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US ethane output growth to slow in 2026
US ethane output growth to slow in 2026
The approach of maximum recovery in the Permian and a rising focus on less liquids-rich acreage will limit ethane growth prospects, writes Joseph Barbour Houston, 6 January (Argus) — US ethane production growth may slow this year because the largest gas processors are operating at near-maximum recovery rates, limiting scope to increase supply. US ethane production, or "recovery", from gas processing surged to 2.87mn b/d (59mn t/yr) in 2024 from 1.27mn b/d in 2016, when the US began waterborne exports of ethane, data from government agency the EIA show, with ethane output growing by 20pc/yr in 2018 alone. But the pace of growth may be slowing. The EIA forecasts ethane recovery to have averaged 3.06mn b/d last year and to rise to 3.15mn b/d in 2026, in its latest Short-Term Energy Outlook (STEO), annual gains of 6.6pc and 2.9pc, respectively. This means production growth has slowed consistently since 2022, when it stood at 12pc, dropping to 8.1pc in 2024. This is partly attributable to an easing in the expansion of natural gas production, with marketed output — excluding volumes from Alaska and the Gulf of Mexico — rising by only 0.5pc in 2024 from 2023, the slowest since the pandemic hit in 2020. Gains in US ethane production have far outpaced those of natural gas over the past 10 years. Onshore gas output rose by 50pc from 2016 to 2024, while ethane yields more than doubled. But this trend may stall as the US gets closer to recovering near-maximum levels of ethane from the gas stream, giving less headroom for far higher growth. The robust increase in overall yields of natural gas liquids (NGLs) may also further slow relative to natural gas this year as a result of US producers targeting "drier" gas acreage — reservoirs with lower NGL content. "A lot of the growth we expect to see for crude and gas output is coming from the Haynesville formation [in Texas and Louisiana]… where it's a lot less liquids-rich," STEO contributor Joshua Eiermann told Argus . Ethane, which is a by-product of "wet" natural gas, is left in the gas stream — or "rejected" — if it is not economical to separate it for use as a petrochemical feedstock in ethylene steam crackers. The US is rejecting less ethane than it did in the past. It rejected 500,000-575,000 b/d in 2017 , or at least a quarter of the total, while such volumes stood at 600,000-800,000 b/d in 2025 based on industry estimates , which equates to about 16-21pc of the total, based on EIA estimates. Much of the US' NGL production growth in recent years has been driven by the Permian basin in Texas and New Mexico, which is close to full ethane recovery rates. Ethane export infrastructure expansions on the Gulf coast and growing NGL pipeline and storage capacities have encouraged higher Permian recovery. This means that midstream firms that operate from "well-to-water" for NGLs in the Gulf coast region, such as Enterprise Products and Energy Transfer, already recover nearly all the ethane they produce, market participants say. Handling rejection The US Gulf coast accounted for about 67pc of ethane recovery in 2024, whereas the east coast, where smaller volumes are exported, accounted for 13pc. Gas processors in the Marcellus and Utica shales in northeast US lack the ability to recover more ethane because of limited takeaway capacity. Marcellus-focused upstream producer Antero Resources in March 2025 estimated that 45pc of potentially recoverable ethane in the east coast's Appalachian production region, or approximately 273,000 b/d, is rejected into the gas stream. In contrast, higher recovery from the Permian basin means ethane production growth in the region is set to more closely equate to that of natural gas. Overall, US NGL production is expected to continue outpacing natural gas growth this year. Enterprise forecasts NGL output to rise by 17pc between 2024 and 2030 compared with 14pc for all natural gas, although Permian production growth of both will be an equal 32pc. If the Permian continues to constitute an increasing share of US oil and gas output, growth in ethane production is likely to slow alongside natural gas. Ethane rejection, recovery: 2017 vs 2025 US ethane production Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Inland NWE LPG buyers to return to ARA spot market
Inland NWE LPG buyers to return to ARA spot market
LPG buyers may scale back term purchases this year, but increased spot trade carries higher risk, writes Waldemar Jaszczyk London, 6 January (Argus) — Northwest European downstream LPG buyers are set to return to spot trade this year after supply concerns driven by geopolitics and high natural gas prices led to heavy term buying in 2025. Polish importers are leading the way in scaling back term commitments after adapting to the EU's ban on Russian LPG. The embargo, which took effect in December 2024, halted most of the 1mn t/yr Russia exported to Poland, prompting buyers to source supply from western markets. Fears of shortages spurred Polish buyers to lock in substantial 2025 term contracts early at record-high premiums to the large cargo cif Amsterdam-Rotterdam-Antwerp (ARA) benchmark. But this backfired as Poland ended up well-supplied owing to weaker autogas consumption and tumbling re-exports to Ukraine, leaving importers with excess term product. Baltic ports covered the loss of Russian rail flows, with seaborne