ngl supply/demand demand projects arrive as supply … · presentation only for your personal use....

BENPOSIUM 2016

NGL SUPPLY/DEMAND DEMAND PROJECTS ARRIVE AS SUPPLY GROWTH SLOWS Andrew Neal NGL Analyst Platts Analytics, Bentek products

Copyright © 2016 by S&P Global. All rights reserved.

RESTRICTIONS ON USE: YOU MAY USE THE PRICES, INDEXES, ASSESSMENTS AND OTHER RELATED INFORMATION (COLLECTIVELY, “DATA”) IN THIS PRESENTATION ONLY FOR YOUR PERSONAL USE. YOU MAY NOT PUBLISH, REPRODUCE, DISTRIBUTE, RETRANSMIT, RESELL, CREATE ANY DERIVATIVE WORK FROM AND/OR OTHERWISE PROVIDE ACCESS TO DATA OR ANY PORTION THEREOF TO ANY PERSON (EITHER WITHIN OR OUTSIDE YOUR COMPANY INCLUDING, BUT NOT LIMITED TO, VIA OR AS PART OF ANY INTERNAL ELECTRONIC SYSTEM OR INTERNET SITE), FIRM OR ENTITY. DISCLAIMER: PLATTS, ITS AFFILIATES AND ALL OF THEIR THIRD-PARTY LICENSORS DISCLAIM ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AS TO THE DATA, OR THE RESULTS OBTAINED BY ITS USE OR AS TO THE PERFORMANCE THEREOF. LIMITATION OF LIABILITY: IN NO EVENT WHATSOEVER SHALL PLATTS, ITS AFFILIATES OR THEIR THIRD-PARTY LICENSORS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, TRADING LOSSES, OR LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. THE DATA IS PROVIDED ON AN “AS IS” BASIS AND YOUR USE OF THE DATA IS AT YOUR OWN RISK. COPYRIGHT © 2016 BY PLATTS, MCGRAW HILL FINANCIAL, INC. ALL RIGHTS RESERVED. NO PORTION OF THIS PUBLICATION MAY BE PHOTOCOPIED, REPRODUCED, RETRANSMITTED, PUT INTO A COMPUTER SYSTEM OR OTHERWISE REDISTRIBUTED WITHOUT PRIOR AUTHORIZATION FROM PLATTS. PLATTS IS A TRADEMARK OF MCGRAW HILL FINANCIAL.

3 BENPOSIUM 2016

Key Takeaways

• Slower NGL production growth as gas, oil align to new price regime • Production growth in Northeast is constrained to infrastructure • Low growth in other regions in near-term

• Rapid demand growth in near-term causes markets to tighten • Exports tightened propane market in early 2016 • Petrochemical demand will tighten ethane in 2017 and beyond

• Tighter ethane leads to short-term demand shift in petrochemicals until infrastructure can relieve constraints

• Propane demand competition between petrochemicals and exports • Natural gasoline predominantly moves to Canada for oil sands diluent

