Edge Login

NGLs

Difference between Natural Gas Processing and Fractionation for NGLs (Natural Gas Liquids)

Leave a Comment / NGLs, Uncategorized / By
methane, gas, ch4-7470686.jpg

Natural gas is a valuable energy resource that is used for various purposes, from heating and cooking to electricity generation. However, the natural gas that is extracted from underground is not pure enough for direct use. It needs to undergo a series of processes to remove impurities and separate valuable components. One crucial step in this process is the extraction and fractionation of Natural Gas Liquids (NGLs). In this article, we will delve deeper into the world of NGLs, their components, extraction methods, and the importance of fractionation in the midstream sector.

What are Natural Gas Liquids (NGLs)?

Natural Gas Liquids (NGLs) are hydrocarbons that are found in natural gas streams along with methane, the primary component of natural gas. NGLs are composed of various components, including ethane (C2), propane (C3), iso-butane (iC4), normal butane (nC4), natural gasoline (C5-C6), and pentanes (C5) and heavier molecules (C6-C9). These components have different boiling points and properties, making them valuable for different applications.

NGLs are usually extracted from natural gas because they have significant commercial value and can be used for various purposes. Ethane is a crucial feedstock for petrochemical industries, propane is widely used for heating and cooking, butanes are used as blendstocks in gasoline production, and natural gasoline is used in gasoline blending, specialty solvent production, and as a diluent for syncrude production. The extraction of NGLs not only provides valuable products but also improves the quality of the remaining natural gas, making it suitable for further processing or direct use.

NGL Extraction Methods

There are two primary methods for extracting NGLs from natural gas: the absorption method and the cryogenic expander process. These methods are used depending on the specific composition and requirements of the natural gas stream.  (shameless plug:  Rogue Edge Members have access to our natural gas processing calculator – providing REAL TIME insight into recoveries and the true economic value for the full Natural Gas Stream)

Absorption Method

The absorption method for NGL extraction is similar to the absorption process used for dehydration. However, instead of using glycol, an absorbing oil is used to separate NGLs from the natural gas stream. The absorbing oil has an affinity for NGLs, similar to how glycol has an affinity for water. When the natural gas is passed through an absorption tower, it comes into contact with the absorbing oil. The absorbing oil absorbs a high volume of NGLs from the gas stream, becoming “rich” in NGLs. The rich oil is then sent to a lean oil still, where the mixture of absorption oil and NGLs is heated to a temperature higher than the boiling point of the NGLs but below that of the oil. This process allows for the recovery of approximately 75% of butanes and 85-90% of natural gasoline from the natural gas feedstock. Refrigeration can be used to target specific NGLs, such as propane, and improve the extraction efficiency.

Cryogenic Expansion Process

The cryogenic expansion process is employed when it is necessary to extract lighter hydrocarbons, such as ethane, from the natural gas stream. Cryogenic processes involve lowering the temperature of the gas stream to extremely low levels, around -120 degrees Fahrenheit. The most effective technique for achieving this is the turbo expander process. The natural gas stream is cooled using external refrigerants, and then an expansion turbine rapidly expands the chilled gases. This rapid expansion causes the temperature of the natural gas to drop significantly, condensing ethane and other hydrocarbons while methane remains in its gaseous form. The recovery of ethane in the cryogenic expansion process can reach approximately 90-95%. Moreover, the energy released during the expansion of the natural gas stream can be utilized to recompress the gaseous methane effluent, resulting in energy cost savings associated with ethane extraction.  (shameless plug:  Rogue Edge Members have access our outlook for Ethane elections – allowing midstream providers and producers to see if they should Recover Ethane or Reject Ethane)

The extraction of NGLs from the natural gas stream not only produces cleaner and purer natural gas but also provides valuable hydrocarbons that can be used in various industries. The extracted gas can serve as a feedstock for Liquid Natural Gas (LNG) production, which has its own set of applications and benefits.

NGL Fractionation: Separating Valuable Components

Once NGLs have been extracted from the natural gas stream, they need to be separated into their individual components to be used effectively. This separation process is known as fractionation and is essential for maximizing the value of the NGLs.

Fractionation is based on the different boiling points of the various hydrocarbons in the NGL stream. The process involves a series of steps, starting with the removal of the lighter NGLs and progressing to the separation of heavier components. There are specific fractionators dedicated to each hydrocarbon. Here are the key steps involved in NGL fractionation:

Deethanizer – Ethane Removal

The deethanizer is the first fractionator in the process. Its primary function is to separate ethane from the NGL stream. Ethane has a lower boiling point compared to other NGL components, allowing it to be easily separated. The deethanizer operates by heating the NGL stream and condensing the ethane, which can then be collected separately.

Depropanizer – Propane Removal

The depropanizer is responsible for removing propane from the NGL stream. Propane has a slightly higher boiling point than ethane, making it the next component to be separated. The depropanizer works in a similar way to the deethanizer, with the propane condensing at the appropriate temperature and being collected as a separate product.

Debutanizer – Butanes Removal

The debutanizer is used to separate butanes (both iso-butane and normal butane) from the remaining NGL stream. Butanes have higher boiling points compared to ethane and propane. The debutanizer operates at a higher temperature to condense and collect the butanes, leaving the pentanes and heavier hydrocarbons in the NGL stream.

Butane Splitter or Deisobutanizer – Separating Iso and Normal Butanes

In some cases, it is necessary to separate iso-butane and normal butane from each other. This is achieved through a process called butane splitting or deisobutanizer. The butane splitter operates at specific temperatures and pressures to selectively condense and separate the iso-butane and normal butane components.

Natural Gasoline

The remaining NGL stream after the butanes have been separated is known as natural gasoline. Natural gasoline is a mixture of pentanes (C5) and heavier molecules (C6-C9). It serves various purposes, including gasoline blending, specialty solvent production, feedstock for ethanol production, and as a diluent for syncrude production.

Fractionation is a critical process in the midstream sector of the natural gas industry. It enables the separation of different NGL components, each with its unique value and application. The separated NGLs can be sold individually, providing raw materials for petrochemical plants, enhancing oil recovery in oil wells, and serving as sources of energy. The fractionated NGLs play a vital role in various industries, from plastics manufacturing to gasoline production.

The Importance of Natural Gas Processing

Natural gas processing is a crucial step in the midstream sector of the natural gas industry. It involves the extraction of NGLs and the fractionation of these valuable components. Natural gas processing plants are typically located in natural gas producing regions, where the extracted gas is transported through a network of gathering pipelines.  (shameless plug:  Rogue Edge Members have access to fundamental supply/demand for Natural Gas, Ethane, Propane, Iso Butane, Normal Butane, and Natural Gasoline – along with forward pricing for each commodity in the energy space.)

Gathering and Transporting Natural Gas

Before natural gas can be processed, it needs to be gathered and transported from the wellhead to the processing plant. Gathering pipelines, which are small-diameter and low-pressure pipes, are used to transport the extracted natural gas to the processing plants. A complex gathering system can consist of thousands of miles of pipelines, connecting the processing plant to numerous wells in the area. The gathering pipelines ensure the efficient and safe transportation of the natural gas to the processing facilities.

Processing Natural Gas

Once the natural gas reaches the processing plant, it undergoes a series of processes to remove impurities and separate the valuable components. The primary goal of natural gas processing is to produce “pipeline quality” dry natural gas, which meets the specifications imposed by major transportation pipelines. These specifications ensure the safe and efficient transport of the natural gas to end users. (shameless plug:  Did we mention that Rogue Edge Members have access to processing economics???)

The processing of natural gas involves several steps, including the removal of impurities like water vapor, hydrogen sulfide (H2S), carbon dioxide, helium, nitrogen, and other compounds. The purification process varies depending on the specific impurities present in the natural gas stream. For example, water vapor can be removed through dehydration using absorption or adsorption methods.

Oil and Condensate Removal

In some cases, natural gas is produced along with crude oil or condensate. To process and transport the associated dissolved natural gas, it needs to be separated from the oil. This separation process can be achieved through various techniques, such as conventional separators or low-temperature separators (LTX). The separation of oil and natural gas is typically done at or near the wellhead, ensuring the efficient extraction of both resources.

Water Removal

Water vapor is another impurity that needs to be removed from the natural gas stream during processing. The presence of water vapor can lead to the formation of natural gas hydrates, which can obstruct the passage of natural gas through pipelines and valves. To prevent hydrate formation, natural gas is dehydrated using either absorption or adsorption processes. Glycol dehydration and solid-desiccant dehydration are two commonly used methods for removing water vapor from the natural gas stream.

