With NGLs Flowing, Some States Struggle with the Glut

A gas rig in Wetzel County, West Virginia. (image: kgaddis85 via flickr.com)

U.S. gas fields are pumping out more natural gas liquids (NGLs) than ever before, and some states are struggling to handle the haul.

West Virginia has become a net exporter of propane — though the state is a modest consumer. In addition, ethane has become so abundant that production may need to be curtailed, according to The Register-Herald in Beckley, W. Va. And to address the bounty of NGLs — and consider options for economic development related to the liquids — the governor, Earl Ray Tomblin, has plans to convene a task force this week.

Meanwhile, Conway, Kan., which is the country’s second largest propane hub, has recently landed in a similar spot. The processing infrastructure has been oversupplied by liquids flowing out of Wyoming and the Rockies, which has softened prices.

Last week, the Energy Information Administration reported NGL output topped two million barrels a day in 2010, setting a record.

Though it may be the best kind of problem, and West Virginia is hoping the flood of NGLs rejuvenates the state’s chemical industry. Corky DeMarco, the executive director of the West Virginia Oil and Natural Gas Association told the Register-Herald:

Because of the natural gas hydrocarbons, and especially ethane, we are being looked at very intensely as a location to site an ethane cracker or two … and its jobs, jobs, jobs. These are good-paying jobs. They are probably in the neighborhood of $60,000-a-year jobs, working for these chemical industries.

DeMarco added that four companies were scouting locations for possible processing plants. And he said if producers didn’t find an outlet for the ethane, they may be forced to slow down production.

Along with propane and ethane, natural gas liquids include butane and iso-butane.