4 BENPOSIUM 2016

Improvement in all NGL prices since mid- February 2016

0

20

40

60

80

100

120

140

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16

Cen

ts/g

allo

n

NGL Prices at Mt. Belvieu

Ethane Propane N Butane Isobutane Natural Gasoline

BENPOSIUM 2016

SUPPLY OUTLOOK

6 BENPOSIUM 2016

Growth of NGL production from gas plants expected to level off

0.0

1.0

2.0

3.0

4.0

5.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

MM

b/d

US NGL Supply from Gas Plants Prior to ethane rejection

Ethane Propane Normal Butane Isobutane Natural Gasoline

75% growth in NGL production

14% growth in NGL production

Source: Bentek Market Call: North American NGLs 2Q2016

7 BENPOSIUM 2016

Long term NGL growth driven by Marcellus/Utica, Permian, and Eagle Ford

NGL Production from Gas Plants (Mb/d) Williston

Permian

Eagle Ford/ Texas Gulf Coast

Anadarko

Wet Marcellus/

Utica

1,026 557

504 508

712

801

338 391

235

218


606

369

871

628

267

No pipeline capacity from

Northeast to Gulf Coast for LPG, only for ethane

8 BENPOSIUM 2016

Current production in NE heavily dependent on well inventory

Source: Bentek Northeast Oil and Gas Production Monitor, April 2016

0

500

1000

1500

2000

2500

3000

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017 2018 2019 2020 2021

Wel

l inv

ento

ry c

ount

Prod

uctio

n vo

lum

e (B

cf/d

)

Northeast gas production and well inventory projections

Projection (with increased drilling)Projection (current drilling and well inventory volumes)April projection-current drillingWell inventory count

9 BENPOSIUM 2016

Current production in NE heavily dependent on well inventory

Source: Bentek Northeast Oil and Gas Production Monitor, April 2016

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017 2018 2019 2020 2021

Prod

uctio

n vo

lum

e (B

cf/d

)

Northeast gas production without increased drilling

Projection (with current drilling) Projection (after depleting well inventory)

Well Inventory Volume

10 BENPOSIUM 2016

New wells needed to keep up NGL production: Raw mix drops 1/3 by 2019 under current drilling

0

200

400

600

800

1000

1200

2016 2017 2018

NG

L vo

lum

es (M

b/d)

Northeast NGL production estimates

NE Projection (new drilling activity) NE ProjectionNE Projection-expired inventory NGLs from DUCs

Source: Platts Analytics

11 BENPOSIUM 2016

Incremental Northeast ethane will be disconnected from USGC demand

Mariner East 1 (40 Mb/d, C2)

(Current Capacity/Possible Expansions)

12 BENPOSIUM 2016

Incremental Northeast ethane will be disconnected from USGC demand

Mariner East 1 (40 Mb/d, C2)


0

200

400

600

2011 2012 2014 2015 2017 2018 2020 2022 2023

Mb/

d

Northeast Ethane Supply vs. Takeaway

Northeast Ethane Supply Mariner WestMariner East ATEXUtopia East ATEX ExpansionShell Cracker Source: Platts Analytics

13 BENPOSIUM 2016

Northeast C3+ entirely reliant on truck and rail takeaway until Mariner East 2

Mariner East 2 (275/450 Mb/d)

Other Proposed Projects: UMTP (430 Mb/d) Centennial (200 Mb/d)

Mariner East 2X (100/250 Mb/d)


Mariner East 1 (~30 Mb/d C3)

14 BENPOSIUM 2016

Northeast C3+ entirely reliant on truck and rail takeaway until Mariner East 2

Mariner East 2 (275/450 Mb/d)

Other Proposed Projects: UMTP (430 Mb/d) Centennial (200 Mb/d)

Mariner East 2X (100/250 Mb/d)


Mariner East 1 (~30 Mb/d C3)

0

200

400

600

800

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mb/

d

Northeast C3+ Production, Pipeline Takeaway

PADD 1 C3+ Production Mariner East 1Mariner East 2 Mariner East 2XUTOPIA East UTOPIA WestPossible Mariner Expansions