Separation of NGLs

During natural gas processing, NGLs are separated from the gas stream to maximize their value and ensure the production of pipeline-quality dry natural gas. The extraction of NGLs involves methods like absorption and cryogenic expansion. These methods target specific NGLs, such as ethane, propane, and butanes, and separate them from the natural gas stream. The recovered NGLs can then be further processed or sold separately, depending on their specific applications.

Natural gas processing plays a crucial role in the midstream sector, ensuring the production of clean and valuable natural gas. It involves the extraction and fractionation of NGLs, which have numerous commercial applications and provide raw materials for various industries. The processing of natural gas also improves the quality of the remaining gas, making it suitable for further processing or direct use.

Conclusion

Natural gas processing and the fractionation of NGLs are vital steps in the midstream sector of the natural gas industry. These processes involve the extraction, separation, and purification of valuable components from the natural gas stream. NGLs, including ethane, propane, iso-butane, normal butane, natural gasoline, and pentanes, are extracted through methods like absorption and cryogenic expansion. Fractionation further separates these components, maximizing their value and enabling their use in various industries.  (shameless plug:  Rogue Edge Members can learn about Natural Gas Processing through our state of the art and AFFORDABLE platform with energy financials and fundamentals.)

Natural gas processing ensures the production of clean and pure natural gas, suitable for further processing or direct use. It involves the removal of impurities like water vapor, oil, and condensate, as well as the separation of NGLs. The processed natural gas can then be transported through pipelines to end users, providing a reliable and efficient source of energy.

Understanding the importance of natural gas processing and fractionation is crucial for the midstream sector and the overall natural gas industry. These processes not only enhance the value of natural gas but also contribute to the production of essential products and the growth of various industries.

Curious about Rogue Edge?

Discover Rogue Edge, our powerful market research tool designed for energy professionals like you. For only $89/month, gain access to 150 interactive and downloadable charts, AI forecasting, and expert insights on oil, natural gas, natural gas liquids, and refined products. Stay ahead with our daily market email, weekly video recap, and PDF reports. Expand your knowledge and stay updated with our educational resources and industry trend updates. Our experienced team is here to provide personalized guidance, tools and support, ensuring your success in the energy sector.

Join us today and unlock the power of informed decision-making in the ever-evolving energy markets.

Click Here To Register Now

Curious but want to learn more… Simply book a meeting with Bill & Brian and we’ll decide together if Rogue Edge is right for you:

Click Here To Book a Meeting

For more information on natural gas processing and its impact on market dynamics, contact our team of experts at rogue@energyrogue.com.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or investment advice. Trading and investing in the energy market involves risks, and individuals should conduct thorough research and seek professional guidance before making any trading decisions.

Natural Gas and Crude Commitment of Traders – Unraveling the Market Trends

Leave a Comment / Natural Gas, NGLs, Oil, Uncategorized / By
chart, trading, courses-1905225.jpg

   

Introduction

The energy market is a complex and ever-evolving landscape, where traders and investors strive to navigate the volatility and capitalize on opportunities. One tool that provides valuable insights into the market dynamics is the Commitment of Traders (COT) report. In this comprehensive guide, we will delve into the world of Natural Gas and Crude Commitment of Traders, uncovering the significance of this report, understanding its structure, and exploring how it can be utilized to gain a competitive edge in the energy market.

Understanding the Commitment of Traders Report

The Commitment of Traders (COT) report, published by regulatory bodies like the Commodity Futures Trading Commission (CFTC), offers a weekly snapshot of the aggregate holdings and positions of different participants in the futures market. Released every Friday, the report provides a breakdown of the commitment of classified trading groups based on their positions as of the preceding Tuesday. It aims to enhance market transparency and serves as a valuable tool for futures traders in making informed trading decisions.  (shameless plug:  Rogue Edge Members receive the updated COT every Friday.)

Key Takeaways

  • The COT report showcases the aggregate holdings of participants in the U.S. futures market.
  • It offers insights into the positions of different trading groups, such as commercial and non-commercial traders.
  • The report is released every Friday and represents the market conditions as of the preceding Tuesday.

Evolution of the COT Report

The history of the COT report dates back to the early 20th century when the U.S. Department of Agriculture’s Grain Futures Administration first introduced an annual report to outline hedging and speculation activities in the futures market. Over the years, the report’s frequency and coverage expanded to encompass various commodities and financial assets.

Initially published annually, the report transitioned to monthly publication in 1962, and subsequently, to a weekly format in 2000. This shift in frequency allowed for more timely and relevant insights into market positions. As the futures market expanded beyond agricultural products to include crude oil, refined products, natural gas, metals, currencies, and other financial instruments, the COT report adapted to include a broader range of commodities.

Classifications in the COT Report

To provide clarity and categorize traders effectively, the COT report classifies participants into different segments based on their primary business activities. The classifications have evolved over time to reflect the changing landscape of the energy market and address concerns about market impact. Let’s explore the key classifications used in the report:

1. Physical Commodities (Nat Gas, Crude, Heating Oil, and other commodities)

For the official Definition – navigate HERE to the CFTC official definitions – below is our simplistic definition.

The physical commodities segment encompasses traders engaged in the production, processing, and usage of commodities. It includes the following categories:

  • Commercials:  Producer/Merchant/Processor/Users: This category comprises firms that utilize futures and options to hedge price risks associated with their commercial operations. They are primarily involved in the physical production, processing, or consumption of the respective commodities.
  • Swap Dealers: Swap dealers are banks and other firms that engage in over-the-counter trading with hedge funds, pension funds, and commercial users. They use on-exchange futures and options to offset price risks arising from these trades.  Often this is the “other side” of the transaction when Commercials Hedge.
  • Managed Money:  noncommercial participant that is generally speaking the “hedge fund” business.
  • Others:  not classified or reported as a classified definition per the CFTC.

(shameless plug:  Rogue Edge Members have access to interactive charts for COT as well as technical technical indicators updated daily. )

2. Financial Products

The financial products segment focuses on traders involved in financial instruments related to commodities. It includes the following categories:

  • Dealer: Dealers are market participants who facilitate the trading of commodities and financial products. They play a vital role in providing liquidity and market-making services.
  • Asset Manager: Asset managers are organizations responsible for managing or conducting futures trading on behalf of clients. They include hedge funds, pension funds, and commodity trading advisers.

Additional Classifications

In addition to the primary classifications mentioned above, the COT report also includes a category called “Others” or “Other Reportable.” This category consists of traders who have positions above the reporting threshold but do not fit into the previously mentioned segments. The CFTC does not disclose specific information about how individual traders are classified within the report.

Analyzing the COT Report: Benefits and Limitations

The COT report offers valuable insights into market sentiment, positioning, and potential trends. Traders and investors can leverage this information to make informed decisions and identify potential trading opportunities. Here are some key benefits of analyzing the COT report:

  1. Market Sentiment: The report provides a glimpse into the sentiment of different trader groups, including commercial hedgers and speculators. By analyzing their positions, traders can gauge the overall market sentiment and potentially identify market reversals or trend continuations.
  2. Position Changes: Monitoring changes in positions over time can help traders understand evolving market dynamics. Significant shifts in positions can indicate changing expectations and potential price movements.
  3. Contrarian Indicators: The COT report can serve as a contrarian indicator, highlighting situations where traders’ positions are heavily skewed in one direction. Such extreme positioning may signal an upcoming reversal in market trends.

While the COT report provides valuable insights, it is essential to recognize its limitations. Due to the broad classifications used, the report does not provide granular information on individual traders’ positions. Additionally, the report’s publication lag may impact its relevance in rapidly changing market conditions.  (shameless plug:  Rogue Edge Members have access to our weekly PDF report along with a video recap of the week on COT, Technicals, and all the nitty gritty fundamentals – supply, demand, exports, storage)

Harnessing the Power of COT Reports: Tools and Resources

To effectively utilize the COT report and harness its potential, traders can leverage a range of tools and resources. Energy Rogue, a leading provider of market insights, offers Rogue Edge, a powerful platform that provides interactive and downloadable COT charts. With Rogue Edge, traders can access the latest COT reports for Natural Gas, Crude Oil, Natural Gas Liquids (NGLs), and Refined Products. The platform allows users to identify trends, analyze historical data, and gain foresight into the energy market.

