ONEOK Partners could earn $200 million more from ethane transportation and fractionation services without any additional investment if producers increase recoveries of the NGL from the gas stream, the company said on May 4.
Roughly a third of all ethane on the midstream operator's system is being rejected, or left in the gas stream, due to its low price, company executives said in a quarterly earnings call.
They said the company could transport an additional 140,000 barrels per day (bbl/d) of ethane on its systems from the U.S. Midwest, 35 Mbbl/d from the Williston Basin and 10 Mbbl/d from the Permian if recoveries pick up.
Ethane, the lightest hydrocarbon in the NGL complex, is primarily used to make petrochemicals. It has been rejected at an unprecedented rate since 2013, executives said, as a supply overhang severely weakened its value.
In mid-December, ethane at the Mont Belvieu, Texas, NGL hub fell to just 12.75 cents per gallon, its weakest level in more than two decades, according to Thomson Reuters Eikon data.
Prices have since rebounded to more than 19 cents per gallon amid new opportunities to export the light hydrocarbon and expectations for increased petrochemical demand from new facilities slated to come on line next year.
ONEOK expects to see an additional 93 Mbbl/d of incremental petrochemical demand for ethane during the second quarter of this year to the first quarter of 2017, which could jump to 308 Mbbl/d by the second quarter of 2017 through the third quarter of that year.
Gathered NGL volumes on the company's system rose by 6% over the same quarter later year, while fractionated volumes increased by 16%, driven by new gas processing plant connections in the Williston Basin of North Dakota and U.S. Midwest, the company said.
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