In 2020 and 2021, more than 2,000 miles of new liquids pipelines were commissioned in the US, according to the US Energy Information Administration’s Liquids Pipeline Projects database. Several of these recent infrastructure projects were dedicated to transporting a mix of natural gas plant liquids (NGPLs), which are produced from raw natural gas streams at natural gas processing plants.
Natural gas plant liquids must be extracted from raw natural gas streams so the processed natural gas can be sold into the natural gas market. After these NGPLs—a mixture of ethane, propane, butanes, and natural gasoline known as the Y-grade mix—are separated from raw natural gas (primarily methane), they are shipped by pipeline for further processing.
The expanded Y-grade pipeline capacity enables natural gas processing plants to process more natural gas and to ship the extracted Y-grade mix to fractionation plants at relatively low cost. At fractionation plants, the Y-grade mix is further processed into its components, which can then be sold individually.
Of the 14 Y-grade pipeline projects completed in the past two years, five projects, accounting for more than 800,000 b/d of new capacity, originate in the Permian basin of West Texas and Southeast New Mexico. Natural gas production in the Permian basin tends to have more NGPL content relative to the total volume of raw natural gas produced than most other basins in the US.
The additional capacity to ship Y-grade from the Permian basin and the completion of two major dry natural gas pipelines in the region (the Permian Express and Whistler) have facilitated growth in natural gas production in the Permian basin at a time when crude oil production has remained relatively flat. NGPL production for the Texas Inland and the New Mexico refining districts, which overlap the Permian basin, grew by 19%. EIA’s Drilling Productivity Report (DPR) estimates that gross withdrawals of natural gas grew by 16% in the Permian basin. During this same period, the DPR estimates that crude oil production in the Permian basin in October 2021 equaled production levels in December 2019 of 4.8 million b/d.