NGL production in the Marcellus and Utica (Northeast) hit a new high in 2Q24 and, reading the tea leaves, we expect output held at record levels in 3Q24. With new natural gas supply growth ahead, operators in the region will need to find new markets for their NGLs.
Earnings data suggest Northeast ethane supply was steady in 3Q24. Large Northeast producers Range Resources (RRC), Antero Resources (AR) and EQT have reported 3Q24 earnings showing flat Q-o-Q ethane production. These three operators generate almost 60% of Marcellus and Utica ethane supply, with a high correlation to final Energy Information Administration (EIA) data (refer to the chart).
In the latest Ethane Supply & Demand Report, East Daley Analytics forecasts ethane production in the Northeast to average 367 Mb/d in 2024 and increase slightly to 369 Mb/d in 2025. Production hit a record of 404 Mb/d in 2Q24.
Some of the increase in NGLs has fulfilled higher ethane demand at the Shell Monaca steam cracker in southwestern Pennsylvania. Most Northeast c3+ demand is exported to international buyers in the UK (SABIC), Norway (INEOS) and Sweden (Borealis) via Energy Transfer’s (ET) Mariner East NGL pipeline and Marcus Hook storage and export facility near Philadelphia, PA.
As shown in Energy Data Studio, there’s not an indefinite runway from the Northeast to Europe without more investment in LPG export capacity. Marcus Hook has about 400 Mb/d of combined ethane and LPG export capacity, ET has disclosed in prior company presentations (refer to the second graph). With estimated 2Q24 throughput of 366 Mb/d, we are likely soon pushing on Northeast export limits.
Gulf Coast operators including Enterprise Products (EPD), ET and Targa Resources (TRGP) have announced several expansions to alleviate what will be a constrained market this winter. It’s all quiet on the eastern front, however, when it comes to dock expansion details. ET has been mum of late on a previously discussed Marcus Hook expansion (see 4Q22 and 1Q23 earnings calls), making it less clear when the next project will occur.
With more than 1.3 Bcf/d of natural gas supply growth expected in our Northeast Supply & Demand Forecast, EDA believes a dock expansion at Marcus Hook is necessary to support Northeast production growth – both for natural gas and NGLs. – Rob Wilson and Maria Paz Urdaneta Tickers: AR, EPD, EQT, ET, TRGP, SHEL.
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