NGLs Price and Fundamentals

Ethane

In the last 10 years, ethane prices have been mostly determined by natural gas prices. Ethane has the flexibility to either be extracted and sold separately (at Mont Belvieu, TX or Conway, KS) or left within the natural gas stream (commonly called rejection). This flexibility creates a direct link between the two commodities. 

Commentary

December 29: Ethane prices firmed near $0.27/gal heading into 2026, retreating from earlier month highs. Ethane continues to respond primarily to movements in Henry Hub which has traded above $4.00/MMBtu for the majority of December. Looking ahead, ethane pricing is expected to remain supported by winter gas demand.

December 3: Ethane prices have firmed into early December, with prompt values reaching $0.30/gal after holding in the upper-20s for most of the fall. The move higher coincided with a sharp rally in the January Henry Hub contract, which approached and briefly surpassed $5.00/MMBtu during the same period. Because ethane remains the NGL most closely tied to natural gas fundamentals, stronger gas pricing likely contributed to the firmer tone in early December.

November 14: Ethane prices eased slightly in November but remain well-supported as strong frac spreads continue to encourage higher recovery rates. Mont Belvieu ethane slipped about 1¢/gal from October levels. Permian recovery economics remained particularly strong, with deeply discounted Waha gas prices keeping local frac spreads elevated. On the supply side, US ethane production continues to trend higher, driven by associated-gas growth in the Permian and rising GORs in key shale zones. 

October 6: Ethane prices have rebounded from August lows. Mont Belvieu ethane has rallied roughly 8¢/gal since late August, supported by both rising natural gas prices and improving ethane fundamentals. The ethane-to-gas frac spread, which measures the difference between ethane and natural gas on an MMBtu-equivalent basis, has widened, indicating stronger recovery economics. On the demand side, China’s ethane consumption has returned to normal after uncertainty earlier this summer surrounding U.S. export licensing requirements temporarily slowed imports. With those issues now resolved, international demand has stabilized, lending additional support to ethane prices.

July 7: Ethane prices have moved lower since April, mostly due to the decline in natural gas prices. However, in the first half of 2025, ethane at Mont Belvieu experienced disruptions to its own supply and demand balance in the form of exports. Frac spreads between ethane and natural gas have eroded as the domestic US ethane market is expected to be well supplied. A lower frac spread indicates more ethane is likely to be rejected and be accounted for in the natural gas stream. 

December 29: As of early December, Shell began a planned maintenance outage at its Monaca, Pennsylvania ethane cracker and polyethylene units. The outage is expected to last several weeks and temporarily reduces domestic ethane demand.

December 3: The global ethane carrier fleet continues to expand. There are currently 31 Very Large Ethane Carriers (VLECs) in service globally, with an additional 20 vessels scheduled for delivery in 2026 and 29 more in 2027, increasing long-haul shipping capacity and enabling higher US export flows in the coming years.

November 14: The startup of Enterprise's Neches River terminal has positioned the US to move additional barrels offshore in 2026, helping balance rising domestic supply. Phase 2 will introduce a flexible loading system that can handle up to 180 MBbl/d of ethane or 360 MBbl/d of propane, or a mix of both. The expansion is expected to be completed in the first half of 2026.

October 6: Ethane exports to China have recovered following the summer disruption. In June, U.S. ethane exports to China declined after the Bureau of Industry and Security (BIS) implemented new export licensing requirements. Those restrictions were rescinded in July, allowing shipments to resume, and exports have since returned to normal levels.

July 24: A new Ethane export terminal built by Enterprise Products Partners (EPD) is loading its initial cargo, according to shiptracking data. Both MarineTraffic and VesselFinder reported on Thursday, July 24, that the medium-sized tanker, Navigator Eclipse docked at the EPD's Neches River facility. In a Linkedin post, Samantha Maria-Hartke at Vortexa, wrote that the Navigator Eclipse loading is "an apparent commissioning cargo" from the new export terminal. "The ship Navigator Eclipse has nearly exclusively moved ethane between the United States and China since mid-2021," Hartke added.

