By the way, investors should not focus on dry gas only; wet gas is not
all made the same, the majority of the nation wet gas is ethane, ethane
presents 45% of NGL production in all wet basins and over 62% in the
Marcellus
(http://www.aogr.com/index.php/magazine/cover-story/infrastructure-projects-connect-marcellus-shale-to-ethane-ngl-markets).
Ethane prices have declined by 62% in Mont Belvieu and by 91% in
the Mid-west, (check attachment) it is simply not profitable anymore to
produce wet gas with ethane down to such levels and NG in the $2s,
production is going to slow down in the wet gas areas as well:
Ethane will take longer time to recover, since it is
only used is in petrochemicals; there is significant ethane cracking
capacity coming but not until 2014 to 2017. Propane on the other hand
was hit because of the 4th warmest winter on record last year; with a normal winter and the expected tripling of
US propane export capacity between Q4 this year and Q2 next year,
propane prices should recover. While Butane, Isobutane and Pentane are
still very profitable.
With this in mind,
Marcellus is the least attractive wet basin to invest in right now;
anyone looking to invest in NGLs should stay away from areas with high
ethane presence.
Regards,
Nawar