Excess volumes moved by truck and rail


15 BENPOSIUM 2016

Takeaway capacity more than sufficient in Eagle Ford

0

500

1000

1500

2000

2500

2011 2013 2015 2017 2019 2021

Mb/

d

Raw mix production–Eagle Ford

2Q2015 2Q2016 Pipeline capacity

0

200

400

600

800

1000

1200

1400

2011 2013 2015 2017 2019 2021

Mb/

d

Raw mix production–Eagle Ford

2Q2015 2Q2016Source: Bentek Market Call: North American NGLs

16 BENPOSIUM 2016

0

500

1000

1500

2000

2500

3000

2011 2013 2015 2017 2019 2021

Mb/

d

Raw mix production—Permian

2Q2016 2Q2015 Pipeline capacity

0100200300400500600700800

2011 2013 2015 2017 2019 2021

Mb/

d

Raw mix production—Permian

2Q2016 2Q2015

Takeaway capacity more than sufficient in Permian

Source: Bentek Market Call: North American NGLs

BENPOSIUM 2016

DEMAND OUTLOOK

18 BENPOSIUM 2016

Petrochemicals and exports will drive long-term NGL demand growth

Demand Share 2015 3.7 MMb/d Petchem

46%

Exports 26%

Gasoline 17%

Demand Share 2021 4.8 MMb/d

Petchem 48%

Exports 29%

Gasoline 13%

Res/Comm 10%

Source: Bentek Market Call: North American NGLs, 2Q2016

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2011 2013 2015 2017 2019 2021

MM

b/d

NGL Demand Components

Petchem

Exports Motor Gasoline

Res/Comm

Res/Comm 12%

BENPOSIUM 2016

PETROCHEMICAL FEEDSTOCK DEMAND

20 BENPOSIUM 2016

Ethylene Production Margins and Feedstock Optimization

-20-10

01020304050607080

¢/lb

Ethylene Production Margin 5-day moving average

Ethane Propane Butane Lt NaphthaSource: Bentek Daily NGL Market Monitor

Emergence of US Shale “Ethane Advantage”

Ethane Petchem Renaissance Crude collapse

Feedstock competition

21 BENPOSIUM 2016

US Cracker Feedslate: Shift from Ethane/Naphtha

Source: Jacobs Consultancy’s Hodson Report

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

US Steam Cracker Feedslate

Ethane Propane Butane Naphtha Gasoil

22 BENPOSIUM 2016

0

100

200

300

400

500

600

700

800

900

1000

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000

Prod

uctio

n C

ost (

$/M

T)

Cumulative Capacity ('000 MT)

Saudi Ethane

Iran Ethane US Ethane

US E/P Mix

WE Naphtha

SE Asia Naphtha NE Asia Naphtha

ME Ethane

CTO/MTO

Ethylene production cost curve highlights US advantage from shale gas ethane

Source: Platts Petrochemical analytics

23 BENPOSIUM 2016

Eight greenfield crackers under construction add 535 Mb/d to US ethane demand

Total Petrochemicals, TX

Williams Geismar 2, LA

Badlands NGL, ND

PTT Global Chemical & Marubeni, OH

ChevronPhillips

ExxonMobil

Dow Sasol

Odebrecht/ Braskem, WV Shell, PA

Under Construction 535 Mb/d ethane – 2019

Formosa Plastics

Oxy

Axiall & Lotte

Proposed

Formosa Petrochemical, LA

Shintech

Planned

24 BENPOSIUM 2016

Ethane 7, 12%

Ethane/ Propane 23, 38%

Flexible 31, 50%

2015 Ethylene Capacity by Feed Type (Blbs/yr, %)

Current US cracker capacity can take multiple feeds but is running ethane as the primary feed

Source: Jacobs Consultancy Hodson Report

Total 62 Blbs/yr

Ethane 25, 29% Flexible

32, 38%

2021 Ethylene Capacity by Feed Type (Blbs/yr, %)

Ethane/ Propane 28, 33%

Total 85 Blbs/yr

25 BENPOSIUM 2016

Tighter ethane market leads legacy steam crackers to switch to naphtha, LPG in 2017-2019

Source: Jacobs Consultancy Hodson Report

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Legacy Cracker Feedslate

Ethane Propane Butane Naphtha GasOil

Source: Bentek, Jacobs Consultancy Hodson Report

26 BENPOSIUM 2016

Changing dynamic of US crackers : ethane as a % feedslate increases further

0

500

1,000

1,500

2,000

2,500

Mb/

d

US Petrochemical Feedstock Demand

Ethane Propane N Butane Naphtha

History Forecast

Source: Jacobs Consultancy Hodson Report Source: Bentek, Jacobs Consultancy Hodson Report

