Five things worth knowing about natural gas liquids
Taking stock of Alberta’s vapours
Natural gas liquids (NGLs) are to the petroleum industry what the bass player is to a rock band. While they might not attract the attention that oil or natural gas do, they are an essential element of the fossil fuel mix.
NGLs, which include ethane, propane, butane, and pentane, are used for a variety of things, such as serving as feedstock to make products like hockey helmets and grocery bags. And as natural gas prices remain in the doldrums, the liquids are an increasingly valuable revenue stream for producers.
What follows are some key points about the NGL landscape in Alberta culled from the Energy Resources Conservation Board’s (ERCB) 2012 energy reserves and supply and demand outlook.
The remaining established raw reserves of NGLs are sizeable – 327.7 million cubic meters. But the amount the ERCB expects to be extracted is actually 254.5 million cubic meters. Total remaining reserves of extractable NGLs have decreased by 2.6 per cent compared to 2010 because of the decline in conventional natural gas production.
Industry is focusing on developing liquids-rich gas pools because NGL prices track crude oil prices. The ERCB found that ethane production increased by 2.9 per cent in 2011 over 2010. Propane, butane and pentane production declined by 0.5, 0.3 and 3.2 per cent, respectively, in 2011 over 2010.
Off-gas is a byproduct of bitumen processing rich in vapors that condense into petrochemical building blocks. Williams Companies Inc. has received approval to build a pipeline that could transport 19,750 cubic meters per day of off-gas liquids from oil sands producers to its fractionation plant in Redwater.
Midstream companies are reacting to the expected increase in liquids-rich natural gas production by either building new liquids extraction facilities or expanding existing extraction capacities. Pembina Pipeline Corporation recently completed the construction of a “deep cut” facility at its existing Musreau gas processing facility and a 10-kilometer pipeline connecting Musreau to its Peace pipeline.
Pentanes stand out as a hot commodity because they are used as a diluent in the blending of heavy crude and bitumen. The ERCB sees demand for pentanes as diluent increasing from 46.8 thousand cubic meters per day in 2011 to 136.8 thousand cubic meters by 2021.