imports for non-petrochemical use jumping by 30pc on the year to a record 1.12mn t by mid-December, Kpler data show. At the same time, weaker demand weighed on imports, which slid by 14pc to 1.58mn t over January-September — a 10-year low. Polish distributors also faced competition from Latvia's Riga terminal, which started importing US LPG, undercutting other Baltic ports. Russian flows continued through a sanctions loophole, boosting imports of cheap normal butane and isobutane for Poland's 1.8mn t/yr autogas market. With profits plunging and buyers facing delivery backlogs, Polish resales to northwest Europe became common. The return to spot markets has spread, to a lesser extent, to buyers in Germany, the region's key heating consumer. The prospect of Polish demand waves set the tone for Europe last year, boosting term deals. But other than brief spikes from refinery disruption, the shift in flows failed to lift spot premiums meaningfully. Fourth-quarter railcar and barge differentials averaged over $100/t below 2024. Surging US exports allowed ARA terminals to absorb additional inland demand as transatlantic flows hit a record 1.7mn t. Many petrochemical producers also refocused storage to sell locally, increasing competition among sellers. For 2026, refinery supply is expected to stabilise, if not increase, as the threat of rising natural gas prices has receded. Resurgent Dutch TTF values last year threatened to curtail refinery flows as they did in 2021-23. But propane was largely shielded from refinery use, with railcar assessments — a proxy for inland product — at a discount to the TTF only during the summer. Propane-burning economics collapsed after the TTF fell to a 20-month low in early December, while LPG supply was ample given mild weather. Forward curves show natural gas at only a marginal premium to large cargoes in 2026, reducing the incentive for refinery LPG use. The propane market also weathered refinery closures in Europe, which removed 400,000 b/d of capacity in 2025. Further shutdowns are unlikely because tighter spare capacity supported refinery margins. Refinery supply in the region is forecast to hold at 16.35mn t in 2026 after a 5pc fall in 2025, according to Argus Consulting . It's cold outside The market enters this year with freezing temperatures across parts of Europe, yet heating consumption is likely to stay historically low. And ARA faces weaker French buying after imports to the 1.1mn t/yr Norgal terminal restarted in October . But a spot-heavy approach brings risk that could boost premiums for buyers. ARA terminal suppliers are likely to follow downstream clients by limiting term imports, while spot US product could tighten as competition from China increases. The threat of closures has eased, but Europe's ageing refineries remain prone to outages. And the EU ban on Russian pure butane fractions under the bloc's 19th sanctions package, effective from 26 January, will remove more than 32,000 t/month of supply, which will have to be replaced partly by propane for autogas use. Poland sea LPG imports by terminal* ARA propane railcar large cargo differential ARA, daf Brest forecast 2026 Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Argentina LPG liberalisation to foster market expansion
Argentina LPG liberalisation to foster market expansion
Higher LPG output spurred by rising investment could push seaborne exports above last year's record, writes Giovann Rosales Houston, 6 January (Argus) — Argentina's deregulation of its LPG market after decades of government intervention is expected to drive growth in LPG production and exports this year. The country's LPG market has undergone a dramatic shift after being liberalised in 2025. For decades, the Argentinian government capped domestic LPG production and prices, and required local suppliers to sell at a government-calculated export parity price that was published monthly. The government continues to publish the export parity price, but sellers no longer need to adhere to it, which will allow natural gas and NGL producers to reap higher margins from their production, and greater price competitiveness. Less government intervention is already spurring additional investment in infrastructure to tap the estimated 308 trillion ft³ (8.7 trillion m³) of natural gas reserves in the Vaca Muerta formation and to capture the associated NGLs. Argentina's two main seaborne LPG exporters have projects under way to boost output and exports . Natural gas firm Mega plans to bring a new NGL fractionation train on line at its Bahia Blanca plant in early 2026 that will help boost NGL production to around 7,000 t/d (2.6mn t/yr). "Today we produce around 4,800 t/d of ethane, propane, butane, and natural gas," Mega chief executive Tomas Cordoba said at an energy conference in December. The $260mn project will be finished in the first quarter, he said, with the additional volume to target export markets. Domestic counterpart TGS is working on a $300mn project to process Vaca Muerta's natural gas that contains "20-25pc of liquifiable components", TGS chief executive Oscar Sardi said at the same event. This includes a storage facility in Puerto Galvan, a 600km pipeline and an NGL fractionation plant in Bahia Blanca. The 43mn m³/d plant will be able to produce around 7,700 t/d of NGLs, and "since Argentina has its LPG needs satisfied, this will be exportable", Sardi said. The timeline for the project is unclear, but Sardi said an engineering phase is