Executive Summary:
Infrastructure: The industry is on track to overbuild Permian NGL pipelines and LPG export docks, but the excess capacity may prove beneficial for ethane.
Exports: Ethane exports jumped 12.5% W-o-W, entirely supported by a surge from ET’s Nederland and Orbit facilities.
Rigs: The total US rig count decreased during the week of Aug 10 to 527. Liquids-driven basins increased by 2 rigs W-o-W from 405 to 407.
Flows: US natural gas volumes averaged 70.9 Bcf/d in pipeline samples for the week ending August 24, up 0.7% W-o-W.
Infrastructure:
The industry is on track to overbuild Permian NGL pipelines and LPG export docks, but the excess capacity may prove beneficial for ethane.
In an uncertain geopolitical environment, the best-positioned assets are those with feedstock flexibility at the dock, like Enterprise’s (EPD) Neches River and Energy Transfer’s (ET) Nederland Flexport. Those facilities can pivot between LPG and ethane, giving midstream operators the ability to capture incremental volumes and defend utilization regardless of which product is in demand.
In a world where LPG spot rates fall and there is downside risk to recontacting along the NGL value chain, midstream strategy shifts to volume capture. The key is to keep volumes on a system and maximize infrastructure use. When LPG dock space sits empty, the incentive increases for ethane recovery and export. Recovery can be flipped on dynamically, and there is ample ethane available.
The challenge now is demand. EPD says Neches River is 100% contracted for ethane beginning in 2026, but an EPD executive noted on the 2Q25 earnings call that a potential customer “made a decision to contract naphtha, which is supplied globally versus just coming to the US to get ethane.” ET likewise said it will be “a little bit more difficult to contract with Chinese crackers” following the May decision by the Department of Commerce to restrict ethane exports to the country. Those restrictions left a “bit of a black eye” on the industry, management said.
US ethane is poised for explosive global growth. However, geopolitics and feedstock competition, rather than infrastructure, are the main bottlenecks. If Chinese demand falters, India and Europe are the next candidates to absorb volumes, though their growth curves are slower and less certain. Overbuilt US export capacity gives midstream operators the flexibility to move quickly when new demand does appear. That optionality also can lure global buyers, knowing the US can supply at scale once contracts are in place.
Exports:
US NGL exports rose 3.4% W-o-W, driven by gains in both LPG and ethane.
- LPG exports increased 1.5% W-o-W, with higher volumes across all terminals except ET’s Marcus Hook, which fell 52% W-o-W.
- Ethane exports jumped 12.5% W-o-W, entirely supported by a surge from ET’s Nederland and Orbit facilities. Shipments reached 273 Mb/d in one week, equivalent to a fully utilized Orbit (180 Mb/d) plus ~93 Mb/d from the Flexport expansion.
Rigs:
The total US rig count decreased during the week of Aug 10 to 527. Liquids-driven basins increased by 2 rigs W-o-W from 405 to 407.
- Anadarko (+3): Suncor Energy, RJM Co.
- Eagle Ford (+2): Pillar Oil & Gas, Mitsui
- Bakken (-2): ConocoPhillips, Devon Energy
- Permian (-1):
-
- Midland (-2): Vital Energy, Exxon
- Delaware (+1): U.S. Development Corp
Flows:
US natural gas volumes averaged 70.9 Bcf/d in pipeline samples for the week ending August 24, up 0.7% W-o-W.
Major gas basin samples declined 0.2% W-o-W to 44.0 Bcf/d. The Haynesville sample decreased 1.5% to 10.6 Bcf/d, and the Marcellus+Utica rose 0.5% to 32.5 Bcf/d.
Several smaller basins included in the ‘Other’ category have posted gains recently, including the Green River and Piceance basins. Samples in these smaller basins collectively gained 0.4 Bcf/d W-o-W to 7.8 Bcf/d.
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