Oil prices will not curb NGL output: Lyondell

Weakness in crude prices and the subsequent decline in drilling rig counts in the US are unlikely to significantly curb NGL production, LyondellBasell chief executive Bob Patel told analysts.

"We see 400,000 b/d or so of ethane that is being rejected," Patel said during an investor presentation today. "Despite low oil prices we still see a significant amount of NGL output. Natural gas is going to remain abundant, NGLs will be abundant in the near future, and even with lower oil prices the US is very well-positioned in the global cost curve."

Lyondell is investing in new cracking capacity in the US to take advantage of low-cost ethane. Lyondell executives stated US ethane exports will be less competitive than domestic polymer production, noting polyethylene can be shipped for 6-8¢/lb, cheaper in most instances than the capital investment required to export ethylene.

Lyondell is forecasting global ethylene production to grow to nearly 425bn lb/yr by 2020 and demand to reach 375bn lb/yr during the same period, keeping global operating rates above 90pc, according to the presentation. Global polyethylene production will grow to roughly 275bn lb/yr by 2020 with demand rising to nearly 250bn lb/yr in the same period, keeping operating rates around 85pc, Lyondell forecast.

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