Frac spread margins were a mixed bag in October. Energy commodity prices have grown stagnant as European economies took a downturn, which caused demand for propane exports to level off. In addition, a weaker performance by the U.S. economy also hurt worldwide markets.
The biggest exception to this rule was the performance of crude oil, which resulted in improved C5+ prices at both Conway and Mont Belvieu. The margin at Conway improved 6% based on a $0.22 per gallon improvement in the price at the start of October to the end of the month. The Mont Belvieu price rose $0.10 per gallon in the same time frame, which helped the margin improve 6%.
Nothing symbolized the mixed result for frac spreads in the month of October more than ethane, which had both the largest increase in margin for the month and the largest decrease for the month.
The Conway margin had the largest drop at 27% from September while Mont Belvieu's 10% improvement in margin was the biggest in the month. The market for ethane in North America remains strong as ethylene producers continue to operate at record rates and ethane is by far the most preferred feedstock.
As a result, the Mont Belvieu margin is much stronger because of its close proximity to the North American petrochemical market. The Conway hub's location in the Midcontinent places it at a disadvantage as there is no such market in that part of the country and capacity out of the Midcontinent is tight. Additionally, capacity was further tightened as a result of outages on two natural gas liquids pipelines owned by Enterprise Products Partners LP in September that resulted in a great deal of stranded gas in the region.
Recommended Reading
Enterprise Targets FID for SPOT Project by End of 2024
2024-05-01 - Enterprise Products Partners’ co-CEO disputed capex figures reported in the media regarding its Sea Port Oil Export Terminal.
US Reforms Green Law to Speed Clean Energy, Infrastructure Permits
2024-04-30 - The reforms are the second and final phase of adjustments to the National Environmental Policy Act, or NEPA, by the Biden administration.
Canadian Railway Companies Brace for Strike
2024-04-25 - A service disruption caused by a strike in May could delay freight deliveries of petrochemicals.
Enterprise’s SPOT Deepwater Port Struggles for Customers
2024-04-25 - Years of regulatory delays, a loss of commercial backers and slowing U.S. shale production has Enterprise Products Partners’ Sea Port Oil Terminal and rival projects without secured customers, energy industry executives say.
Report: Crescent Midstream Exploring $1.3B Sale
2024-04-23 - Sources say another company is considering $1.3B acquisition for Crescent Midstream’s facilities and pipelines focused on Louisiana and the Gulf of Mexico.