27 BENPOSIUM 2016

Lower ethane utilization due to market tightness, move to heavy feed

0%

10%

20%

30%

40%

50%

60%

70%

80%

2012 2014 2016 2018 2020

2Q2016 Feedslate forecast

Ethane PropaneButane Naphtha

0%

10%

20%

30%

40%

50%

60%

70%

80%

2012 2015 2018 2021

2Q2015 Feedslate forecast

Ethane PropaneButane Naphtha

28 BENPOSIUM 2016

Feedstock switching decreases ethylene availability by 5% vs. 2Q2015 forecast

0

2

4

6

8

10

12

14

16

0102030405060708090

2005 2007 2009 2011 2013 2015 2017 2019 2021

Co-

prod

ucts

(Blb

s/yr

)

Ethy

lene

(Blb

s/yr

)

Steam cracker product forecast (2Q2015-solid, 2Q2016-dashed)

Ethylene Propylene CC4 Butadiene

29 BENPOSIUM 2016

On-purpose propylene production no longer favored in US markets

0

200

400

600

800

1000

1200

1400

1600

1800

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

$/M

T

US Propane - Propylene Margin

Margin Propylene Poly Grade Propane-Mont Belvieu


30 BENPOSIUM 2016

On-purpose propylene production no longer favored in US markets

Current and Announced US PDH Projects

Company Location Capacity (MMlbs/yr)

C3 Demand (Mb/d)

Start-up Date (ISD)

Flint Hills Harris, TX 1,450 26 Completed Dow Chemical Freeport, TX 1,650 29 Completed Enterprise Mont Belvieu, TX 1,650 35 1Q2017 Formosa Plastics Point Comfort, TX 1,320 23 TBD

Ascend/C3 Petrochemicals Brazoria, TX 2,205 39 TBD REXtac Odessa, TX 660 12 TBD Sunoco Logistics Marcus Hook, PA TBD TBD TBD Total 8,935 164 Total Expected 4,750 90

Source: Bentek NGL Facilities Databank

BENPOSIUM 2016

ETHANE

32 BENPOSIUM 2016

Increasing premium over natural gas results in more ethane recovery

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

-0.60

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16

Mb/

d

$/M

MB

tu

Ethane Price Spread vs. Ethane Production (Recovery)

EIA Ethane Production Mt. Belvieu Ethane - Henry Hub

Source: EIA, Platts

Record EIA ethane production

33 BENPOSIUM 2016

Reduce ethane rejection based on T&F to satisfy demand

Bakken Lateral

ATEX

Conway

Mont Belvieu

14 ¢/gal

11 ¢/gal

Williston

SW Marcellus/Utica West

Rockies

East Rockies

7 ¢/gal

9 ¢/gal

23.5 ¢/gal MAPL Sterling

Overland Pass

Current Mont Belvieu Ethane Price: 20 ¢/gal $-

$0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90

-

100

200

300

400

500

600

700

Mb/

d

Ethane Rejection by Region

Williston PADD 1PADD 4 PADD 2Source: Bentek Market Call: North American NGLs, 2Q2016

34 BENPOSIUM 2016

Ethane fractionation spread widens as price rises to incentivize recovery

Source: Platts, Bentek

Ethane Fractionation Spread

= Transportation

& Fractionation

Local natural gas

price - -

-8-6-4-202468

1012

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

$/M

MB

tu

Marcellus/Utica Williston Rockies Permian Eagle Ford

Mt Belvieu Ethane

Price

BENPOSIUM 2016

PROPANE

36 BENPOSIUM 2016

Lower propane export forecast due to petrochemical demand, lower supply growth – to utilize 52% of export capacity in 2021