Conclusion

The Commitment of Traders (COT) report serves as a valuable tool for traders and investors seeking to navigate the energy market. By providing insights into the positions of different trading groups, the report offers a glimpse into market sentiment and potential trends. While the report has its limitations, traders can leverage it in conjunction with other market analysis tools to make informed trading decisions. With platforms like Rogue Edge from Energy Rogue, traders can stay ahead of the curve and gain a competitive edge in the dynamic energy market.

Curious about Rogue Edge?

Discover Rogue Edge, our powerful market research tool designed for energy professionals like you. For only $89/month, gain access to 150 interactive and downloadable charts, AI forecasting, and expert insights on oil, natural gas, natural gas liquids, and refined products. Stay ahead with our daily market email, weekly video recap, and PDF reports. Expand your knowledge and stay updated with our educational resources and industry trend updates. Our experienced team is here to provide personalized guidance, tools and support, ensuring your success in the energy sector.

Join us today and unlock the power of informed decision-making in the ever-evolving energy markets.

Click Here To Register Now

Curious but want to learn more… Simply book a meeting with Bill & Brian and we’ll decide together if Rogue Edge is right for you:

Click Here To Book a Meeting

For more information on natural gas processing and its impact on market dynamics, contact our team of experts at rogue@energyrogue.com.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or investment advice. Trading and investing in the energy market involves risks, and individuals should conduct thorough research and seek professional guidance before making any trading decisions.

Natural gas processing separating methane from natural gas liquids

Leave a Comment / NGLs, Natural Gas, Uncategorized / By
fittings, water polo, construction-2784899.jpg

Image Source: FreeImages

Natural gas has become a vital source of energy in recent years, serving as a bridge between highly polluting fuels and renewable energy. It is an efficient and relatively clean-burning fuel that has gained popularity due to its lower greenhouse gas emissions compared to other non-renewable fuels. However, natural gas as it is extracted from the ground is not immediately usable in its raw form. It undergoes a crucial process called natural gas processing, which separates impurities and extracts valuable components such as natural gas liquids (NGLs). This article will explore the significance of natural gas processing, the various steps involved, and the technologies used.

Understanding Natural Gas Processing

Natural gas is primarily composed of methane, but it also contains other hydrocarbons, nitrogen, carbon dioxide, water vapor, and trace amounts of other compounds. The composition of natural gas can vary depending on the source. It is extracted from underground reservoirs through oil wells, gas wells, or condensate wells. The natural gas obtained directly from these wells is known as raw natural gas and requires processing before it can be used effectively.

The processing of natural gas is essential to produce what is known as “pipeline quality” dry natural gas. This involves separating impurities and other hydrocarbons from the raw natural gas to meet the specifications required for transportation through major pipelines. The impurities that need to be removed include water vapor, sulfur compounds (such as hydrogen sulfide), carbon dioxide, and other contaminants. Additionally, the processing aims to extract valuable natural gas liquids (NGLs), which have various industrial applications. (shameless plug:  Rogue Edge tracks NGL processing economics PLUS you will have access to a unique processing calculator giving YOU Netbacks for future months)

The Natural Gas Processing Journey

The journey of natural gas processing begins at the wellhead, where the raw natural gas is extracted. From there, it is transported through a network of gathering pipelines to a processing plant. The processing plant is usually located in a natural gas-producing region and is responsible for the complete processing of the natural gas.

The processing plant consists of various units and equipment that perform specific functions in the natural gas processing journey. These units include dehydrators, cryogenic plants, gas processing units (GPUs), and gas sweetening plants. Each unit plays a crucial role in removing specific impurities and separating valuable components from the raw natural gas.

Dehydrators: Removing Water and Water Vapor

One of the primary steps in natural gas processing is the removal of water and water vapor from the raw natural gas. Dehydrators are used for this purpose. The most common type of dehydrator is the glycol dehydrator, which uses a chemical called glycol to absorb water from the gas stream. The glycol absorbs the water, separating it from the gas. However, glycol dehydrators release methane, volatile organic compounds, and hazardous air pollutants, which can have adverse effects on the climate and public health. To mitigate these impacts, alternative methods such as solid-desiccant dehydration using silica gel are recommended by the Environmental Protection Agency (EPA).

Cryogenic Plants: Separating Natural Gas Liquids

Cryogenic plants play a vital role in natural gas processing by separating natural gas liquids (NGLs) from the raw natural gas. NGLs include ethane, butane, propane, and pentane, which have significant commercial value. Cryogenic plants utilize refrigerants and a system of tanks and pipes to cool the gas to very low temperatures. This process causes the heavier NGLs to condense and separate from the gas. The separated NGLs can then be further processed and used as feedstock in industries such as petrochemicals and plastics. (shameless plug:  Rogue Edge not only provides processing economic returns but also economics for Ethane Rejection for future months which gives an Edge for economic returns with Producers and Processors.  Book a meeting if you’d like to learn more)

Gas Processing Units (GPUs): Removing Condensate

Gas Processing Units (GPUs) are responsible for removing condensate from the raw natural gas. Condensate, also known as “drip gas” or “natural gasoline,” is a valuable hydrocarbon that can be used as a light crude oil or as a diluent for heavier crude oils. GPUs use a heating and absorption process to separate the condensate from the gas. It is important to note that condensate is considered a hazardous substance and highly volatile, posing risks during transportation. As condensate production has increased in recent years, proper handling and safety measures are crucial.

Gas Sweetening Plants: Removing Hydrogen Sulfide

Gas sweetening plants are designed to remove hydrogen sulfide (H2S) from sour gas streams. H2S is a highly toxic and corrosive gas that needs to be removed for safety and environmental reasons. Gas sweetening plants use ammonia-based products (amines) and a system of tanks and cooling units to absorb and remove H2S from the gas. The removed H2S can be further processed to produce sulfuric acid, which has various industrial applications.

Tanks: Storage and Handling

Tanks play a crucial role in the natural gas processing journey by providing storage for water, condensate, and NGLs after separation. These tanks ensure that the processed natural gas and its by-products are stored safely before further transportation or distribution. However, it is important to prevent leaks from tanks, as they can release methane, volatile organic compounds (VOCs), and other pollutants, contributing to environmental and climate concerns. (shameless plug:  Rogue Edge gives insight to weekly inventory levels for propane and multiple refined products)

Conclusion: The Value of Natural Gas Processing

Natural gas processing is a vital step in making natural gas suitable for transportation and utilization. It involves the removal of impurities and the separation of valuable components, such as natural gas liquids (NGLs). Through the use of various technologies and equipment, raw natural gas is transformed into pipeline quality dry natural gas that meets the required specifications. The processed natural gas can then be safely transported through pipelines to end-users, while the extracted NGLs find applications in industries such as petrochemicals and plastics.  (shameless plug:  if you want to learn more about Natural Gas Processing – email us or book a meeting – links at the end of the article)

As the demand for natural gas continues to grow, efficient and environmentally responsible processing methods are of utmost importance. By adhering to best practices and utilizing advanced technologies, the natural gas industry can ensure the production and delivery of clean and valuable energy resources to meet the world’s energy needs.

Additional Information: The natural gas industry is constantly evolving, and advancements in processing technologies are being made to improve efficiency and reduce environmental impacts. It is essential for industry players to stay informed about the latest developments and regulations in natural gas processing to ensure compliance and sustainable operations.

Curious about Rogue Edge?

Discover Rogue Edge, our powerful market research tool designed for energy professionals like you. For only $89/month, gain access to 150 interactive and downloadable charts, AI forecasting, and expert insights on oil, natural gas, natural gas liquids, and refined products. Stay ahead with our daily market email, weekly video recap, and PDF reports. Expand your knowledge and stay updated with our educational resources and industry trend updates. Our experienced team is here to provide personalized guidance, tools and support, ensuring your success in the energy sector.

Join us today and unlock the power of informed decision-making in the ever-evolving energy markets.

Register Now

Curious but want to learn more… Simply book a meeting with Bill & Brian and we’ll decide together if Rogue Edge is right for you:

Book a Meeting

For more information on natural gas processing and its impact on market dynamics, contact our team of experts at rogue@energyrogue.com.

Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial or investment advice.

Natural Gas Liquids – what exactly is Y Grade? Why is it called that?

Leave a Comment / NGLs, Natural Gas / By
bubble, liquid, drink-2638326.jpg

Introduction

In the world of natural gas processing, there is a term that often confuses many: Y Grade. You may have come across this term and wondered what it means and why it is called that. In this comprehensive guide, we will delve into the origins and significance of Y Grade, shedding light on its role in the natural gas industry. So let’s dive in and unravel the mystery behind Y Grade!

