Natural Gas Liquids: The Unknown Hydrocarbons (CRS Report for Congress)
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| Release Date |
Oct. 26, 2018 |
| Report Number |
R45398 |
| Report Type |
Report |
| Authors |
Michael Ratner |
| Source Agency |
Congressional Research Service |
Summary:
The U.S. oil and natural gas industries have gone through a "renaissance" of production. Technological improvements in hydraulic fracturing and horizontal drilling have unlocked enormous oil and natural gas resources from tight formations, such as shale. In conjunction with the rise in oil and natural gas production, U.S. production of natural gas liquids has also increased.
Natural gas liquids (NGLs) are a group of hydrocarbons that includes ethane, propane, butane, isobutane, and natural gasoline. NGLs are differentiated from one another by the number of carbon atoms in their molecular chain. They have a wide variety of applications from specialized fuels (e.g., propane, butane) to petrochemical feedstocks for making products like plastic and fertilizers.
NGLs are extracted as byproducts in the production of natural gas and oil. Of these two sources, natural gas processing is by far the most significant, contributing over 90% of NGL production in 2016. When extracted from a well, natural gas is mixed with other hydrocarbonsâmany of them NGLsâand various impurities. In order for the natural gas to be marketable, the NGLs and impurities must then be removed. The separated NGLs may then be discarded or undergo further processing in order to be sold. The relatively high value of NGLs combined with the rise in natural gas production has led to a rapid rise in NGL production as it has become more economical for processors to sell the separated NGLs.
The United States is by far the largest producer of NGLs in the world, accounting for more than a third of global production. Domestic NGL production has more than doubled in the ten years since 2008, reaching 1,381 million barrels in 2017. Ethane and propane are the two most prevalent NGLs, and together they account for more than 70% of all domestic production. As NGL production has risen, it has increasingly outstripped domestic consumption, which has remained relatively flat since 2010 (when EIA began to collect data). Consequently, 37% of U.S. NGL-production was exported in 2017. Canada, Japan, and China are currently the largest importers of U.S. NGLs.
The rapid growth of NGL production has also outpaced the development of supporting infrastructure. NGLs are expensive to transport and handleârequiring high pressures and low temperatures to keep them in a liquid state for shipment. A network of processing plants and distribution methods is necessary to move NGLs from well to market. Moreover, the surplus of NGLs brought upon by domestic production growth is increasing the need for infrastructure to aid in the exportation of NGLs internationally and the storage of NGLs domestically.
While energy production and consumption have been issues of interest to Congress for decades, the supply, consumption, environment, and trade of NGLs has become a topic of congressional interest more recently. Infrastructure, production, safety, and economics are all critical to the NGL market and may be of interest to Congress. Over 30 bills that relate to NGLs have been introduced in the 115th Congress. Proposed legislation has targeted issues related to NGL storage, infrastructure permitting, data collection, and safety, among others.
