Despite natural gas liquids (NGL) prices remaining flat throughout the month, the sharp drop in natural gas prices helped support frac-spread margins in March at both Conway and Mont Belvieu hubs.

The price of natural gas fell 24% to $1.79 per million Btu (MMBtu) at Conway and 20% to $1.89 per MMBtu at Mont Belvieu. These prices were among the lowest at both hubs in a decade, due to extremely mild winter and high production rates that led to large storage levels.

The drop in NGL prices was minimal compared to dry gas prices because of the relationship of NGLs to crude prices, as well as the continued strength of the North American petrochemical market. Petrochemical demand remains strong as scheduled maintenance caused shutdowns at several ethane crackers in the U.S.

Once these facilities come back online, prices should experience a slight rebound before several fractionators are taken down for maintenance. However, once these cracker and fractionator turnarounds are completed, Mont Belvieu ethane prices and margins should experience dramatic improvements.

march frac spread

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.