The first phase of the Neches River startup has an ethane capacity of 120 MBbl/d, according to Enterprise's previous public statements. To put this amount in perspective, the EIA estimated the US exported a record 492 MBbl/d of ethane in 2024. EPD has also said that they would convert part of its 240 MBbl/d facility at Morgan's Point to ethylene after Neches River becomes operational. The second phase of Neches River expansion is planned for completion in 1H 2026. This part of the expansion has a "flex" setup capable of exporting 180 MBbl/d of ethane, 360 MBbl/d of propane or a sliding-scale combo between the two.

July: The US Department of Commerce now requires as of May 23, 2025 an export license for ethane shipments to China. Loadings to China have slowed or been redirected. See the table below for a timeline of events involving ethane:

Sources: Reuters, EIA, oilandgas360.com, WSJ

Ethane Background

Ethane Rejection Economics:

• Ethane can be "rejected," meaning producers (or the operator of a processing plant) leave ethane in the natural gas stream instead of recovering it, usually when ethane's market value is low relative to that of natural gas.

• When natural gas prices rise relative to ethane, producers prefer ethane rejection, reducing ethane supply and supporting ethane prices. Conversely, lower natural gas prices encourage ethane extraction, increasing supply and pressuring ethane prices downward. This relationship means that if the price ratio between ethane and local natural gas becomes too small or too large, ethane rejection can correct the imbalance.

Extraction Flexibility:

• Ethane recovery is economically viable when the price spread (the "frac spread") between ethane and natural gas is favorable.

• Producers regularly monitor this frac spread. If natural gas prices climb significantly, the relative incentive to extract ethane diminishes, reducing ethane supply and aligning ethane price movements with natural gas trends.

Infrastructure and Market Linkages:

• Many natural gas processing facilities have the option to easily switch between ethane recovery and rejection based on economics.

• This operational flexibility means ethane supply frequently responds to shifts in natural gas pricing, tightening the correlation between their prices.

Market Demand and Export Dynamics:

• U.S. ethane demand heavily depends on petrochemical cracking and export markets. However, these demand factors often adjust slowly compared to changes in natural gas economics, leaving natural gas price dynamics as the primary short-term driver of ethane price direction.

propane

Propane

Propane prices in the U.S. are influenced by crude oil prices, other NGL prices, weather, and propane's own supply, demand, and inventory balance. Unlike ethane, propane cannot be rejected into the natural gas stream in large amounts. Propane's relative value to oil typically strengthens when domestic inventories are low (that is, demand has been relatively high compared to supply) and weakens when the U.S. propane market is well-supplied. Because of this interaction between propane's economics and other market prices, propane's price history is complex. 

Commentary

December 29: Propane prices increased in December, trading in the upper-$0.60s alongside expectations for colder winter weather, with propane’s value relative to WTI improving to roughly 47% from the low-40% range in November. While propane prices may find seasonal support as winter heating demand builds, elevated inventories and strong upstream supply could weigh on the market. Higher gas-to-oil ratios across major producing basins are sustaining robust NGL production, possibly limiting the degree of tightening typically seen during winter months.

December 3: Propane entered winter from a well-supplied position, but prompt prices have rebounded above $0.70/gal after trading mostly in the lower $0.60s through November. Inventories remain comfortably above seasonal averages due to strong NGL production and modest early-winter draws. Early December’s uplift has coincided with a sharp turn colder in weather models, with forecasts pointing to one of the coldest Decembers in more than a decade. Colder outlooks increase expectations for winter heating demand and can lend support to propane even when broader fundamentals remain loose.

