When you hear the word “propane,” do you envision the tanks sitting beside your barbecue, or does the term natural gas liquids (NGLs) come to mind? It’s a question worth asking.
The truth is, few people outside of the oil and gas industry think or talk about NGLs, despite the fact that so many of us rely on them on a regular basis.
But now’s the time to get familiar: NGLs are stirring up conversations across the province, thanks to the Government of Alberta’s push to diversify our economy. Earlier this year, the government announced a Petrochemical Diversification Program that will give $500 million in incentives through royalty credits to new petrochemical facilities in Alberta. To get these facilities up and running, they will need certain NGLs as ingredients, or “feedstock.”
With an end goal to boost demand for NGLs, and encourage energy companies to produce more natural gas and propane in our province, it’s about time we brushed up on these three little letters.
Here are five things that are good to know about NGLs:
- It started with a little incentive. The roots of Alberta’s petrochemical industry can be traced back to the 1970s and the premier at the time, Peter Lougheed. Lougheed’s government took notice of a growing manufacturing industry, which relied on natural gas liquid by-products—something that Alberta’s reserves held in abundance. He warmed producers up to the idea of diversification by offering incentives to those who used ethane, an NGL, as a feedstock to manufacture textiles, chemicals, and fertilizers. Fast forward to today, and Alberta’s petrochemical sector is valued at $14 billion.
- They come from the ground. NGLs are a group of hydrocarbons that come out of the ground with natural gas, which is largely a mixture of methane and—you guessed it—NGLs. After the natural gas is produced, it is taken to a plant to separate the NGLs from the methane. It is truly science at work when the liquids are removed from the gas.
- NGLs are a robust blend. “NGLs” is plural for a reason; it’s a blend of several specific components, including ethane, propane, butane, and pentanes plus. Once NGLs have been removed from the natural gas, they are then further separated into their individual types in a process called fractionation. Generally, NGLs are not useful until they are separated.
- Industry is hungry for them. NGLs’ increased value in recent years has motivated many producers to seek out areas where natural gas contains high amounts of NGLs. Because NGLs can add to natural gas’s selling price, developing these areas offers producers a chance to make more money.
- We use them every day. We come across NGLs more often than we think. Do any of the following sound familiar?
- Ethane is used to help make a variety of plastic products, detergents, and chemicals.
- Propane is used as a fuel for heating in remote places like farms and on campgrounds, where there is no gas line. It’s also used to heat water, dry crops, act as an alternative fuel in motor vehicles, and of course, for barbecuing. Some energy companies use it as a solvent to dissolve other chemicals with steam-assisted gravity drainage, known as SAGD.
- Butane is used as a fuel for lighters, portable stoves, and cooking torches to caramelize your crème brûlée; it can also be used as a gasoline additive.
- Pentanes Plus is primarily used by energy companies to help transport blended crude bitumen through pipelines.
Make no mistake—they might share the same letters, but NGLs should not be confused with liquefied natural gas (LNG). Take a few moments to learn the difference.