0

300

600

900

1,200

1,500

1,800

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Mb/

d

Propane Supply - Demand

Petchem (Steam Cracker) Petchem (On-purpose)Res/Comm Heating ExportsSupply


BENPOSIUM 2016

BUTANES AND NATURAL GASOLINE

38 BENPOSIUM 2016

0

200

400

600

800

1,000

Mb/

d

Butane Supply- Demand Balance

Exports Octane EnhancementRefinery Net Inputs IsomerizationPetchem (On-purpose) Petchem (Steam Cracker)Supply

Butanes driven by blending and isomerization (octane enhancement) demand


020406080

100120

Mb/

d

Isomerization Demand

1Q2016 2Q2016

39 BENPOSIUM 2016

0

100

200

300

400

500

600

2011 2013 2015 2017 2019 2021

Mb/

d

Natural Gasoline Supply- Demand

Petchem Refinery Net InputsRenewable Fuels ExportsSupply

0

250

500

750

Mb/

d

Western Canadian Diluent Demand

US Natural Gasoline ExportsWC Pentanes PlusTotal Diluent Demand

Natural Gasoline –Less supply growth means less diluent available for exports to Canada


BENPOSIUM 2016

PRICE OUTLOOK

41 BENPOSIUM 2016

Sustained price increases on rising demand

020406080

100120140160180200

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Cen

ts/g

allo

n

NGL Prices at Mt. Belvieu

Ethane Propane N Butane Isobutane Natural Gasoline

42 BENPOSIUM 2016

Widening NGL fractionation spreads indicate better NGL uplift to producers

-4-202468

101214

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

$/M

MB

tu

Marcellus/Utica Williston Rockies Permian Eagle Ford


NGL Fractionation Spread

= Weighted Mt Belvieu NGL Price

Transportation &

Fractionation

Local natural gas

price - -

43 BENPOSIUM 2016

Key Takeaways

• Slower NGL production growth as gas, oil align to new price regime • Production growth in Northeast is constrained to infrastructure • Low growth in other regions in near-term

• Rapid demand growth in near-term causes markets to tighten • Exports tightened propane market in early 2016 • Petrochemical demand will tighten ethane in 2017 and beyond

• Tighter ethane leads to short-term demand shift in petrochemicals until infrastructure can relieve constraints

• Propane demand competition between petrochemicals and exports • Natural gasoline predominantly moves to Canada for oil sands diluent

44 BENPOSIUM 2016

THANK YOU

Andrew Neal NGL Analyst T: 720.264.6616 [email protected]

mailto:[email protected]

45 BENPOSIUM 2016

US Ethane Rejection as Methane Equivalent (1010 Btu/cf)

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Gas

equ

ival

ent (

Bcf

/d)

Rejection Gas equivalent lost from peak rejection


46 BENPOSIUM 2016

0

10

20

30

40

50

60

70

0

20

40

60

80

100

120

Jan-15 May-15 Sep-15 Jan-16 May-16

Cen

ts/g

al

MM

bbls

Propane stocks, prices

Propane Stocks Mont BelvieuConway

0

200

400

600

800

1000

1200

2013 2014 2015 2016

Mb/

d

US LPG Exports

EIA (waterborne)

Record LPG exports are not sustainable as stocks decline and prices respond

Record LPG Export: 962 Mb/d Stocks drawn 40%

Prices rose 22%

Source: EIA Weekly Petroleum Status Report, Platts Source: Platts Analytics, EIA

47 BENPOSIUM 2016

0

10

20

30

40

50

60

70

J F M A M J J A S O N D

MM

bbl

PADD 3 stocks

5-year range 5-year average2015 2016

0

5

10

15

20

25

30

35

J F M A M J J A S O N D

MM

bbl

PADD 2 stocks

5-year range 5-year average2015 2016

Propane stock draws drove price action at storage hubs

Source: EIA Weekly Petroleum Status Report

48 BENPOSIUM 2016

Ethane fractionation spread widens as price rises to incentivize recovery


NGL Fractionation Spread

= Weighted Mt Belvieu NGL Price

Transportation &

Fractionation

Local natural gas

price - -

-10

-5

0

5

10

15

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

$/M

MB

tu

Marcellus/Utica Committed (Absolute) Marcellus/Utica UncommittedRockies WillistonEagle Ford Permian

