isobutylene. Except for propane, nearly all HGLs that are not used as refinery and blender inputs are consumed by the industrial sector. In 2016, the U.S. industrial sector consumed 83% of U.S. HGLs. It’s primarily used as a feedstock to produce intermediate organic chemicals such as ethylene and propylene, which are used to make plastics and resins.

Between 2010 and 2016, HGL consumption in the industrial sector rose 19% or by 125 million barrels. Over the same period, industrial HGL expenditures fell 45% or by more than $17 billion as the average price of HGLs declined from $16.64 per million British thermal units (Btu) to $7.79 per million Btu.

The residential sector consumes the second-most HGL, and its use largely comprises of consumer-grade propane for space heating, water heating and cooking. Between 2010 and 2016, its consumption fell 19% to 112 million barrels as a result of warmer winter temperatures and the declining number of homes using propane as a primary heating fuel. Over the same period, residential HGL expenditures fell 32% to $21.59 per million Btu.

The commercial and transportation sectors account for 4% and 1% of total HGL consumption, respectively. The commercial sector uses HGLs for heating, and the transportation sector uses HGLs as a vehicle fuel, including propane-fueled police cars and school buses.