Understanding Y Grade

Y Grade is a term used to refer to a specific product resulting from the natural gas processing process. It is the combination of various natural gas liquids (NGLs) that are separated from the natural gas stream. NGLs, as defined in our previous article “Natural Gas Processing 101” encompass a range of components including ethane, propane, iso butane, normal butane, and natural gasoline. These components exist in the molecules extracted during oil and gas drilling and are separated from the gas stream at the surface.

At the tailgate of a natural gas processing plant, all these NGLs come together as a single product, which is commonly referred to as Y Grade. This unique name, which was discussed in our article “Y? Because we care!!!” however, begs the question: why is it called Y Grade? Legend has it that an old Texas pipeline company assigned letters to products shipped on its pipeline, and when it reached the letter Y, it was assigned to Natural Gas Liquids. While this historical explanation may not hold much relevance today, it adds a touch of trivia to our understanding of Y Grade.

The Value of Y Grade

Now that we know what Y Grade is, you might be wondering about its significance and value in the natural gas industry. Each component within Y Grade has its own specific applications and market demand, making the separation of these components crucial for maximizing their value. Let’s take a closer look at the individual components and their uses:

  1. Ethane: Ethane finds extensive use in the manufacturing of plastics. As a key raw material in the petrochemical industry, it is an essential component in the production of various plastic products.
  2. Propane: Propane is commonly known for its use as a heating fuel, particularly in remote areas where natural gas pipelines may not be accessible. Additionally, it is the fuel source for activities like grilling, making it a staple for outdoor cooking enthusiasts.
  3. Iso Butane: Iso butane, also known as isobutane, serves as a vital component in refinery processes. It is utilized in alkylation units to produce high-octane gasoline and as a feedstock for the production of various petrochemicals.
  4. Normal Butane: Similar to iso butane, normal butane plays a crucial role in refinery processes. It is used as a blendstock for gasoline and as a feedstock for the production of petrochemicals, including butadiene and isobutylene.
  5. Natural Gasoline: Natural gasoline serves as a blendstock for certain types of crude oil. It enhances the quality and properties of crude oil blends, making it a valuable component for refineries.

While Y Grade itself may not hold significant value, the individual components that make up Y Grade are highly sought after in various industries. Therefore, the process of fractionation becomes essential to unlock the full potential and value of Y Grade.

Fractionation: Separating the Components

To derive the maximum value from Y Grade, it needs to undergo a process called fractionation. Fractionation involves the separation of the different components within Y Grade, allowing them to be utilized individually for their respective applications. This process is complex and requires specialized fractionation facilities, which are limited in number within the United States.

Fractionation typically takes place in a natural gas processing plant that utilizes either refrigeration or cryogenic cooling methods. These methods enable the separation of the “liquid” gas molecules (C2 through C5+) from the gas components, with methane (CH4) being the primary gas component. Methane, also known as residue gas, is ready for interstate transportation, fulfilling the demand of utilities and industrial sectors.

The separated NGL components, such as ethane, propane, iso butane, normal butane, and natural gasoline, leave the processing plant either through trucks or pipelines as individual streams. These streams, now separated and categorized, can be further processed and utilized for their specific applications across various industries.

Why Should You Care?

Understanding the significance of Y Grade and the process of fractionation is essential for anyone involved in the oil and gas industry. Each of the NGL components exists in its “raw” gas stream at the extraction location, and recognizing their commercial viability and value is crucial. While Y Grade itself may not hold significant value, the individual components derived from its fractionation are highly valuable and sought after.

Fractionation serves as a necessary function in the industry, enabling the extraction of maximum value from the natural gas liquids extracted during the drilling process. By separating these components, the industry can meet the specific demands of various sectors, ranging from plastics manufacturing to heating and refining processes.

In Summary

Y Grade is the term used to describe the combined natural gas liquids (NGLs) resulting from the natural gas processing process. It encompasses components such as ethane, propane, iso butane, normal butane, and natural gasoline. These NGLs are separated from the natural gas stream at the surface, and at the tailgate of a natural gas processing plant, they come together as a singular product called Y Grade.

While Y Grade itself may not hold significant value, the individual components derived from its fractionation process are highly sought after in various industries. Ethane is used in plastics manufacturing, propane serves as a heating fuel, iso butane and normal butane are utilized in refinery processes, and natural gasoline enhances the quality of crude oil blends.

Fractionation plays a crucial role in unlocking the value of Y Grade by separating its components into individual streams. This process is complex and requires specialized fractionation facilities. By understanding the importance of Y Grade and its subsequent fractionation, industry professionals can make informed decisions regarding the utilization and commercial viability of natural gas liquids.

So, the next time you come across the term Y Grade, you can confidently explain its origins and significance within the oil and gas industry. Remember, Y Grade is not just a name, but a representation of the valuable components that power various sectors and contribute to our daily lives.

Curious about Rogue Edge?

Discover Rogue Edge, our powerful market research tool designed for energy professionals like you. For only $89/month, gain access to 150 interactive and downloadable charts, AI forecasting, and expert insights on oil, natural gas, natural gas liquids, and refined products. Stay ahead with our daily market email, weekly video recap, and PDF reports. Expand your knowledge and stay updated with our educational resources and industry trend updates. Our experienced team is here to provide personalized guidance, tools and support, ensuring your success in the energy sector.

Join us today and unlock the power of informed decision-making in the ever-evolving energy markets.

Register Now

Curious but want to learn more… Simply book a meeting with Bill & Brian and we’ll decide together if Rogue Edge is right for you:

Book a Meeting

—————————————————

Note: This article is intended for informational purposes only and does not constitute professional advice. The extraction and processing of natural gas liquids should be conducted in accordance with industry regulations and best practices.

Ethane Rejection how to maximize profit in natural gas processing

Leave a Comment / Uncategorized, Natural Gas, NGLs / By
bottle, mineral water, glass-2032980.jpg

Introduction

In the world of natural gas processing, maximizing profit is a constant goal for producers and processors. One strategy that has gained traction in recent years is ethane rejection. By understanding the dynamics of ethane in the market and leveraging its value, companies can make strategic decisions that optimize their bottom line. In this article, we will explore the concept of ethane rejection, its impact on oil and gas prices, and how the industry plans to approach it in the coming years.

The Process of Ethane Rejection

Ethane rejection is a practice employed by natural gas processors in the oil and gas industry. It involves leaving ethane in the natural gas stream and selling it as natural gas instead of extracting it for other purposes. This decision is primarily driven by the current market conditions, as ethane may not be in high demand or its profit margin may be low. When the cost of extracting ethane outweighs the price of standard oil, ethane rejection becomes a viable option. One nuance is that while Midstream processors of Natural Gas employ the process to reject ethane at the processing plant, many producers have an “election” to choose whether they would like to retain the ethane gallon or capture ethane’s heating value in an MMBtu as represented in the Natural Gas stream.

The Importance of Ethane

Although ethane is not always utilized in the production of NGLs, it plays a crucial role in the creation of ethylene, a key component in the production of various everyday products such as plastics, antifreeze, and detergents. Ethane demand has increased over the last 10 years due to large sized ethylene crackers that have been built in the United States.  This increased demand has lifted the price of ethane but the price still fluctuates based on demand for plastics (as well as the other products).