49 BENPOSIUM 2016

-1

-0.5

0

0.5

1

1.5

2

2.5

0

10

20

30

40

50

60

70

J F M A M

MM

bbl

PADD 3 stocks

2016 Mo2-Mo1

-1

-0.5

0

0.5

1

1.5

2

2.5

14

16

18

20

22

24

26

J F M A M

Cen

ts/g

al

MM

bbl

PADD 2 stocks

2016 Mo2-Mo1

Propane stock draws drove activity on forward prices at storage hubs

Source: EIA Weekly Petroleum Status Report, Platts

50 BENPOSIUM 2016

PRODUCERS LIKELY TO RELY ON DIMINISHING BACKLOG, BUT WILL NEED HIGHER PRICES TO DRILL AGAIN

0

500

1,000

1,500

2,000

2,500

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

# of

act

ive

rigs

# of

DU

Cs

Well Backlog through History

Directional Horizontal Vertical Rig Count

51 BENPOSIUM 2016

Ethane Propane Butane Naphtha

2005-2011

2012

2013

2014

2015

US feedstock switching

52 BENPOSIUM 2016

Propane price re-links to crude on exports

30%

35%

40%

45%

50%

55%

60%

65%

70%

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Prop

ane/

Bre

nt

Pric

e pe

r gal

lon

Propane price forecast

Propane 27-May Propane (% crude) 27-May %

Source: Platts, Bentek Market Call: North American NGLs 2Q2016

53 BENPOSIUM 2016

INCREMENTAL NORTHEAST ETHANE WILL BE DISCONNECTED FROM USGC DEMAND

0100200300400500600

Mb/

d

Northeast Production vs. Takeaway

Northeast Ethane SupplyMariner WestMariner EastATEX

Mariner East 1 (70 Mb/d)

Source: Bentek

54 BENPOSIUM 2016

Pipeline expansions to expand capacity to Texas or exports

Proposed NGL Pipelines

Pipeline Owner/ Operator Min.

Capacity (Mb/d)

Max Capacity

(Mb/d) Origin Destination Start Date

Lone Star Express Phase I Lone Star NGL 375 495 Permian Bosque County, TX 2Q2016

Lone Star Express Phase II Lone Star NGL 495 495 Bosque County, TX Mt. Belvieu, TX 3Q2016

NuStar & PMI LPG NuStar TBD TBD Mont Belvieu, TX; Corpus Christi, TX

Neuvo Laredo; Burgos-Reynosa,

Mexico 4Q2017

Cornerstone Marathon Petroleum Corp. 40 40 Harrison, OH Canton, OH 4Q2016

Mariner East 2 MarkWest & Sunoco 275 450 Houston, PA Marcus Hook, PA 3Q2017

Utopia East Kinder Morgan & NOVA Chemicals 50 75 Harrison County, OH Ontario, Canada 1Q2018

Utopia West Kinder Morgan 95 95 Harrison County, OH Kankakee County, IL 3Q2018

UMTP Kinder Morgan & MarkWest 430 430 Tuscarawas County, OH Mont Belvieu, TX TBD

Mariner East 2X Sunoco Logistics 100 250 Houston, PA Marcus Hook, PA TBD

Centennial MPLX and Enterprise 100 TBD Bourbon, IL Beaumont, TX TBD

55 BENPOSIUM 2016

US PRODUCERS LIKELY TO COMPLETE WELLS ON HIGHER PRICES, NEED TO DRILL MORE WELLS

0%10%20%30%40%50%60%70%80%

Internal Rates of Return (IRR)