November 14: Propane prices softened in November as a well-supplied domestic market and weak global petrochemical demand continued to pressure the Mont Belvieu complex. The prompt-month barrel averaged lower than October, and propane’s ratio to WTI slipped further into the mid-40% range. US propane stocks remained more than 10 MMBbl above the five-year average heading into winter, reflecting strong upstream production and steady fractionation.

October 6: Propane strengthened relative to WTI last month. Despite higher inventory levels than last year, which were historically high too, propane's percentage-of-WTI rose to 46% in September. Weaker than expected exports and robust production have caused inventories to be almost 10 MMBbl above the five-year average. 

August 8: Propane dropped in July relative to WTI as propane inventories continued to rise above the five-year average. Propane as a percentage of WTI fell to about 44% as of early August, down from just under 50% in June. The inventory gains in propane come amid robust production and weaker propane exports. 

July 10: The propane market has turned more bearish as of July amid outsized increases in inventories. Strong propane production and weaker exports were major contributors to the rapid rise in stocks. Higher freight costs and weaker international arbitrage economics weighed on exports. On the supply side, production reached nearly 2.9 MMBbl/d in May, up 0.1 MMBbl/d from April. Weekly data does show propane production back down near 2.8 MMBbl/d in early July. The Mont Belvieu propane-to-crude ratio has weakened down to near 45% compared to nearly 60% in April. The decreasing ratio to crude implies that propane's supply-demand dynamics have become looser and inventories are evidence of this.

Sources: AP News, Reuters, Bloomberg

Propane Background

Reasons why propane prices follow crude oil prices:

Petrochemical Demand:

• Propane serves as a feedstock in petrochemical plants, particularly in propane dehydrogenation plants (PDH) and in steam crackers, which can switch feedstocks based on price competitiveness between propane and other feedstocks (usually ethane and butane in the U.S.).
• Rising crude prices often lift naphtha prices, making propane a more attractive feedstock for petrochemical plants (globally) and thus supporting propane prices.

Heating Dynamics:

• Propane demand is seasonal, because it is a heating fuel in winter. Because of the concentration of demand in winter months, propane prices also follow the seasonal pattern of higher prices in winter and lower prices in summer.
• Propane is consumed from on-site tanks at end-user facilities (home, business, industrial location), rather than delivered directly from a pipeline. Therefore, demand statistics from the US EIA often appear after the fact, when the retail distribution network refills from primary storage at the fractionator sites.

Export and Global Pricing Influences:

• The U.S. exports significant volumes of propane, linking domestic prices to international LPG (Liquefied Petroleum Gas) markets, which are heavily influenced by global crude benchmarks.
• When crude prices increase internationally, overseas propane benchmarks like the Saudi Aramco contract price typically rise, encouraging maximum exports from the US. 

Infrastructure and Storage Dynamics:

• U.S. propane storage and export infrastructure allows propane markets to rapidly respond to global crude-driven market signals.
• Robust export capacity connects domestic propane pricing closely to crude-driven global LPG demand.

Influence of Propane’s Own Supply-Demand Balance

• • While propane pricing largely tracks crude oil, propane’s own domestic supply-demand fundamentals independently affect its relative pricing and market value.

  • When U.S. propane inventories are low, typically due to strong domestic or export demand, propane’s price premium relative to crude tends to increase.

  • Conversely, if propane supply exceeds domestic and export demand, resulting in higher inventories, propane’s value relative to crude often weakens, even if crude prices remain stable or strong.

Butane

Butane, specifically normal butane (n-butane), is a natural gas liquid (NGL) produced primarily during natural gas processing and petroleum refining. It's distinct from propane and ethane due to its heavier molecular structure and distinct market uses. Like propane, butane closely tracks crude oil due to its end-uses in transportation and petrochemicals.

Commentary

December 29: Normal butane prices remained stable around the mid-$0.80s/gal into early winter, supported by seasonal gasoline blending demand, but elevated inventories and strong NGL production continue to cap upside. Relative to crude, butane traded near 60% of WTI in November and December, with further strengthening likely requiring a sharper inventory draw or stronger export pull.