The Impact on Natural Gas Prices

The decision to reject or extract ethane has a direct impact on natural gas prices. When ethane is rejected, it remains in the natural gas stream and is sold as natural gas, which can help stabilize or lower gas prices. However, when ethane is extracted and used in the production of ethylene, it can increase the price of NGLs and have a positive effect on oil and gas prices. This delicate balance between ethane rejection and extraction is influenced by market demand and the overall profitability of the industry.  When evaluating Ethane Rejection, the processing plant does lose efficiency on Propane recoveries – which weighs in on the decision to reject or recover ethane.  Energy Rogue provides daily outlook for Natural Gas, Ethane, Propane, and virtually any energy product in the US (details at the end of the article)

Predictions for Ethane Demand

While the cost of ethane production can be high, industry experts predict a significant increase in demand for ethane-based products in the next few years. This increased demand will drive up ethane prices and potentially lead to a wider spread between ethane/natural gas and a shift towards wetter gas plays. With a greater focus on ethane recovery, the volume of ethane in gas streams will decrease, but the amount of propane recovered will increase, resulting in more efficient and profitable operations.  Energy Rogue tracks supply, demand, and exports for ethane, propane, natural gas and virtually any energy product in the US (details at the end of the article)

Ethane Rejection and Profitability

While ethane rejection can be a complex decision for production facilities, it is ultimately driven by market demand and profitability. By carefully assessing market conditions and understanding the potential value of ethane, companies can make informed decisions that align with their financial goals. Ethane rejection may provide short-term cost savings, but as demand for ethane-based products increases, the industry may shift towards greater ethane recovery to capitalize on the rising prices.  Energy Rogue values ethane rejection on a DAILY basis (Rogue Edge members have access to this along with so much more – details at the end of the article).  We also offer custom processing plant models (updated daily – book a meeting and we’ll discuss)

Ethane Rejection in Different Regions

The impact of ethane rejection varies across different regions. For example, in the Bakken Shale, where transportation costs for NGLs are high, the economics of ethane rejection become more compelling. The cost of recovering and transporting ethane from remote locations can exceed its value at market prices. In contrast, regions with lower transportation costs and higher ethane demand may choose to focus on ethane recovery to take advantage of the potential profits. Energy Rogue tracks every producing basin in the country and has details on nearly every processing plant in the US (details at the end of the article)

Considerations for Processing Strategies

When it comes to processing strategies, several factors come into play. Agreements between producers and processors, pipeline minimum volume commitments, and contractual requirements all influence the decision to reject or recover ethane. By utilizing advanced modeling approaches that consider measurement, quantity, quality, and value factors, processing plants can gain greater clarity on the economics of ethane rejection or recovery, enabling them to make optimal decisions. Energy Rogue is a partner with many natural gas processing companies in the US – we can help you too (join Rogue Edge and book a meeting today – details below)

Conclusion

Ethane rejection is a vital aspect of natural gas processing economics. By understanding the market dynamics and evaluating the value of ethane, companies can make informed decisions that maximize profitability. While ethane rejection may provide short-term cost savings, the increasing demand for ethane-based products could shift the industry towards greater ethane recovery in the future. By leveraging daily insight into Natural Gas and NGLs, Energy Rogue can help you stay ahead in a competitive market (details below).

Remember, the key to success in natural gas processing lies in staying informed, making data-driven decisions, and adapting to changing market conditions. As the industry continues to evolve, companies that embrace innovative strategies and leverage new technologies will be well-positioned to thrive in the dynamic world of natural gas liquids processing.

Curious about Rogue Edge?

Discover Rogue Edge, our powerful market research tool designed for energy professionals like you. For only $89/month, gain access to 150 interactive and downloadable charts, AI forecasting, and expert insights on oil, natural gas, natural gas liquids, and refined products. Stay ahead with our daily market email, weekly video recap, and PDF reports. Expand your knowledge and stay updated with our educational resources and industry trend updates. Our experienced team is here to provide personalized guidance, tools and support, ensuring your success in the energy sector.

Join us today and unlock the power of informed decision-making in the ever-evolving energy markets.

Register Now

Curious but want to learn more… Simply book a meeting with Bill & Brian and we’ll decide together if Rogue Edge is right for you:

Book a Meeting

What is Ethane and What are Its Uses?

Leave a Comment / NGLs, Uncategorized / By
blocks, bricks, toy-252602.jpg

Ethane is a hydrocarbon, an odorless and colorless gas that is produced as a byproduct when natural gas is processed or refined. It is primarily used to produce ethylene, propylene, and other petrochemical products. The lightest of the alkanes, ethane has many applications in various industries. This article explores what ethane is, its uses, properties, production methods, and more. Keep reading to find out everything you need to know about this versatile hydrocarbon.

What is Ethane?

Ethane is a hydrocarbon fuel primarily used to produce ethylene, propylene, and other petrochemical products. It is the most abundant hydrocarbon in the world, and the third simplest molecule after hydrogen and methane. Unlike most alkanes, ethane is naturally occurring, allowing for ethane extraction as a byproduct when processing or refining natural gas. Ethane can also be synthesized from crude oil and from coal through hydrogenation. Ethane is colorless and odorless, and is widely distributed in nature. It has many applications in various industries, like petrochemicals, natural gas processing, agriculture, and energy. Ethane is primarily used to produce ethylene, propylene, and other petrochemical products.

Properties of Ethane

Pure ethane has a heat of combustion of 25.5 MJ/kg, a flash point of -92 °C, an atmospheric boiling point of -88 °C, a specific gravity of 0.5, a vapor pressure of 99.3 kPa at 20 °C, and a viscosity of 0.1 Pa·s at 20 °C. The viscosity of ethane depends on the pressure and temperature at which it is measured. Ethane is relatively soluble in water and most common organic solvents. It is also miscible with ethanol, which is used as a solvent in ethane extraction. When ethane gets in contact with the atmosphere, it undergoes oxidation, producing CO2 and methane. Ethane is highly flammable, with a flammability limit of 10%. It is also inflammable, with a flash point of -18 °C.

Uses of Ethane

Ethane is primarily used to produce ethylene, propylene, and other petrochemical products. It is also used to produce ethylene oxide, ethylene glycol, ethanol, carbon dioxide, and hydrogen. Ethane is also used as an alternative fuel and a fuel additive. Ethane is a feedstock for the production of ethylene, a major building block for the petrochemical industry. Approximately half of the ethylene produced in the U.S. is used to make polyethylene, which is used to make plastic bags, bottles, wrap, and other packaging materials. Ethylene is also used to make a wide range of other chemicals. Ethane is also used as a fuel. Ethane is used in place of natural gas in some areas, and it can also be blended with other fuels to reduce emissions. Ethane can also be used to make ethanol, which is used as a fuel in certain vehicles. Ethane is also used as an additive to improve the performance of fuels in engines.

How is Ethane Produced?

Ethane is naturally produced as a byproduct when processing or refining natural gas. Ethane can also be obtained by hydrogenation of crude oil and coal, or through hydrogenolysis of ethylene. In North America and Europe, ethane production is primarily used to produce ethylene, propylene, and other petrochemical products. Ethane is synthesized from crude oil and coal through hydrogenation. These processes involve the catalytic conversion of ethane with hydrogen to produce ethylene or ethylene derivatives. In the hydrogenation process, the high pressure and temperature are needed for ethane conversion. Ethane can also be obtained by fractional distillation of natural oil and natural gas.

Supply and Demand of Ethane

The supply of ethane is expected to outpace demand over the next decade. Ethane supply is expected to increase by over 10 million tonnes per year from 2020 to 2030, due primarily to increased ethane production from natural gas processing. Ethane demand is expected to remain relatively stable. Ethane is used as a feedstock for ethylene and ethylene derivatives, a feedstock for the production of ethylene oxide, and as a fuel additive. Ethane demand is expected to increase in the near term due to increased ethylene and ethylene derivative production. Ethane demand is expected to decrease in the long term as ethylene production moves away from ethane feedstock. Ethane is expected to remain in surplus over the next decade.

Conclusion

Ethane is a hydrocarbon that is largely produced as a byproduct when processing or refining natural gas. Ethane is primarily used to produce ethylene, propylene, and other petrochemical products. Ethane is also used as an alternative fuel or a fuel additive and as a feedstock for ethylene and ethylene derivatives. The supply of ethane is expected to outpace demand over the next decade. Ethane supply is expected to increase by over 10 million tonnes per year from 2020 to 2030, due primarily to increased ethane production from natural gas processing. Ethane demand is expected to remain relatively stable. This article explored what ethane is, its uses, properties, production methods, and more. Ethane is a hydrocarbon that is produced as a byproduct when processing or refining natural gas. It is primarily used to produce ethylene, propylene, and other petrochemical products.

Join us with a Rogue Edge Membership:

Introducing Rogue Edge Membership, the ultimate market research tool for energy professionals. Stay ahead of the game with our comprehensive analysis of oil price trends, natural gas movements, and refined products. 

  • With over 150 interactive charts, you’ll make informed decisions that drive success. 
  • Our weekly video recaps and PDF reports provide invaluable insights into the future of energy trading. 
  • Plus, enjoy daily emails and direct access to industry experts Bill & Brian, who will guide you through the complexities of the market. 

Don’t miss out on this exciting opportunity to excel in the world of energy trading. Join Rogue Edge Membership today and seize your competitive edge.