complete. These projects are expected to further boost Argentina's seaborne LPG exports, which rose by 27pc to a record high of around 1.1mn t last year, according to Kpler. Brazil took 735,000t, or 68pc of this supply, and may continue to capture more of Argentina's rising output this year (see p9). Brazil's LPG demand is forecast to grow by about 4-8pc this year as a result of the recently launched Gas do Povo subsidy scheme for low-income households, as well as an improving economy, datafrom Brazil LPG association Sindigas and state-owned research institute Epe show. The country's main distributors — Copa Energia, Nacional Gas, Supergasbras and Ultragaz — account for nearly 90pc of Brazil's market and have confirmed that incremental demand will be met by imports from the US and Argentina. Argentina also re-emerged as an LPG supplier to China last year owing to the US-China trade war, shipping 115,000t — the first LPG trade between the countries in five years. And it is positioning itself as a key South American LPG supplier through overland exports to landlocked neighbours. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Viewpoint: US ethane output growth may slow
Viewpoint: US ethane output growth may slow
Houston, 30 December (Argus) — Growth in US ethane production may slow as the country's largest gas processors are all operating near maximum recovery rates, leaving limited upside for ethane volumes. Since the US began waterborne exports of ethane in 2016 , ethane production, or "recovery", from gas processing has surged from 1.27mn b/d to 2.87mn b/d last year, US Energy Information Administration (EIA) data show, with yearly ethane output growing by 20pc in 2018 alone. Yet the pace of growth may finally be slowing down. The EIA forecast in its most recent Short-Term Energy Outlook (STEO) that total ethane recovery will average 3.06mn b/d and 3.15mn b/d in 2025 and 2026, respectively. If so, production would have grown at consistently slower rates each year since 2022 — the growth rate fell from 11.9pc in 2022 to only 8.1pc in 2024. The slowdown partly comes alongside a similar lull in natural gas growth. US marketed natural gas production, excluding Alaska and the Gulf of Mexico, rose by 0.5pc from 2023 to 2024, the slowest pace since 2020. Furthermore, growth in the broader natural gas liquids (NGLs) complex may already slow relative to natural gas as US producers target drier acreage. STEO contributor Joshua Eiermann told Argus that the agency sees a possible slowdown in NGL output gains. "A lot of the growth we're seeing for crude oil and gas output is coming from the Haynesville formation [in Texas and Louisiana]… It's a lot less liquids-rich," Eiermann said. Still, gains in US ethane production have historically outpaced those of natural gas. Lower-48, on-shore production of marketed natural gas rose by only 50pc between 2016 and 2024, while ethane output more than doubled. This trend may stall, however, if near-full recovery becomes more dominant in the US. Ethane, which is entirely produced as a byproduct of natural gas, is left in gas to be burned as fuel, or "rejected", if not separated for use as a petrochemical feedstock. The US is likely rejecting less ethane than in the past. The US rejected an estimated 500,000-575,000 b/d of ethane in 2017 , or at least a quarter of potential extraction at the time, to between 600,000-800,000 b/d by industry estimates which, based on the EIA's 2025 projection, equates to 16.4-20.7pc of present potential volumes. Much of the US' liquids production has been increasingly driven by the Permian basin in west Texas and south New Mexico, the region at the center of an apparent trot towards full ethane recovery in the US. Export expansions along the Gulf coast, growing NGL pipeline capacity and storage have created favorable conditions for Permian producers' ethane recovery. This includes the addition of 180,000 b/d of ethane loading capacity at Energy Transfer's Nederland, Texas, terminal in early 2021 . Because of this, firms in the Gulf coast region, particularly integrated "well-to-water" firms like Enterprise and Energy Transfer, recover nearly all the ethane they drill, market participants say. The US Gulf coast region accounted for 67.2pc of ethane recovery in 2024, whereas the east coast, the US' other contributor to exports, accounted for only 12.6pc. Gas processors in the Marcellus and Utica shales lack the ability to recover more ethane because of limited takeaway capacity. In March, Marcellus producer Antero Resources estimated that 45pc of potentially recoverable ethane in the east coast's Appalachian production region, or approximately 273,000 b/d, is rejected into the gas stream. The better egress for NGLs out of the Permian basin means gas processors there typically operate closer to maximum recovery, and ethane production growth is set to more closely resemble that of natural gas. Overall, NGL output will outpace natural gas growth, industry outlooks show. Enterprise forecasts NGL production rising by 16.7pc between 2024 and 2030 compared with 14.4pc for all natural gas, whereas Permian output of both would grow by an equal 32.4pc. If the Permian continues to constitute an increasing share of US oil and gas production, growth in ethane production is likely to slow alongside natural gas, even if NGL output does not lag. By Joseph Barbour Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
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