Commodity Management BlogInnovative Ideas and Thought Leadership for Volatile Commodity Marketplace
I would be hard-pressed to cite a manufacturing process that didn’t inevitably lead to the co-manufacture of some form of waste. Throughout history, successful companies have developed creative ways of breathing new life into those by-products. When Henry Ford, of Ford Motor Company, began his assembly line production of Model T’s; he discovered that scrap wood pieces could be used to manufacture charcoal. That discovery not only repurposed the wood but allowed Ford to earn additional profit and ultimately spinoff the business. Today, Kingsford Products Company remains the leading U.S. charcoal manufacturer.
In the same vein, Natural Gas Liquids (NGLs) have proven to be valuable by-products of crude oil and natural gas. The raw mix (Y-Grade) gas that remains as part of the refining process does not have a price index and is considered waste, but the individual hydrocarbons comprising the mix are profitable. The process of fractionation yields ethane, propane, isobutane, butane, and pentane which are priced and actively traded throughout the world. They are considered key components of chemical and plastic manufacture, and the heavier hydrocarbons are used as fuel.
The boom of shale oil and gas production in the United States has left the country with a surplus of NGLs. Asked a decade ago; no analyst would have surmised that the U.S. would be poised for becoming the world’s largest exporter of any fossil fuel, but an increase in global demand has set the stage for it to happen. The energy market is always changing and remains highly unpredictable.
The demand for NGLs is growing and now is the time to develop a strategy to profit from market movements. Companies seeking to enter the NGLs arena need to be aware of the many factors affecting the process of isolating the individual components of Y-Grade, potential yields, and ultimately bringing the end products to market.
Triple Point Technology’s solution offers a comprehensive Energy Trading and Risk Management (ETRM) system with the unique capability of providing physical supply chain management, risk management, and optimization of energy trading strategies on a single platform. Commodity XL provides companies with the tools necessary to interpret complex data that is paramount to understanding the complicated relationships that exist in today’s NGLs market. Click here to learn more about Triple Point’s software.