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From 2000 through 2006, natural gas processing capacity increased gradually in
the major gas producing regions, specifically the United States, Canada, the
United Kingdom and Saudi Arabia. As natural gas gradually increases its share
of world energy demand, gas processing capacity will increase, as will the production
of NGLs. The major producers of NGLs from gas processing plants are private oil
and gas companies in the United States, Canada and the North Sea region, and
mainly national oil companies in the other major producing regions.
Overall, world production of LPG in 2006 returned to 2000 levels after having
decreased significantly in 2004 as a result of rising crude oil and production
costs. North America, the Middle East, the former USSR/Eastern Europe and Oceania
continue to increase production of LPG. In the Middle East, increases have come
from new gas processing plants in Iran, the United Arab Emirates and Qatar. Over
the next few years, the Middle East will continue to develop new gas reserves
which will further drive the production of LPG.
The following pie chart shows world production of natural gas liquids:
The two major uses for natural gas liquids are in petrochemicals and motor
gasoline.
The spot price, reflecting the value for NGLs, is heavily influenced by petrochemical
feedstock economics and refining economics, both of which depend on crude oil
pricing and natural gas pricing. If crude oil prices increase, the value of
NGLs as petrochemical feedstocks in competition with increasing naphtha prices
should increase.
Crude oil prices in the United States are increasing because of a tight product
market and limited spare refining capacity. In December 2007, the closing price
of crude oil on the New York Mercantile Exchange reached a peak of $86.58 per
barrel. The average wellhead price for crude oil in the United States in 2008
is forecast at over $101 per barrel, a 17% increase from the previous year.
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