Gas production, demand and processing -- A satellite view

Over the last 10 years, from 1985 to 1994, the volume of gas processed in the continental US except for Alaska, has steadily increased and there are optimistic forecasts of increasing demand for natural gas. Also, the unit recovery of natural gas liquids (NGL), in gallons per volume (MCF) of gas processed, has stayed relatively constant at an average of about 1.75 GPM. While total NGL volumes recovered has increased, at the same time, the gas processing margins which is the difference between the value of the NGL in the gas and the value as fractionated product, in constant dollars has declined. The industry is processing more but enjoying it less. On closer examination, the major gas processing regions of the US each present a different picture. The Gulf Coast has increasing gas processing volumes but declining unit NGL recoveries. The gas processing volume trend is down but the NGL unit recovery trend is up in the Midwest. Gas volumes processed in the Rocky Mountains have almost doubled over the period but the unit NGL recovery has dramatically declined. More importantly, in all three regions of the US, the processing margins in constant dollars are declining. The highest margins were recorded in 1985, and never achieved again in the 10 year period. Current margins are hovering below normal and just above the 10 year lows