COVID 19 has reduced production from shale basins across the U.S., limiting wet gas production and the extraction of associated NGLs. In this article, we will discuss the impact of lower NGL production  on U.S. gulf coast fractionation balances and spot fractionation rates. Since 2012, robust oil-directed drilling has resulted in a ~18 Bcf/d increase in wet gas production in the U.S., with Permian leading the pack. NGL Y-grade production from the Permian, Eagle Ford, Mid-continent, Bakken, Rockies, Haynesville, and the Barnett flow to U.S. gulf coast fractionator complex, which in aggregate fractionated  approximately 4.1 Million bpd of NGLs in 1Q 2020.

By 1Q 2020, five major regions – all west of the Mississippi (Permian, Eagle Ford, Mid-con, Niobrara, and Bakken) in aggregate processed ~43 Bcf/d of wet gas, resulting in 3.7 Million Bpd of NGL production. As wet gas production grew, an aggregate of ~33 Bcf/d of processing capacity was installed in the five regions since 2012 to facilitate NGL extraction, with Permian adding the majority of new plants. For now, there is an ample near-term processing capacity.

In lock step, NGL pipeline capacity expanded to accommodate greater NGL volumes for transportation to the gulf coast for fractionation complex at Mont Belvieu and Sweeny.  NGL pipeline capacity is  projected to be adequate to transport future growth in NGL production through 2024.