Join us here:  Register – Energy Rogue

Curious but want to talk – Book a Meeting Here

What is Normal Butane and What It Can Be Used For

Leave a Comment / Uncategorized, NGLs / By
flame, gas, gas flame-580342.jpg

‍

Butane is a hydrocarbon gas with a chemical formula of C 4 H 10 . It has properties that make it valuable as a fuel source. Butane can be used for many different things, but the most common use is as an alternative fuel for lighters and heaters. What are some other uses for butane? Keep reading to find out.

Lighters and Heaters

One of the most common uses for butane is in lighters. Butane has been used as a lighter fuel for decades. However, many modern lighters are now filled with an aerosol containing a mixture of butane and propane, or with butane alone. Butane will also work as a heating fuel. You can use a heater containing butane to provide warmth during cold weather.

Food and Cooking

Butane is often used in cooking. It can be used to expand food, such as frozen vegetables and pasta. Butane is also commonly used to make whipped cream. Butane is often blended with other fuels, such as propane or natural gas, to create a fuel mixture for cooking. Butane is also used for cooking in developing countries, as it is commonly used in unrefined petroleum.

Industrial Uses

Butane is often used in industrial applications. It is commonly used in blast furnaces as a fuel for carbon reduction and for desulfurization. Butane is also frequently used as an industrial refrigerant. It is useful in this application because it does not damage food or biological materials, like CO does. Butane can also be used as a solvent for industrial applications, such as in removing paint and ink.

Additionally, Butane Can Be Used for:

– As a cleaning solvent, butane can be used to remove dirt, grease, and other contaminants from surfaces. – Butane can be a refrigerant and a propellant in aerosol sprays. – Butane can be used in extraction applications, such as in removing crude oil from the ground.

Safety Tips for Working with Butane

Butane is an extremely flammable, highly combustible gas. It can easily ignite and cause fires or explosions if it comes into contact with a spark or flame. Always make sure that you are working safely when using butane. If you are using butane as a heating or cooking fuel, make sure that you follow all safety instructions on the product packaging.

Summing up

Butane is a hydrocarbon gas with a chemical formula of C 4 H 10 . It has properties that make it valuable as a fuel source. Butane can be used for many different things, but the most common use is as an alternative fuel for lighters and heaters. Butane is often used in cooking, as it can be used to expand food, such as frozen vegetables and pasta, and to make whipped cream. Butane is also commonly used in industrial applications.

Join us with a Rogue Edge Membership:

Introducing Rogue Edge Membership, the ultimate market research tool for energy professionals. Stay ahead of the game with our comprehensive analysis of oil price trends, natural gas movements, and refined products. 

  • With over 150 interactive charts, you’ll make informed decisions that drive success. 
  • Our weekly video recaps and PDF reports provide invaluable insights into the future of energy trading. 
  • Plus, enjoy daily emails and direct access to industry experts Bill & Brian, who will guide you through the complexities of the market. 

Don’t miss out on this exciting opportunity to excel in the world of energy trading. Join Rogue Edge Membership today and seize your competitive edge.

Join us here:  Register – Energy Rogue

Curious but want to talk – Book a Meeting Here

Does America have enough oil? The Truth about our Energy Resources

Leave a Comment / Oil, Natural Gas, NGLs, Uncategorized / By
refinery, crude oil, mineral oil-161795.jpg

Does America have enough oil?
The Truth about our energy Resources

The United States is one of the largest producers of oil in the world. In fact, America is producing at a rate that rivals countries like Saudi Arabia and Russia. However, it’s not just about how much oil we have but rather how quickly oil can be extracted and at what cost. To remain a top player in the energy market, we should understand the US oil production and consumption patterns. Is America running out of oil? Do we have enough natural gas to meet demand? Are renewable energy sources a viable long-term solution? Unbeknownst to many, there is an ongoing debate about whether or not America has enough natural resources for future growth and development. The truth lies somewhere between yes and no. Let’s take a look at the facts and explore some common misconceptions about America’s energy resources.

Crude Oil Supply:

How much Oil does America produce?

The United States is the largest oil producer in the world (counting crude oil, petroleum liquids, biofuels, and refinery processing gain), more than even Russia and Saudi Arabia. In fact, Texas alone produces about 40% of all American oil. New Mexico, North Dakota, Oklahoma, Alaska and California also produce significant amounts of hydrocarbons. These seven states account for approximately 74% of all American oil production and yield approximately 8.5 million barrels of crude oil each day. Current crude production from shale plays total over 7.5 million barrels of crude per day.  Crude oil production is forecast to increase to 12.6 million barrels per day (note – we are currently producing over 12.2 mmbopd or million barrels of oil per day).  Many analysts attempt to forecast crude oil production, but the fact remains that sharp increases/decreases in price provide a more wide variation of forecasts.  If the price for crude oil is $50-60/barrel, crude production in the US might shrink to 8 mmbopd.  On the other hand if crude oil is $100+, crude oil production might grow to 15 mmbopd.

Let’s take a quick look at the largest 10 oil producing countries:

Country

Million barrels per day

Share of world total

United States

18.88

20%

Saudi Arabia

10.84

11%

Russia

10.78

 11%

Canada

  5.54

  6%

China

  4.99

  5%

Iraq

  4.15

  4%

United Arab Emirates

  3.79

  4%

Brazil

  3.69

  4%

Iran

  3.46

  4%

Kuwait

  2.72

  3%

Total top 10

68.82

  72%

World total

95.57

 

Crude Oil Demand:

How much oil does America consume?

Contrary to popular belief, the United States is not one of the top consumers of oil in the world. In fact, America only ranks 22nd in terms of oil consumption per capita (interesting names ahead on per capital – Saudi Arabia, Kuwait, Luxembourg, Singapore, Bermuda, Greenland, Canada). The average American consumes approximately 22 barrels of oil each year. This number is expected to drop in years to come due to increasing investments in renewable energy technology and sustainable development strategies. Singapore leads the pack with 87 barrels of oil consumed per person per day.  Saudi Arabia is in the top 10 with  37 barrels of oil consumed annually per person and the United Arab Emirates with 35.  Many people believe that America consumes an absurd amount of oil each year.

Let’s take a quick look at the top 10 oil consuming countries:

Country

Million barrels per day

Share of world total

United States

20.54

20%

China

14.01

14%

India

  4.92

  5%

Japan

  3.74

  4%

Russia

  3.70

  4%

Saudi Arabia

  3.18

  3%

Brazil

  3.14

  3%

Canada

  2.63

  3%

South Korea

  2.60

  3%

Germany

  2.35

  2%

Total top 10

60.81

61%

World total

100.23

 

Natural Gas?

Natural Gas: The fastest growing resource...

Natural gas is the fastest growing energy source in the United States – consumption has grown over 30% since 2010. In fact, natural gas is expected to account for more than 26% of America’s energy production by 2030. Currently, natural gas is used to generate 38% of electricity in the United States.  Natural gas is much cleaner than other carbon-based fuel sources. It’s also cheaper (until early 2022 – 😉), abundant and easier to transport. As a result, natural gas is expected to remain the main source of electricity in America for years to come. In terms of production, the United States is the largest natural gas producer in the world. As a matter of fact, the US has become one of the largest exporters of Natural Gas in the world via LNG – with the other two countries in the top three – Australia and Qatar.

Crude Oil Production Capacity:

Is America Running Out of Oil?

No, not at all. In fact, American reserves are predicted to last for another 40 years. This figure is based on daily consumption rates and does not account for rising demand. The rate at which oil is extracted from the ground varies significantly and can shift dramatically within a matter of months depending on prices and demand.. It depends on several factors including the location of the well, the type of crude oil and the amount of pressure it is under. As crude oil ages, it becomes more difficult to extract and the cost of production increases.

Reserves are one of the most contended variables as it can vary significantly based on who does the reserves analysis on the actual economic recovery of the oil.  One important fact to understand is that if it costs more than a barrel is worth to extract it from the ground, it will not be counted in oil reserves – which can vary significantly due to price swings.  At the end of 2020 – here is where the market “believes” the reserves stand by country:

Rank

Country

Reserves

% of World Total

1

Venezuela

303.8

17.50%

2

Saudi Arabia

297.5

17.20%

3

Canada

168.1

9.70%

4

Iran

157.8

9.10%

5

Iraq

145

8.40%

6

Russia

107.8

6.20%

7

Kuwait

101.5

5.90%

8

United Arab Emirates

97.8

5.60%

9

United States

68.8

4.00%

10

Libya

48.4

2.80%

What about renewables?

