Low NGL Prices Perplex Producers, but Chemicals Industry Reaps Bargains, an Industrial Info News Alert

SUGAR LAND, TX--(Marketwired - Jan 27, 2016) - Researched by Industrial Info Resources (Sugar Land, Texas) -- The epic boom in North American shale gas development has unleashed a rapid growth in facilities related to the production and processing of natural gas liquids (NGL), with more than $27 billion worth set to begin construction in the U.S. and Canada this year. But with NGLs such as ethane, propane and butane hitting the market in large quantities, NGL producers now must face the specter of a supply glut, which likely will continue to suppress prices, and thus margins.

In addition to oversupply, factors keeping NGL prices low include a sharp drop in the price of West Texas Intermediate (WTI) oil in the second half of 2015. In years past, U.S. NGL producers have benefited from export demand whenever domestic demand failed to grow; but inexpensive production is likely to outpace exports in 2016, according to the U.S. Energy Information Administration (EIA).

"The drop in oil prices in the fourth quarter of 2014 took everyone by surprise, yet major projects were still pursued in 2015," said Chris Easley, Industrial Info's Research Manager of North American Oil & Gas. "Drilling rigs were cut to half, but production was over 2014's rates. This year will be different. With another drop in the fourth quarter of 2015, after prices had started to creep up, I feel that we will see more mid-range investment projects put on hold."

To read the complete story, check out the most recent edition of Industrial Info's NavigatIIR online newsletter, which includes information on the declining value of North American construction kickoffs; write-downs and bankruptcies in the Oil & Gas Production Industry; and the newest additions to Industrial Info's growing global family!

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