December 3: Normal butane traded in the high-$0.80s/gal range early December. The butane-to-WTI ratio has edged toward the ~60% band, consistent with a market that is well supplied but still responsive to broader crude and LPG pricing. Gulf Coast inventories remain elevated, and strong NGL production continues to keep the balance sheet loose, limiting the extent of any upside follow-through.

November 14: Butane prices continued to soften in November as both global LPG benchmarks and domestic fundamentals remained under pressure. Mont Belvieu butane slipped from October levels, and its relative value to WTI eased further into the upper-50% range. US butane inventories stayed elevated through the fall, supported by strong NGL production and reduced export pull.

October 6: Butane prices strengthened last month, with Mont Belvieu butane rising to 90¢/gal. The increase occurred even as crude oil prices weakened, pushing butane’s relative value to WTI higher to about 60% from 55%. Seasonally, this pattern is typical as refiners begin Reid Vapor Pressure (RVP) switching in September, increasing butane blending into gasoline ahead of the winter season.

July 10: Like propane, butane has weakened in July. Butane stocks have risen and this is reflected in the higher natural gas plant liquids (NGPL) inventory reported by the EIA. Again, like propane, butane exports were lower recently with falling butane arbitrage economics for delivery to Asia and Europe. Freight rates are also weighing on the export arbitrage and would need to fall in order to increase exports. 

Butane Background

U.S. Butane Market Overview

Key Uses:

• Gasoline blending (primary, seasonal)

• Petrochemicals (producing isobutane, butadiene, alkylate)

• Heating fuel (minor, compared to propane)

• Exports (primarily Asia, Latin America, Europe)

Supply Sources

• Natural Gas Processing: Primary source, separating butane along with other NGLs (propane, ethane, pentanes).

• Refineries: Secondary source from crude oil processing.

Infrastructure & Storage

• Primarily stored in Gulf Coast salt dome caverns (Mont Belvieu, TX).

• Transported domestically via pipelines, rail, and trucks.

Domestic Demand

• Peak in winter (Oct-Mar): Increased use in gasoline blending due to higher vapor pressure requirements.

• Reduced in summer (Apr-Sep): Regulatory limits lower blending demand.

• Consistent year-round petrochemical demand.

Seasonal Pricing Patterns

• Winter: High blending demand elevates prices relative to crude oil, peaking around Jan-Feb.

• Summer: Reduced blending leads to excess supply, softening prices; excess typically exported or stored.

Exports

• Growing due to rising U.S. production.

• Key markets: Asia (Japan, South Korea), Latin America, Europe.

Pricing Dynamics

• Quoted at major NGL hubs (primary benchmark: Mont Belvieu).

• Influenced by:

  • Crude Oil Prices: Close correlation due to shared end-markets.

  • Gasoline Market Dynamics: Competition with natural gasoline, ethanol, and refining margins.

  • Natural Gas/NGL Production: Higher production can depress prices if demand lags.

  • Export Conditions: Increased exports support domestic pricing.

  • Inventory Levels: High inventories pressure prices; low inventories support pricing.

General Market Principles

• Butane pricing closely tracks crude oil due to similar applications.

• Seasonal inventory cycles: builds in summer/fall, draws in winter, monitored closely by the market.

• Mont Belvieu prices serve as key benchmarks for domestic and international contracts.

Isobutane

Isobutane is produced at gas processing plants, refineries, and through isomerization units that convert normal butane into isobutane. Its value is tied closely to octane markets because it is primarily used as alkylation feedstock for high-octane gasoline. Demand is steadier than normal butane and less seasonal, but the market is thinner, so prices can move quickly when refinery runs or isomerization economics shift. Isobutane typically trades at a premium to normal butane, though this spread narrows when octane values soften or normal butane prices rise sharply.