Where do renewables fit in?

Renewable energy sources such as solar and wind are expected to produce about 44% of America’s electricity by 2050. This projection is based on current production rates and expected technological advancements. These sources of energy are growing in popularity because they are cheap and environmentally friendly. They also require little to no maintenance. However, renewable energy sources are not expected to meet all of America’s energy demands. This is because certain areas of the United States are not suitable for solar and wind farms due to climatic conditions.

The jury is still out on if renewables solve the dependence on oil & gas. The majority of energy experts agree that renewable energy technologies are here to stay. They are expected to contribute significantly to America’s power generation in the near future. However, there is no consensus on whether or not renewables will replace conventional energy sources such as oil and gas. Experts do agree that the two sources will form a symbiotic relationship in the years to come. As renewable energy technologies continue to evolve and improve, they are expected to meet more and more of America’s energy demands. But they will likely never replace conventional sources of energy.

Renewables will have a direct impact on crude oil and natural gas demand.  However, when we look at each product – there is an amount of demand that simply can not be replaced by renewables (at least with today’s technology).  Crude Oil is used to make products made from wood, plastic, clothing, computing, etc. – there is a certain amount of crude oil demand that will simply be needed as long as we use monitors, tvs, cell phones, clothing, furniture, etc.  On the Natural Gas side, it is important to realize that when the wind dissipates or the sun is hidden behind clouds, Natural Gas is our likely back up fuel.  This reinforces a viewpoint of needing ALL OF THE ABOVE in our energy future.



windmills, clouds, fog-1048981.jpg

Conclusion:

So what is the bottom line?

America is not running out of oil but it is becoming more expensive to extract as reserves age. There are plenty of ways to reduce this dependency by switching to renewable energy sources. However, doing so will take time and require significant investment. In the meantime, we can take steps to reduce our reliance on oil and gas by creating a more sustainable way of life. This can involve investing in public transportation, increasing energy efficiency and developing better regulations to curb carbon emissions.

landscape, water, rock-1328858.jpg

Join Us with a Rogue Edge Membership:

Introducing Rogue Edge Membership, the ultimate market research tool for energy professionals. Stay ahead of the game with our comprehensive analysis of oil price trends, natural gas movements, and refined products. 

  • With over 150 interactive charts, you’ll make informed decisions that drive success. 
  • Our weekly video recaps and PDF reports provide invaluable insights into the future of energy trading. 
  • Plus, enjoy daily emails and direct access to industry experts Bill & Brian, who will guide you through the complexities of the market. 

Don’t miss out on this exciting opportunity to excel in the world of energy trading. Join Rogue Edge Membership today and seize your competitive edge.

Join us here:  Register – Energy Rogue

Curious but want to talk – Book a Meeting Here

Market Minute is a daily email with the latest prices and fundamentals so that you don’t get left behind.  Designed to give you the basics.  SIGN UP FOR FREE !!

Rogue Lite
$30/m

Rogue Lite is a Daily Email that provides 24 Daily Charts for Crude Oil, Natural Gas, NGLs, and Refined Products – including storage/stocks, Fundamental Supply/Demand, Technical Analysis, Basis. This email provides a quick way to determine the market based on both fundamental analysis and technical analysis. Balancing supply, demand, and technical trading to give you everything you need for YOUR MARKET PREDICTION!

  • 24 Daily Charts
  • 6 NG Charts
  • 4 Crude Oil Charts
  • 6 NGL Charts
  • 7 Trading Charts
  • Daily Advanced Email
  • Fundamental Supply
  • Fundamental Demand
  • Technical Analysis
  • Storage & Stocks
  • Products & NGLs
Rogue Edge™
$89/m

Rogue Edge is a comprehensive and robust dashboard for oil, natural gas, natural gas liquids, and refined products. The dashboard includes interactive and downloadable charts for fundamental analysis and technical analysis. Supply and demand for each commodity in the US and internationally is available as well as technical indicators to predict short term price direction. The Rogue Edge also provides Artificial Intelligence analysis to predict future supply and demand.

  • 84 Daily Charts
  • 15 NG Charts
  • 15 Crude Oil Charts
  • 16 NGL Charts
  • 10 Products Charts
  • 28 Trading Charts
  • Daily Advanced Email
  • Fundamental Supply
  • Fundamental Demand
  • Technical Analysis
  • Storage & Stocks
  • Products & NGLs
  • Interactive Website

The Impact of Russia on World Crude Oil Supply and Demand

Leave a Comment / Natural Gas, NGLs / By

The Impact of Russia on World Crude Oil Supply & Demand:

Everything you need to know about Russian Energy!

Russia is the world’s third largest crude oil producing country second only to the US. In addition to crude oil, Russia provides more than 40% of the Natural Gas used in Europe.  The country has a lot of geopolitical influence in the world, but what does that mean for the future of our global energy supply?  How will Russia’s geopolitical actions affect crude oil prices?  If crude and natural gas supplies from Russia are sanctioned, how will the supply and demand be balanced?

When Russia joined OPEC+ in 2016, the organization became one of the most prominent influences in the world.   OPEC already commands a large percentage of the World Supply of Crude Oil with over 28 MMBOPD, that represents close to 30% of the global demand.  Add in Russia’s 10-11 MMBOPD, and it becomes close to 40% of the world’s supply of crude oil.

Crude Oil is needed not only for transportation, but also for agriculture, manufacturing, plastics, and many more.  Roughly 64% of oil demand is used to support Transportation – but please recognize that includes every facet of transportation (airlines, shipping, trucking, and automobiles) and roughly 20% of oil demand is represented in industry, agriculture, buildings, commercial, and public services.

How would the world respond if Russia’s supplies are no longer available?

Russia's Oil Supply

As of early 2022, Russia produces roughly 10-11 MMBOPD and consumes roughly 3 MMBOPD of refined products leaving a large amount of oil that is exported out of the country.  The main port for Russian crude oil is Novorossiysk which feeds into the Black Sea – it is important to understand that the Black Sea needs to pass through Turkey to access the Mediterranean Sea.  Oil and natural gas are not just a commodity used for fuel, but it’s also used to produce goods like plastics and fertilizers.  If Russia cut off their supplies of oil and natural gas, they would have massive impacts on their economy as well as other countries that rely on Russian products.

Russia's Natural Gas Supply

Russia is one of the world’s largest suppliers of natural gas, providing a significant portion of the natural gas used in Europe.  In early 2022, Russia exported 40% of its natural gas to Europe through pipelines running through Ukraine. One consequence of this is that if Russia cut off these exports, Russia would also be cutting off Europe’s supply of energy which could lead to an international crisis between these countries.

The country has a lot of geopolitical influence and can even dictate prices in many European countries.  While Russia exports its natural gas to Europe, it also has plans to increase their production by building new pipelines and drilling.  This would give Russia more control over its own supply chain, which would decrease dependence on pipeline imports from Central Asia.  However, some Russian companies have been shown to be reluctant to expand into new markets, which could hamper future production opportunities.

What would happen if Russia's supplies are no longer available?

If Russia’s supplies are no longer available, the world would be left with a number of challenges.  If Russia’s crude oil is no longer available, the price of crude oil would skyrocket due to a lack of supply.   This would most certainly result in a drastic increase in gas prices and transport prices.  And, in March of 2022, we can see the impact of potential Russian sanctions that would limit the world’s supply of crude oil.

If Russia’s natural gas is no longer available, factories may start shutting down or slowing production due to the lack of power generation. This could also affect winter heating as natural gas is needed for this. The world would need to find an alternative solution for power generation and winter heating if Russia stopped supplying natural gas.

Russia has a lot of geopolitical influence over much of the world, so if they were to stop supplying their energy resources, it creates new geopolitical conflicts that might have otherwise not existed. For example, because Europe relies on Russian natural gas for 40% of its energy needs, it is vulnerable to political actions from other countries or groups like OPEC+. A disruption in supplies from Russia would create even more pressure on Europe and create new tensions between nations that had previously been at peace.

Conclusion

In 2020, Russia’s oil and gas exports account for approximately 50% of the country’s GDP.  Sanctions on energy would impact the country in a very severe manner (unless some creative ways to execute trade outside of the sanctions were to come into play).  Sanctions on energy is difficult though as Russia supplies 40% of Natural Gas to Europe (through Nord Stream 1 and pipelines that travel through Ukraine.

