(Note: This is not this week’s frac spread. Next week’s issue of Gas Processors Report will feature the January frac spread.)

Despite increased natural gas liquid (NGL) prices, higher natural gas feedstock prices helped to push down frac spread margins in most cases in the month of December.

The one exception to the rule was for propane, which experienced an 11% increase in margin at Conway and a 4% margin increase at Mont Belvieu throughout the month.

The largest margin decreases were for ethane, which was down 33% at Conway and 28% at Mont Belvieu during the month. The second highest decrease in margin was for C5+, which was down 12% at Conway and 14% at Mont Belvieu during the final month of 2009.

The most profitable NGL to make in December at Conway was C5+ at US$1.14 per gallon (/gal) while the highest frac spread margin at Mont Belvieu in the same time period was iso-butane at $1.10/gal. The second-most profitable NGL to make at Conway was iso-butane at $1.09/gal, while C5+ was the most profitable NGL to make at Mont Belvieu at $1.05/gal.

The order at both hubs was the same for the rest of the profitability rankings with butane at $1.05/gal at Conway and 94¢/gal at Mont Belvieu; propane at 80¢/gal at Conway and 75¢/gal at Mont Belvieu; and ethane at 22¢/gal at Conway and 35¢/gal at Mont Belvieu. – Frank Nieto

Current Frac Spread (Cents/Gal)

Date: December 2009

Conway

Change from

Mont

start of month

Belvieu

start of month

Ethane

61.25

73.38

Shrink

38.92

38.72

Margin

22.33

-32.79%

34.66

-27.46%

Propane

133.28

128.05

Shrink

53.77

53.49

Margin

79.51

10.78%

74.56

4.04%

Normal Butane

165.33

154.25

Shrink

60.87

60.56

Margin

104.46

-2.75%

93.69

-9.99%

Iso-Butane

167.33

167.70

Shrink

58.47

58.17

Margin

108.86

-3.89%

109.53

-4.76%

Pentane+

178.83

170.20

Shrink

65.10

64.77

Margin

113.73

-11.65%

105.43

-13.55%

NGL $/Bbl

51.18

7.91%

50.66

3.37%

Shrink

21.44

21.33

Margin

29.74

-6.36%

29.33

-10.56%

Gas ($/mmBtu)

5.87

36.83%

5.84

31.53%

Gross Bbl Margin (in cents/gal)

68.15

-5.89%

68.72

-10.12%

NGL Value in $/mmBtu

Ethane

3.37

-0.68%

4.04

-4.97%

Propane

4.63

20.00%

4.45

13.99%

Normal Butane

1.79

8.84%

1.67

2.74%

Iso-Butane

1.04

7.26%

1.04

5.32%

Pentane+

2.31

1.44%

2.19

-0.58%

Total Barrel Value in $/mmbtu

13.13

8.21%

13.39

3.23%

Margin

7.26

-7.44%

7.55

-11.50%

Price, Shrink of 42-gal NGL barrel based on following: Ethane, 36.5%; Propane, 31.8%; Normal Butane, 11.2%; Isobutane, 6.2%; Pentane+, 14.3%, Fuel, frac, transport costs not included. Conway gas based on NGPL Midcontinent zone, Mont Belvieu based on Houston Ship Channel.

Shrink is defined as Btus that are removed from natural gas through the gathering and processing operation.