Commentary

December 29: Isobutane prices averaged about $0.89/gal in December, unchanged from November, as stable refinery alkylation demand was balanced by softer octane incentives. Isobutane prices closely follow alkylate and reformate values and often face seasonal pressure in winter when increased butane blending reduces octane scarcity in the gasoline pool. While isobutane continues to trade at a premium to normal butane, ample C4 supply and limited refinery disruptions have constrained further upside.

December 3: Isobutane prices moved modestly higher into early December, supported by steady refinery alkylation demand and firm octane values. Market balance remains relatively stable, with isobutane still pricing at a premium to normal butane, though that spread has narrowed slightly as normal butane strengthened with seasonal blending activity. Strong NGL production continues to keep overall supply ample, but consistent refinery pull has helped prevent the same degree of inventory pressure seen in some other C4 streams.

Isobutane Background

U.S. Isobutane Market Overview

Key Uses:

• Alkylation feedstock for producing high-octane gasoline components

• Petrochemical feedstock for specialty chemicals

• Refinery blending and octane enhancement

• Occasional exports, typically when domestic supply outpaces refinery demand

Supply Sources

• Natural Gas Processing: Baseline production of isobutane alongside other NGLs

• Refineries: Additional volumes produced through crude oil fractionation

• Isomerization Units: Convert normal butane into isobutane to meet refinery alkylation needs

Infrastructure & Storage

• Stored primarily in Gulf Coast salt dome caverns, often alongside other butane streams

• Moved by pipeline, rail, and truck to refineries and petrochemical plants

• Limited storage relative to propane and normal butane due to smaller market size

Domestic Demand

• Demand is steady year-round because alkylation units operate continuously
• Less seasonal than normal butane since its primary use is octane production, not vapor-pressure blending

• Sensitive to refinery utilization and octane economics

Pricing Dynamics

• Prices are quoted at major NGL hubs such as Mont Belvieu

• Influenced by:

  • Octane values and gasoline-blend economics

  • Normal butane prices, due to isomerization flexibility

  • Crude oil trends as broader energy benchmarks

  • Refinery runs and alkylation margins

• Typically trades at a premium to normal butane, with the spread narrowing when:

  • Normal butane strengthens sharply, or

  • Octane values soften

General Market Principles

• Isobutane is a thinner market, so prices can move quickly when refinery demand shifts

• The ability to convert normal butane into isobutane via isomerization helps balance supply

• Pricing tends to follow octane markets more closely than crude

• Inventory levels can fluctuate rapidly due to the smaller market size and refined-product linkages

Natural Gasoline

Natural gasoline (C5+) is produced mainly at gas processing plants and closely tracks light crude and naphtha because it competes directly in gasoline blending and export markets. Demand is anchored by its role as a blendstock and as diluent for heavy crude, providing steady baseline pull. Prices typically follow WTI, and the natural-gasoline-to-crude ratio weakens when domestic supply outpaces blending or diluent needs.

Commentary

December 29: Natural gasoline prices weakened through December, averaging in the low-$1.20s/gal and trading near the high-80% range relative to WTI. The move lower has largely reflected declines in crude oil prices rather than a tightening C5 balance.

December 3: Natural gasoline prices in early December are only slightly higher than recent months, continuing to move largely in line with WTI as crude stabilizes. The C5 market remains well supplied, with strong NGL production keeping domestic availability high and limiting upward pressure on prices. Softer global naphtha benchmarks have reduced export pull, keeping most barrels tied to U.S. blending and diluent markets. Overall, natural gasoline fundamentals remain loose, with pricing still dictated more by crude and naphtha trends than by any structural tightening in the C5 balance.

November 14: September natural gasoline averaged $1.31/gal and October averaged $1.23/gal, declining alongside crude oil and maintaining an ~86% ratio to WTI. Natural gasoline continues to shadow crude oil while facing headwinds from muted global naphtha demand and steady US supply growth. Naphtha matters because it competes directly with natural gasoline in blending and petrochemical markets, so weaker naphtha pricing reduces export pull for C5.

