Gas processing margins are in structural decline

Historical oil and gas pricing data show that gas processing margins are in a long-term decline, a phenomenon not welcomed by processors. As the most recent unprecedented duration of gas prices higher than $5/MMbtu shows, low or nonexistent margins are compelling processors to accelerate a contract restructuring campaign to restore processing plant earnings.For the present purposes, processing margins or the "frac spread" are defined as the difference between the price of NGLs at Mont Belvieu, Tex., (based on the national average NGL composition) and the price of natural gas at Henry Hub, La., represented by near-month prices on the New York Mercantile Exchange. Click here to enlarge ima...

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