As a result, geopolitical actions have an enormous effect on global crude oil prices which is used as part of a strategy for various goals that Russia seeks.  If sanctions or other constraints limit Russian production from the global supply mix, the deficit would be over 6% of the global supply – and without storage or stocks to soften the impact, economies around the world would likely suffer.  As part of it’s ongoing initiatives, Russia is well aware of this influence and uses this information to further their goals and objectives.  While joining OPEC + was controversial at the time, it does concentrate most of the world’s energy resources in the hands of OPEC +.   Aligning OPEC with Russia puts the energy supply for the world in a very interesting (sometimes concerning) way.  

Ultimately, should Russia’s supplies be eliminated from the worldwide mix, there would be an adaptation that would incentivize other countries and producers of energy to come into the mix.  In the short run, there would be a shortfall of products (and more important Natural Gas) but in the long run, we might have a more stable energy supply portfolio.

Rogue Edge™
$89/m

Rogue Edge is a comprehensive and robust dashboard for oil, natural gas, natural gas liquids, and refined products. The dashboard includes interactive and downloadable charts for fundamental analysis and technical analysis. Supply and demand for each commodity in the US and internationally is available as well as technical indicators to predict short term price direction. The Rogue Edge also provides Artificial Intelligence analysis to predict future supply and demand.

  • 150 Interactive Charts
  • Daily Email - Current Market
  • Weekly Video Recap & Insights
  • Weekly PDF Report
  • Daily Support & Resistance - Nat Gas & Crude
  • Insight into potential future moves on Supply, Demand, and Financial Markets
  • AND - Access to Bill & Brian for Tailored Insights -----> JUST FOR YOU



Still Curious?? Book a meeting with Bill & Brian via the link below

Book my Meeting

home

blog

basic

edge

contact

The Ultimate Guide to Ethane Rejection

Leave a Comment / Natural Gas, NGLs / By
processing plant

The Ultimate Guide to Ethane Rejection:

Everything you need to know and more!

Whether you are new to the world of ethane rejection or an experienced veteran, this blog post will provide you with everything that you need to know about ethane rejection. From what it is, who needs to worry about it, and how it can affect your plant, to what you can do to either REJECTING or RECOVERING ETHANE, here is your ultimate guide!

What is Ethane Rejection?

Ethane rejection is a process that removes ethane from the product stream before it enters downstream Natural Gas Pipelines.  Wet gas streams (raw natural gas that still contains natural gas liquids – NGLs) Processing plants typically are built with two main NGL extraction techniques:  Refrigeration and Cryogenic. 

How is ethane recovered or rejected?

Refrigeration Processing removes heat and drops the temperature of the wet gas stream which then allows the heavier NGLs to drop out, though lighter elements such as Ethane (C2) and Propane (C3) are not extracted efficiently.  Cryogenic Processing drops the gas stream to approximately -120 degrees Fahrenheit which allows for Ethane and Propane to be extracted efficiently.

The difference between recoveries can be significant.  For example, refrigeration might be able to extract Ethane around 40% of the total Ethane detected in the gas stream, while cryogenic will be able to extract Ethane over 90%.  This allows for cryogenic facilities to recover Ethane at 90%+ and the plant can choose how low to drop the temperature to recover Ethane at the full 90% or to drop the temperature slightly less to “Reject” Ethane.  Cryogenic natural gas processing plants have varying degrees of efficiency when Rejecting Ethane – some plants might be able to Recover only 8% (leaving 92% of Ethane in the downstream gas).

Here is a sample of recoveries for a highly efficient Cryogenic Processing Plant:

In Recovery Mode, Ethane gets efficient recoveries at 90.9% and Propane at 99.3% which provides efficient extraction of C2 & C3 out of the gas stream.  This plant is able to optimize in Rejection Mode to lower recoveries for Ethane to 9.3% and Propane at 92.2%. 

Now you might ask, why would you want to do that, silly?

Why would you WANT to Reject Ethane?

What makes the world go around?  Newton’s first law of motion states that an object in motion stays in motion – so physics really … Actually, we were talking metaphorically – it’s all about the Benjamins, Dollars, Green, Moola.

Bottom line:  MONEY

Natural Gas, Ethane, Propane each have a value – and those values combined with recoveries will determine the value derived from the Plant Inlet Mcf.

For simplicity, let’s just look at Ethane vs Natural Gas (which is the main driver in the calculation):

For 10,000 Mcf with a 1.3 BTU Factor and a C2 GPM of 3.00:

  • Recovery (90% extraction):
    • Ethane Volume:   27,000 Gallons
    • Natural Gas Volume:   11,209 MMBtu
  • Rejection (10% extraction):
    • Ethane Volume:   3,000 Gallons
    • Natural Gas Volume:   12,801 MMBtu

For a price case of Ethane at $0.30 per Gallon and Natural Gas at $3.50, Recovery ends up being a better option by $0.16 per inlet Mcf. 

So, let’s take a look at a couple of quick price cases if you only Recover:

Ethane
Natural Gas
Recovery vs Rejection
$0.30/Gallon
$3.50/MMBtu
+ $0.16/Mcf
$0.25/Gallon
$4.50/MMBtu
($0.12)/Mcf

So, when Ethane is $0.30/Gallon and NG is $3.50/MMBtu, RECOVERY is a better economic option by $0.16/Mcf which is worth $48,667 if you ELECTED RECOVERY on 10,000 Mcfd!!!

And, when Ethane is $0.25/Gallon and NG is $4.50/MMBtu, REJECTION is a better economic option by $0.12/Mcf which is worth $36,500 if you ELECTED REJECTION on 10,000 Mcfd!!!

As you can see, if you ALWAYS recover ethane, you can lose money. 

The key is to watch these economics monthly at a minimum!! 

Would you like to get a Weekly Ethane Rejection Analysis for YOUR PLANT?

If you would like YOUR PROCESSING PLANT with a daily updated forward outlook of Ethane Recovery vs Rejection for ONLY $500/month, drop us a line at rogue@energyrogue.com and bill@energyrrogue.com to set it up!

Who needs to worry about Ethane Rejection?

Producers, Midstream, and Downstream – yep pretty much everyone!

  • PRODUCERS need to elect Ethane Rejection or Recovery for their highest Well-Head Net Value!
  • MIDSTREAM:
    • Processors need to monitor for Plant profitability
    • Pipelines need to monitor for Gas Quality
  • DOWNSTREAM:
    • Natural Gas Consumers should know whether Ethane is being rejected as that would provide more Natural Gas Supply to the mix (an estimated 0.8 Bcfd is the swing Ethane Recovery/Rejection)
    • Ethane Consumers should know whether Ethane is more profitable in the Natural Gas stream or as Purity Ethane

Essentially, any part of the energy value chain SHOULD know about Ethane Rejection!

Conclusion:

Ethane rejection is a complicated process, but one that can bring value to your organization!  As you can see from this Ultimate Guide to Ethane Rejection, the economic value impact around whether to recover or reject ethane is worth it (currently Recovering Ethane is worth $0.15/Mcf).

Producers can create incremental value for their Well Head Netback.

Midstream Processors can be more profitable managing the Plant Operations to the most economic result.  Midstream Pipelines need to monitor ethane for gas quality.

Natural Gas Consumers will be able to determine whether there will be more or less natural gas due to processing is necessary to ensure that the gas flowing into the pipeline is the highest quality gas possible.

Ethane Consumers will know whether there will be less ethane available due to rejection or more ethane available due to recovery.

Ethane Rejection sounded like a foreign concept at first but luckily, this guide has provided you with all of the information you need to know about ethane rejection.

Have a great day!

Team Rogue

Rogue Edge™
$89/m

Rogue Edge is a comprehensive and robust dashboard for oil, natural gas, natural gas liquids, and refined products. The dashboard includes interactive and downloadable charts for fundamental analysis and technical analysis. Supply and demand for each commodity in the US and internationally is available as well as technical indicators to predict short term price direction. The Rogue Edge also provides Artificial Intelligence analysis to predict future supply and demand.

  • 150 Interactive Charts
  • Daily Email - Current Market
  • Weekly Video Recap & Insights
  • Weekly PDF Report
  • Daily Support & Resistance - Nat Gas & Crude
  • Insight into potential future moves on Supply, Demand, and Financial Markets
  • AND - Access to Bill & Brian for Tailored Insights -----> JUST FOR YOU



Still Curious?? Book a meeting with Bill & Brian via the link below

Book my Meeting

home

blog

basic

edge

contact

Copyright© 2023 Energy Rogue®
Powered by Energy Rogue