October 6: Natural gasoline prices have averaged about $1.30/gal since August. Crude oil prices have hovered near $60.00/Bbl for a while now and with natural gasoline's high correlation to WTI, C5 has been trading in similar sideways fashion to oil. 

July 10: Recently, the price of natural gasoline to WTI (the ratio) has declined to 80% in July from 90% in April. In the US, natural gasoline is primarily used as blend stock for motor gasoline. Prices should align with natural gasoline's value as a blending stock. There is also an important relationship with global naphtha prices and will influence the US Gulf Coast price of natural gasoline.

Natural Gasoline Background

Natural gasoline is an NGL on the heavier end of the hydrocarbon spectrum, typically designated as pentanes plus (C5+). It resembles a very light crude or condensate. In the industry, it’s often simply called “natural gasoline” or “plant condensate.”

Key Uses

• Gasoline blending (raising octane and vapor pressure)

• Diluent for heavy crude oil (especially in Canada’s oil sands, to create “dilbit”)

• Feedstock for petrochemical processes

• Occasionally sold as a standalone fuel component or exported

Production Sources

Natural gasoline is produced mainly from:

• Natural gas processing plants (the heaviest portion of the NGL barrel)

• Stabilization of field condensate during crude oil production (less common in marketed NGL reporting)

The U.S. shale boom has notably increased production, especially from the Permian Basin and Eagle Ford Basin.

Infrastructure & Storage

Natural gasoline is stored in:

• Salt dome caverns and tanks in Gulf Coast hubs (Mont Belvieu is the primary location)

• Field-level tankage in producing regions

• Railcar or pipeline storage during transit to blending or export locations

Pipelines move volumes from production regions to refineries, blenders, or export docks. Rail transport is also common, particularly to Western Canada.

Domestic Demand

The main domestic uses are:

• Blending into finished gasoline to meet vapor pressure and octane specs

• Diluent blending with heavy crude oil from Canada and North Dakota

• Smaller volume into petrochemical production

Diluent demand is especially important: Canadian oil sands operations rely heavily on U.S. natural gasoline to move bitumen by pipeline.

Exports

Exports are focused mainly on:

• Canada (as diluent)

• Some volumes into Latin America and occasional Asian buyers for blending

Canadian diluent demand is the single biggest structural driver of export flows.

Pricing

Natural gasoline prices are typically quoted at:

• Mont Belvieu (primary benchmark)

• Conway, Kansas (Midcontinent benchmark)

Key Pricing Drivers

• Crude Oil Prices
  Natural gasoline tracks very closely with WTI because of its similarity to light naphtha or condensate.

• Gasoline Blendstock Demand
  Seasonal blending patterns influence pricing.

• Canadian Diluent Demand
  Steady, structural demand from Western Canada supports a large baseline consumption.

• Natural Gas/NGL Production
  Higher shale output increases supply, affecting balances and pricing.

• Inventory Levels
  Market participants watch stocks to gauge oversupply or tightness.

• Export Economics
  Pipeline and rail transportation costs into Canada set price floors.

Seasonality

Natural gasoline shows less pronounced seasonality than propane or normal butane but still has patterns:

• Summer Driving Season (April–September): Higher demand for gasoline blending raises prices relative to crude.

• Winter: Decreased recoveries at processing plants, because natural gasoline more readily condenses as part of the crude oil stream. 

• Spring and Fall Refinery Maintenance: May cause temporary softening in blending demand.

Overall, seasonal swings are tempered by consistent diluent demand, which anchors baseline consumption levels.

General Market Principles

Strong Crude Oil Correlation
Prices often move in tandem with WTI and condensate markets.

Blending and Diluent Dynamics
Demand comes from gasoline spec requirements and Canadian bitumen transport needs.

