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Ethanol info
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JonSCKs
Posted 11/30/2012 11:13 (#2724952 - in reply to #2724675)
Subject: Here comes the NGL's.. impacts upon etoh??


Natural Gas isn't the only commodity that is seeing Supply catch up with Demand.  As a side benefit of all the shale development we are seeing an increase in Natural Gas Liquids (NGL) production as well.. Butane being one of them..  As you can see the yearly stocks of Butane are on the upswing.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mbrsb_nus_1&f=a

However the Monthly chart shows more of the story.. in that Butane useage is very seasonal..

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mbrsb_nus_1&f=m

The reason is that Butane can be dumped into Gasoline however it increases Reid Vapor Pressure hitting specification constraints..

http://www.rbnenergy.com/wasted-away-in-butane-blendingville  (If you only read one link from this post.. THIS is the one.)


As you can see supply is building.

Coming in a hard upswing from the bottom of 2005, the productivity of the Barnett and other emerging shales brought butane supply back in a big way

..

What do the price spreads and forward markets tell us about the relationship between butane prices and motor gasoline?  The chart below shows the seasonal spread between NYMEX RBOB gasoline and butane at Mont Belvieu. The red line is 2012 and the shaded area is the range over the ten previous years. The blue line is 2011 and the black line is the average of the five-year range. This year has seen a historically high spread between RBOB and Normal Butane.   As of November 27, 2012 the spread is off a bit from its peak, but still sits at a healthy $1.07/gallon!



With 3 billion gallons of motor gasoline production each month, is there room to hide a little more butane in there?  Gotta be.  With $1.07 uplift on every gallon added, there is obviously a big financial incentive to do so.  But there are several variables that must be considered.

The author continues with the constraints of summer blending vs winter blending.. a very good read.. see link above.  Butane has high octane but also high Reid Vapor Pressure limiting it's blending ability during the summer months.

conclusions:

Remember the billions of gallons of gasoline?  If there is room for another 2% butane in there, that’s a lot of opportunity given a price differential over $1/gallon
...

There is a lot of meat left on the bone even still--and with it, a growing home for more gas plant butane.  However, we can’t outblend shale production.  No way, no how!  So I’m looking for my lost shaker of salt (storage), smelling the shale that’s beginning to boil.  And I’m wasted away again in butane blendingville!

Growing Butane stocks are gonna be a market factor in energy markets.

fwiw.

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