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Ohio Utica Shale

High prices for NGLs drive drillers to target wet areas

By Bob Downing Published: May 8, 2014

From the U.S. Energy Information Administartion today:

 

graph of natural gas liquids prices are now roughly halfway between natural gas and crude oil prices, as explained in the article text

Source: WTI and Henry Hub spot prices from Reuters, NGPL composite price from EIA via Bloomberg
Note: NGPL Composite price estimates for March and April 2014 were calculated using February weights from form EIA-816, Monthly Natural Gas Liquids Report.

In recent years, high levels of natural gas production have pushed prices down. The Henry Hub spot price averaged $3.73 per million British thermal units (MMBtu) in 2013. In 2012, the average annual Henry Hub price was $2.75/MMBtu, which reduced profit margins for many natural gas producers. The relatively high value of natural gas liquids (NGL) has led producers to target wet gas. NGL prices have traditionally been linked to crude oil, resulting in a significant price premium over pipeline-quality dry natural gas. More recently, the natural gas plant liquids composite spot price (which approximates a value of NGL produced at natural gas processing plants) has hovered roughly halfway between West Texas Intermediate (WTI) crude oil and natural gas spot prices.

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