The production for Natural gas liquids or NGLs for short is rising high. The EIA or Energy Information Administration of the U.S. estimated in their latest report, that the NGL plants would increase the production of HGLs or hydrocarbon gas liquids to 3.2 MMBbl/d this year. In their recent report called Short-Term Energy Outlook or STEO, EIA explained that the production goes up from 2.6 million barrels per day, two years ago to the aforementioned quantity in 2015. In 2016, this is estimated to be 3.5 million bbl/ d. NGL makes it easy to drill out wet gas. This activity is most feasible for companies like Chesapeake Energy Corporation (NYSE:CHK).
Reason for Increase
NGLs are the kinds of hydrocarbons. Production of these takes place when natural gases (in the wetter form) are being processed in plants for natural gas. The wet gases include condensed heavy hydrocarbons and methane. NGLs in the meanwhile, include gases like natural gasoline, butane, propane and ethane.
Most of the increase in production of natural gas liquids is attributed to additional propane and ethane. HGLs are inclusive from NGLs along with olefins like ethylene and propylene. These olefins are meant for production of polymers, which in turn are used for making plastic. The domestic industry of petrochemicals in the U.S. is increasing its demand for propylene and ethylene. At the same time, there is an increased demand for exports.
It is because of the aforesaid reasons that there has been a projected increase in the production of NGLs. These NGLs help making drilling the wet gas reasonable for producers like Chesapeake Energy Corporation, Laredo Petroleum Inc (NYSE:LPI) and EOG Resources Inc (NYSE:EOG).
Natural Gas Production Lagging Behind
From January 2011 to December 2014, the production of NGLs (inclusive of the refinery gas) saw a surge of 48%. There was an increase from 65.5 million barrels monthly production to 96.7 million barrels monthly making. In the same period, the production of dry natural gas increased by just around 24%.