Butane

(Normal Butane & Isobutane)
Butane has diverse applications, including as a gasoline blend stock, in the production of petrochemicals, and as a refrigerant. Normal butane and isobutane are separated from natural gas and crude oil refining.

Significant production regions include the United States, Saudi Arabia, and Russia.

Propane

Propane is used for residential and commercial heating and cooking and as a fuel for engines and industrial processes. It is also a crucial feedstock for petrochemical production because of how efficiently it can be converted (cracked) into mostly propylene but also ethylene and butylene. Propane is extracted from both natural gas processing and crude oil refining.

Key production areas include the United States, Canada, and the Middle East.

Ethane

Ethane is primarily used as a feedstock in the petrochemical industry to produce ethylene, a key component in the manufacturing of plastics, antifreeze, and detergents. It is separated from natural gas through a process called cryogenic distillation at processing plants near the oil or gas well that produced it.

The U.S. is the largest producer of ethane in the world, boasting not only vast gas reserves and production but also the infrastructure to process, transport, & convert ethane into useful products.

Shale Gas Revolution

Advances in shale gas extraction have led to a surge in NGL production, particularly in North America, influencing global supply dynamics.

Growing Global Demand

Increasing industrialization and urbanization, especially in emerging markets, are driving higher demand for NGLs. Supply of lower-cost NGLs from the United States has somewhat moved the petrochemical industry away from heavier feedstocks such as naphtha and gasoil.

Technological Advancements

Innovations in extraction, processing, and transportation are enhancing the efficiency and reach of NGL supply chains.

Market Volatility

Price fluctuations in crude oil and natural gas directly impact NGL markets, affecting industries reliant on stable NGL prices. Natural gas price volatility mostly affects ethane, while oil-related prices affect propane and butane more directly.

Pricing Factors

Crude Oil Prices

Since NGLs are by-products of oil and gas production and because substitutes are related to oil and refined products, propane, butane, and natural gasoline prices are closely linked to crude oil prices.

Natural Gas Prices

The availability and cost of natural gas can impact NGLs supply and pricing, especially ethane. 

Seasonal Demand

Heating demand in winter increases propane prices. Butane is affected year-round by gasoline demand, either in the winter when it is used as a blending material or as a feedstock in the creation of high-octane fuels at refineries.

North America

Shale Gas Boom: The shale gas revolution has significantly increased NGL production, particularly in the United States.

Infrastructure Developments: Investments in pipelines and export terminals enhance market connectivity.

Middle East

Major Producers: Countries like Saudi Arabia and Qatar are leading NGL producers with significant export capabilities.

Export Strategies: Focus on expanding market reach in Asia and Europe.

Asia-Pacific

Growing Demand: Industrialization, urbanization, and a move away from burning organic matter, drive increased NGL consumption.

Import Trends: Reliance on imports from North America and the Middle East to meet demand.

Europe

Supply Challenges: Limited local production necessitates high import levels.

Regulatory Impacts: Environmental regulations and energy policies influence market dynamics.