Natural gas liquids prices trend down since the start of 2012

: U.S. Energy Information Administration based on Bloomberg Financial-reported prices at Mont Belvieu, Texas.
Note: Natural gasoline is the product name used by the spot and futures markets to describe pentanes and hexanes. These are the primary components of pentanes plus, the term used by EIA in its surveys and reports.

Republished: July 29, 2013, 4:15 p.m.: Text was modified to update content.

Daily spot prices for natural gas liquids (NGL)—ethane, propane, normal butane, isobutane, and natural gasoline—have moderated because of a combination of ample supply, flat or moderating demand, export constraints, and domestic infrastructure constraints.

Source: U.S. Energy Information Administration based on Bloomberg Financial-reported prices at Mont Belvieu, Texas.

Ethane spot prices have been below the 2007-to-2012 range for every trading day in 2013 so far. For the first six months of 2013, ethane prices averaged 27 cents per gallon, over 45% below the price for the first six months of 2012. Ethane prices have been low compared with natural gas prices, prompting gas processors to leave it mixed in the natural gas stream, a phenomenon referred to as ethane rejection. Accordingly, net ethane production was down 9% for the first four months in 2013 compared to the same period in 2012, which may be applying some amount of price support.

Ethane demand comes almost exclusively from petrochemical plants, which have significant capital costs and take several years to build. Pipelines or liquefaction facilities to export ethane also face time and cost constraints, but there are projects underway to send ethane to the Gulf Coast to be processed, to export it to Canada, and to liquefy it and export it to Europe. The United States very recently began exporting ethane from the Marcellus shale play to Canada (week of July 21).

Spot propane traded at an average of 89 cents per gallon in the first half of 2013, compared to $1.12 per gallon in the first half of 2012. Since July 2012, propane prices have remained relatively flat. The average propane price for the second half of 2012 was also 89 cents per gallon, the same as for the first half of 2013. Propane is a petrochemical feedstock, similar to ethane, but also serves as an important home-heating fuel. Net propane production was up 8% through April 2013 compared to the same time period in 2012. The price effects of increased production have been mitigated by increased exports. Propane/propylene exports, primarily going to Latin America, are up 42% through April this year versus the same period last year.

Normal butane and isobutane spot prices have recently moved together, falling by 22% and 23%, respectively, in the first half of 2013 compared with the first half of 2012. By the end of June 2013, both products were near or below the 2007-to-2012 range for this period. Since both normal butane and isobutane are important blendstock for motor gasoline, lower-than-usual gasoline demand may be reducing demand for these products and applying downward pressure on their prices. Increased supply may also be pushing prices down. Net production levels of normal butane and isobutane were up 9% and 12%, respectively, for the first four months of 2013 compared to the first four months of 2012.

Natural gasoline prices fell by about 8% in the first half of 2013 compared to the first half of 2012, averaging $2.14 per gallon, down from $2.34 per gallon. Natural gasoline prices have remained highly correlated to movements in crude oil prices in recent months, unlike the prices of other NGL products. Production of natural gasoline (which is referred to as pentanes plus by producers and in EIA reports) is up about 8% so far this year compared to the same period last year. Natural gasoline can be used as a diluent (a diluting agent) for heavy crude oil, or as a blendstock for motor gasoline (regular 10% ethanol blend as well as high-percentage ethanol blends known as E85).

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Edwardsport IGCC Project Start Marks Delayed, Costly Milestone for Coal Generation

Duke Energy's long-awaited but controversial and cost-overrun-plagued integrated gasification combined cycle (IGCC) coal plant began commercial operation on June 7 in Knox County, Ind.

The 618-MW advanced technology coal gasification plant—the first major new coal-fired power plant built in Indiana in more than two decades—is one of the "world's cleanest," Duke energy said in a statement.

Duke Energy received approval from the Indiana Utility Regulatory Commission (IURC) to build the IGCC facility in 2007. The plant was built on the site of a coal plant built in 1918 that is no longer operational. Three other operating units built there between 1944 and 1951 were retired in 2011.

The plant is expected to build up to its long-term level of availability over the next 15 months. Edwardsport uses a Clauss sulfur removal system, activated carbon beds for mercury removal, and a power block tailored for reducing nitrogen oxides.

The company broke ground on the project in June 2008, anticipating that it would use 1.5 million tons of coal per year to generate 630 MW when opened in 2012. But Duke’s $3.4 billion project has faced cost overruns and delays, as well as legal challenges and an ethical scandal. The company, which last year completed a $32 billion merger with Progress Energy, had originally estimated project costs at $1.985 billion.

A 2012 settlement proposed to end five years of litigation involving the Indiana Office of Utility Consumer Counselor, the Duke Energy Industrial Group (which consists of six of the utility’s large industrial customers), Nucor Steel, and Duke Energy put a $2.595 billion cap on project costs to be included in electric rates. The IURC in December 2012 ruled that Duke Energy would bear all cost overruns, not its customers.

The Edwardsport project’s start marks a noteworthy milestone for IGCC technology, which, according to the National Energy Technology Laboratory (NETL), has a number of environmental benefits, including carbon capture. IGCC also has the ability to use a variety of feedstocks and has a high efficiency relative to other power generation technologies.

Yet only a handful of IGCC power plants exist in the U.S., including the 1999-commissioned Wabash River Power Station in West Terre Haute, Ind.; the 1996-commissioned Polk Power Station in Tampa, Fla.; and Piñon Pine in Reno, Nev. The Wabash plant cost $438 million, including construction and operation during a four-year-long demonstration period. The Polk plant cost $303 million, including all equipment procurement, installation, and operation throughout its four-year initial demonstration. The Department of Energy’s Clean Coal Technology Demonstration Program in 2003 also completed the 107-MW Piñon Pine IGCC project in Reno, Nev., at a cost of $335 million.

Southern Co. is currently building a 583-MW lignite-fired IGCC plant in Kemper County, Miss. That project is slated to go online in mid-2014, but like Edwardsport, it has seen cost overruns of nearly $1 billion.

Two other U.S. IGCC projects are also under development: Summit Power’s Texas Clean Energy Project and SCS Energy’s Hydrogen Energy California. Both plan on coproduction of urea fertilizer and the sale of CO2 for enhanced oil recovery.

Around the world, ELCOGAS'  Puertollano IGCC plant in Spain was first fired with syngas in 1998. Total capital cost for that plant, neglecting interest during construction, worked out to $1,850/kW in 1991 dollars, according to the DOE. The Netherlands also has a 253-MW IGCC plant that began service in 1994 as a demonstration facility in Buggenum. China's Huaneng Group demonstrated successful startup of its GreenGen IGCC plant in Tianjin City in April 2012.

Several IGCC plants are in the pipeline worldwide, however, including the highly ambitious Energy Power Research Centre (EPRC) of the Chinese Academy of Sciences clean coal energy demonstration project in Jiangsu Province. That project intends to include a 1,200?MW IGCC power plant built alongside two 1,300?MW ultrasupercritical (USC) pulverized coal power plants and a 10?MW solar unit to maximize heat integration between the IGCC, USC, and solar heat collector to improve efficiency.

See pictures of the Edwardsport facility here.

Sources: POWERnews, COAL POWER, NETL, Duke Energy

—Sonal Patel, Senior Writer (@POWERmagazine, @sonalcpatel)

NOTE: This story was originally published on June 12

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