Propane vs. Natural Gas

Currently expectations seem to be that LNG is going to become a very big deal worldwide, and that this will bring about a commoditisation of prices - and for most markets a significant increase in prices. This is a curious irony of the success of fracking and other tight gas production technologies. Whilst there was both limited production, and no useful way of selling methane outside of the local market (where local is defined as within pipeline distance) the price for methane as an energy source was low. Gas wells that produced both propane (and ethane) as well as methane simply flared off the methane. However LNG transportation has changed that. If you can produce enough methane to justify the capital cost of an LNG plant, you have a worldwide market for your methane. Suddenly you can get a lot more money for it.
We are seeing this in Australia. Up until recently we were using all our methane production locally - which meant long (thousand kilometer) pipelines between states. Much gas came from the Cooper Basin, which is in the middle of the country. Now large amounts of methane are coming from coal seam and shale plays, and there is going to be a surfeit of gas. A LNG production facility is on the way, and an eager export market (mostly Chinese) is waiting to buy it. Local prices will go up. This is becoming a significant political issue - with cries to legislate to “reserve” some production for local use. Which is effectively a way of forcing the producers to sell at the historical price locally, and only make the big money on exports. Needless to say this has not gone down well with the producers.

As has been noted above, gas from conventional gas wells tends to be “wet” meaning lots of propane and ethane as well as methane. Gas from coal bed or shale tends to be entirely methane. So the advent of fracking is a game changer in a lot of interconnected ways. And curiously large scale production can lead to price rises, rather than price drops, as simple economics might suggest.

I keep seeing Ethane mentioned as another bi-product of oil and natural gas production, like propane.

Why aren’t we using ethane a lot more than I think we are, or are we?

Mostly because ethane requires a higher pressure (600 - 700 psi) to liquefy at ambient temperatures.

Ethane is more useful as a feedstock to make ethylene (which in turn is used to make PVC and Polyethylene).

Most gas processing plants operate in Ethane rejection mode and change the rejection based on frac spread.

In simple terms, they recover the ethane if the prices are favorable or leave it in the natural gas if it is not.

You can quantify this easily by a few Google searches.