Ethane Prices Are "Collapsing," According To The Wall Street Journal

• Scott Detrow
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  Scott Detrow is a congressional correspondent for NPR. He also co-hosts the NPR Politics Podcast.
  
  Detrow joined NPR in 2015 to cover the presidential election. He focused on the Republican side of the 2016 race, spending time on the campaign trail with Donald Trump, and also reported on the election's technology and data angles.
  
  Detrow worked as a statehouse reporter for member stations WITF in Harrisburg, Pennsylvania, and KQED in San Francisco, California. He has also covered energy policy for NPR's StateImpact project, where his reports on Pennsylvania's hydraulic fracturing boom won a DuPont-Columbia and national Edward R. Murrow Award in 2013.

The supply curve is once again hurting natural gas drillers.
The increase in domestic gas production brought on by shale drilling has led to the lowest natural gas prices in a decade. Drillers combated that trend by focusing on “wet gas” – pockets that contain byproducts like ethane, which can be sold to boost revenue. In Pennsylvania, that has meant more drilling in the southwest and less in the northeast.
But so many drillers are focusing on wet gas that its price is dropping too. The Wall Street Journal has more:

Prices for ethane have collapsed in many parts of the country as supply far outstrips demand from chemical plants that use it as a feedstock for plastics.
Ethane at the Mont Belvieu, Texas trading hub, a traditional pricing benchmark, sold for 28.4 cents per gallon Tuesday, down from a peak average of 89 cents in October, according to Platts research. Propane at Mont Belvieu sold for 79.65 cents per gallon, down from $1.47 a gallon in October.
The weak prices, which may last for several years due to a mismatch between supply and demand according to many market observers, could provide an unexpected hit to earnings and cash flow for many exploration and production companies.

The news comes at a time when Governor Corbett is pushing to give Shell a $66 million annual tax break on ethane purchases, as the company considers building an ethane “cracker” in Beaver County.
 

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