Infrastructure Constraints
Pipeline and rail capacity to Canada can cause basis volatility.

Export/Import Economics
Netbacks from Canadian oil sands influence pricing spreads.

Inventory Cycles
Builds occur in lower demand periods, with draws during blending peaks or pipeline restocking.

LPG

Exports of LPG from the US are critical to allowing for the growing amounts of NGLs from shale. The future of propane and butane prices hinge on the ability for those purity products to reach the water and fulfill overseas demand. If terminal or dock capacity is tight, inventories in the Lower 48 could swell, depending on production growth levels. As mentioned above, higher levels of US inventories typically result in lower prices. Below are planned and existing export terminal additions that will help clear excess propane and butane from the US.

Commentary

December 29: LPG export capacity along the U.S. Gulf Coast remains sufficient, highlighted by the slow operational ramp at Energy Transfer’s Flexport expansion at Nederland. Although export volumes have yet to fully reflect the new capacity, the terminal is positioned to increase VLGC loadings as ramp-up progresses. Elsewhere, export activity has remained active, with recent volumes directed primarily toward Asian markets.

December 3: LPG export conditions entering December appear broadly stable, with activity supported by steady Asian demand and favorable shipping economics on key VLGC routes. Freight markets found equilibrium after an early-November rally, helping maintain consistent terminal utilization across the Gulf Coast. Spare capacity remains available as the newest expansion projects continue gradual ramp-up, and the ability to load additional VLGC cargoes has improved scheduling flexibility even though incremental spot activity remains limited. 

November 14: US LPG export activity was uneven through the month as weaker global prices continued to constrain arbitrage economics. Freight rates eased slightly from October highs, but not enough to consistently reopen spot export opportunities into Asia or Europe. As a result, some Gulf Coast terminals saw lower utilization compared to earlier in the fall, with exports largely aligned to baseline contractual flows rather than incremental spot liftings. Energy Transfer’s Flexport facility continued ramp-up operations, though outbound volumes remained limited as global demand stayed soft. Additional export flexibility is expected as more capacity comes online in 2026.

October 6: Higher freight rates have pressured US LPG export economics in recent weeks. Export terminal utilization remained near maximum levels last month, reflecting strong global demand despite higher shipping costs. Energy Transfer’s Flexport expansion, which began service in July, has yet to record significant outbound volumes but is expected to gradually ramp up in the coming months.

July 10: LPG terminal utilization was near 80% in July. Utilization should ease as new expansions come online in July 2025 and later in 2026. 

Background on U.S. LPG Exports

The United States has become the world’s leading LPG exporter over the past decade, largely because of the shale boom that dramatically increased natural gas liquids (NGL) production. When natural gas and crude oil are produced, significant volumes of NGLs, especially propane and butane, are extracted along with them.

Domestic demand for propane (e.g., heating, agriculture, petrochemicals) and butane (e.g., blending, refining, petrochemicals) has limits and is seasonal. As shale output surged, U.S. producers faced the risk of oversupply and low domestic prices. LPG exports emerged as the critical pressure valve to balance the market.

The Gulf Coast, with major fractionation hubs (like Mont Belvieu) and deepwater export terminals, became the launch point for large-scale shipments to Asia, Latin America, and Europe. These exports have grown to over 2.5 MMBbl/d (waterborne and land exports) in recent years, making them essential for:

• Clearing surplus production of propane and butane that the U.S. market cannot absorb year-round.

• Supporting domestic NGL values relative to crude oil by tapping higher-value overseas demand, particularly from Asian petrochemical and heating markets.

• Creating price linkages between U.S. hubs and international benchmarks (like FEI in Asia).

In effect, LPG exports are no longer optional—they are fundamental to balancing U.S. propane and butane supply. Without strong export flows, inventories could quickly swell, pressuring prices and reducing NGL recovery incentives across the upstream and midstream sectors.

chart_pack

Chart Packet