July 2014 1/2 Cycle April 2015 1/2 Cycle 2April 2016 1/2 Cycle IRR April 2016 1/4 Cycle IRR

April 2016 Price Assumptions: Gas = average of the 12 month forward curve for each regional pricing point (range $1.56 - $2.44/Mcf) Oil = 12 month forward average WTI +/- differential (range $29.69- $42.21/barrel) (WTI Avg $48) NGLs = weighted average $/barrel, 12-mo forward average Mt. Belvieu prices (range $17.24- $20.82/barrel) 55

56 BENPOSIUM 2016

US LPG exports to Mexico seasonal, but increasing

Source: Secretaría de Energía, Bentek

020406080

100120140160180

Mb/

d

US LPG Exports to Mexico

Source: EIA, Bentek

57 BENPOSIUM 2016

Historical ETHYLENE Production Costs

-

200

400

600

800

1,000

1,200

1,400

Jun-

14Ju

l-14

Aug

-14

Sep-

14O

ct-1

4N

ov-1

4D

ec-1

4Ja

n-15

Feb-

15M

ar-1

5A

pr-1

5M

ay-1

5Ju

n-15

Jul-1

5A

ug-1

5Se

p-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16Fe

b-16

$/MT

WE Naphtha

SE Asia Naphtha

NE Asia Naphtha

US Ethane

US E/P

CTO/MTO

58 BENPOSIUM 2016

Ethane, HH forecast suggest advantage to importers of NE volumes

0

10

20

30

40

50

60

2014 2015 2016 2017 2018 2019 2020 2021

Cen

ts/g

allo

n

Ethane (MB) Ethane (HH)Ethane (MB forecast) Ethane (HH forecast)

59 BENPOSIUM 2016

Adrift in a Sea of Ethane: US waterborne ethane exports began in March 2016

Marcus Hook – March 2016

Morgan’s Point – 3Q 2016

Petchem Company INEOS Borealis SABIC Reliance Braskem

Ship Owner Evergas Navigator Gas Ocean Yield Mitsui Gaschem

0100200300400

Mb/

d

US Ethane Exports

Ship PipelineSource: Bentek Market Call: North American NGLs 2Q201

60 BENPOSIUM 2016

New petrochemical projects are the largest source of incremental ethane demand

0

500

1,000

1,500

2,000

2011 2013 2015 2017 2019 2021

Mb/

d

Ethane Supply - Demand

RejectionExportsPetchem (Steam Cracker)Supply


Petchem 61%

Rejection 35%


Petchem 78%

Exports 17%

Rejection 5%

Source: Bentek Market Call: North American NGLs, 2Q2016

61 BENPOSIUM 2016

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Mb/

d

Williston NGL production, pipeline capacity

C3+ C2Capacity (total) Capacity (ethane)Capacity (ethane on Bakken Lateral)

NGL pipeline capacity out of the Williston could be constrained with continued ethane recovery

C2 flows on Bakken Lateral to meet spec

Source: Bentek Market Call: North American NGLs

62 BENPOSIUM 2016

2015 2016 2017 2020

106 49%

103 47%

2015 2016 2017 2020

46 54%

30 32%

3 3%

18 17%

Ethane rejection decreases in all regions in 2017 except Northeast Ethane Rejection

relative to Gas Plant Production (Mb/d, %)

PADD 4

PADD 3

PADD 1 including Ohio


2015 2016 2017 2020

153 55%

112 37%

162 42%

92 18%

2015 2016 2017 2020

Ethane RejectedEthane Recovered

2015 2016 2017 2020

147 16%

80 10%

153 67%

156 69%

86 39%

PADD 2

Williston

-

100

200

300

400

500

600

700

Mb/

d

Ethane Rejection by Region

Williston PADD 1 PADD 4 PADD 2 PADD 3

ngl supply/demand demand projects arrive as supply … · presentation only for your personal use....

Documents