Insight
Couples counseling required – are Conway and Mont Belvieu NGL prices on a permanent break?
Report summary
US shale resurgence is causing concurrent basis “blowouts” at US crude, natural gas, and NGL hubs as midstream infrastructure plays catch-up. More importantly for NGL market participants, southbound NGL flows from Conway, KS to Mont Belvieu, TX seem to be hitting a snag. The Mont Belvieu vs. Conway price differential for E/P mix and LPG have widened by 6 c/gal - 10 c/gal over the last couple of months. Differentials this wide were last seen in late 2012/13. The Conway hub serves as a funnel as NGLs from different basins make their way to Mont Belvieu to be fractionated or sold as purity products. US NGL production excluding PADD 3 is expected to grow 300 kb/d year to year exit, further testing Conway’s ability to funnel NGLs to the US Gulf Coast. In this insight, we discuss the factors that are driving the current differential blowout, and the impact of NGL production growth to the Conway - Mont Belvieu corridor.
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