Water hits Kemah, Texas, near Houston, during Hurricane Harvey.
The mighty rains wrought by Tropical Storm Harvey washed away our ability to provide data tables from this week’s Frac Spread feature but the NGL news gathered, as with most news in the past week, was not good.
IHS Markit confirmed on Aug. 30 that Harvey knocked 41% of U.S. ethylene production offline, with total U.S. ethylene consumption capacity at 33%. That is because Texas is home to about 70% of the country’s ethylene production and accounts for 65% of consumption capacity and the Mont Belvieu, Texas, hub was hit with more than 51 inches of rain resulting in severe flooding.
Enterprise Products Partners LP (NYSE: EPD) reported that much of its Mont Belvieu, Texas, fractionation capacity was down and its marine terminals at the Houston Ship Channel and Port of Beaumont were offline.
Targa Resources Corp. (NYSE: TRGP) said Aug. 29 that its Cedar Bayou Fractionator at Mont Belvieu was temporarily out of service. Targa’s Galena Park terminal on the Houston Ship Channel was also still closed and the company said it was working with pipeline operators to move lower volumes of NGL.
Targa also said it was working with is upstream partners on curtailing output at some of its natural gas processing plants until the Mont Belvieu hub had flooding under control and could handle volumes again.
DCP Midstream LLC (NYSE: DCP) said that 600 MMcf/d of its South Central Texas capacity remained shut in. “All other facilities, including our Sand Hills, Southern Hills and other NGL pipelines connecting to the Gulf Coast remain operational,” the company said in a statement.
To give some historical perspective, the price of the hypothetical NGL barrel at Mont Belvieu when Hurricane Ike struck in September 2008 was $57.15. After a sustained rally, last week’s price was less than half that at $27.88.
The barrel at that point had been trending downward since early July when it peaked at $86.74 and it would continue to fall until bottoming out at $21.17 in early December. That price plunge was tied to the Great Recession. A suddenly tighter supply could very well tilt the trend the other way this time.
RBN Energy LLC’s Housley Carr noted that Gulf Coast refinery outages would typically build inventory, but in the post-Harvey situation, the industry will withdraw inventory to compensate for production shortfalls and scheduled imports that couldn’t make it to port.
“The bottom line is that we are in a totally unique market environment, where typical relationships between inventories, production, demand, storage and price are—for a time—out the window,” he wrote.
Storage of natural gas in the Lower 48 increased by 30 billion cubic feet (Bcf) in the week ended Aug. 25, the U.S. Energy Information Administration reported. Last week’s increase, below the Bloomberg consensus of 32 Bcf, is below the five-year average increase of 67 Bcf. In 2016, storage increased by 46 Bcf. The increase resulted in a total of 3.155 Tcf. The figure is 7% below the 3.394 Tcf figure at the same time in 2016 and 0.3% above the five-year average of 3.147 Tcf.