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Natural Gas Liquids


Natural Gas Liquids (NGLs) are valuable hydrocarbon components derived from natural gas during the refining process. They primarily include ethane, propane, butane, isobutane, and pentane. NGLs are used in various applications such as heating, cooking, and as raw materials in the petrochemical industry.


The phonetic pronunciation of the keyword “Natural Gas Liquids” is:- Natural: ˈnætʃərəl- Gas: gæs- Liquids: ˈlɪkwɪdz

Key Takeaways

  1. Natural gas liquids (NGLs) are hydrocarbons that are separated from natural gas. They are valuable by-products found in natural gas, with higher energy content due to their liquid state. The primary constituents of NGLs are ethane, propane, butane, isobutane, and pentane.
  2. NGLs serve as essential components in various industries. They are used for residential and commercial heating and cooking purposes, as feedstocks for producing chemicals, plastics, and rubber products, and as components in motor fuel blending. This broad range of uses makes NGLs an integral part of global energy consumption.
  3. NGL extraction typically occurs at gas processing plants where they are separated from the natural gas through various methods like absorption, cryogenic, and mechanical refrigeration. Additionally, transportation and storage of NGLs occur through pipelines, railroads, and tanker trucks, while the pricing and trading of NGLs are influenced by factors such as supply and demand dynamics, global market conditions, and geopolitical events.


Natural Gas Liquids (NGLs) are important in the business and finance world, primarily due to their significant economic value and versatile applications in various industries. NGLs, which are hydrocarbon byproducts derived from processing natural gas, consist of valuable components such as ethane, propane, butane, isobutane, and pentane. These components have extensive uses in residential, commercial, and industrial sectors for purposes like heating, cooking, and as feedstocks for petrochemical industries, thus creating significant market demand. Consequently, the production, transportation, and trading of NGLs have grown into a substantial business, with companies making strategic investments in NGL infrastructure and assets. Their relevance to both energy and petrochemical sectors makes NGLs a critical element in the global energy landscape, influencing prices, investment decisions, and energy policies.


Natural Gas Liquids (NGLs) play a crucial role in the energy industry because they are a versatile and valuable byproduct of the natural gas production process. They are composed of hydrocarbons, which are separated from natural gas due to their unique features, such as thicker composition and specific gravities. This separation process, often achieved through an intricate series of cooling and pressure adjustments, enables NGLs to serve a myriad of purposes and, as such, contributes significantly to the global energy supply. The components of NGLs primarily include ethane, propane, butane, isobutane, and pentane. These hydrocarbons can be further processed and utilized in different industrial sectors, ultimately having a pronounced impact on everyday life.

The variety of uses for NGLs is evident in numerous consumer and industrial applications. For instance, propane is widely known as a heating fuel, making its way into millions of homes and offices, while also serving as a key component in the automotive sector where it acts as a cleaner-burning alternative to gasoline. Butane and isobutane hold marked significance in the petrochemical industry, as they’re utilized in the manufacturing of synthetic rubber and other related products, which have downstream applications in the production of tires, adhesives, and sealants. Moreover, ethane is primarily used as a petrochemical feedstock, transforming into ethylene—a compound heavily involved in producing plastics, resins, and various consumer goods. With these noteworthy uses, it’s clear that NGLs are indispensable for modern society, contributing significantly to both energy and manufacturing sectors.


Natural Gas Liquids (NGLs) are hydrocarbons that exist in a liquid state at underground pressures but can become gaseous when brought to the surface. They are considered valuable byproducts of natural gas processing, and are often used as feedstock for the petrochemical industry, as blending components in the production of motor gasoline, or can be burned as fuel in heating appliances. Here are three real-world examples involving NGLs:

1. Mont Belvieu NGL Hub: The Mont Belvieu NGL Hub in Texas is one of the largest NGL storage and processing facilities in the world. It receives, processes, stores, and distributes a variety of NGLs from natural gas production across North America. This hub is a crucial part of the natural gas supply chain, as it acts as a central marketplace where NGLs are bought and sold.

2. The Marcellus and Utica Shale Formations: These two shale formations located in the Appalachian Basin of the United States are rich in both natural gas and NGLs. Due to advancements in drilling technology, there has been an increase in natural gas and NGL production in these regions. Gas processing plants and pipelines have been built to transport and process the recovered NGLs, which are then used in various petrochemical and industrial applications.

3. Petrochemical Plants: NGLs, such as ethane, propane, and butane, are essential raw materials for the petrochemical industry. For example, ethane can be converted into ethylene, which is then used to produce a wide range of products like plastics, antifreeze, and detergents. One such petrochemical plant is the INEOS facility in Grangemouth, Scotland, which utilizes NGLs supplied through pipelines and ships to produce ethylene and other valuable chemicals.

Frequently Asked Questions(FAQ)

What are Natural Gas Liquids (NGLs)?

Natural Gas Liquids, commonly referred to as NGLs, are hydrocarbon components found in raw natural gas that can be extracted and processed into separate valuable liquids. These liquids include ethane, propane, butane, isobutane, and natural gasoline.

How are NGLs extracted from natural gas?

NGLs are extracted from natural gas through a process called fractionation. Raw natural gas is sent to processing plants where it undergoes a series of separations to remove non-hydrocarbon impurities, water, and heavy hydrocarbons. The remaining gas is then cooled, and each NGL component is separated based on its boiling point using specialized equipment, such as deethanizers, depropanizers, debutanizers, etc.

What are the primary uses of NGLs?

NGLs have diverse applications across several industries. Ethane is mainly used in the petrochemical industry to produce ethylene, a primary component of plastics. Propane is commonly used as a heating fuel in residential and commercial settings. Butane can be used as a fuel for lighters, a propellant in aerosol cans, and as a blending component in gasoline. Isobutane is often employed as an industrial coolant and a feedstock for producing high-octane gasoline. Natural gasoline is a blendstock for motor gasoline or used as a fuel for enhanced oil recovery.

How do NGL prices fluctuate, and what factors affect their pricing?

NGL prices are subject to market factors, such as supply and demand, geopolitical events, and fluctuations in crude oil and natural gas prices. Seasonal demand, particularly for propane and butane, can be relevant as well, as their usage as heating fuels increases during colder months.

How are NGLs transported and stored?

NGLs are usually transported through pipelines, rail, trucks, or marine vessels. They can be pressurized into a liquid form for easy transportation. Storage options for NGLs include underground salt caverns and above-ground storage tanks. Long-term storage facilities may also need to maintain the liquids at certain temperatures, pressures, or both.

Are NGLs considered environmentally friendly?

NGLs generally have lower greenhouse gas emissions than coal and crude oil when used as fuels, but they are still non-renewable fossil fuels and contribute to emissions. Environmental concerns regarding NGLs often focus on the extraction process (such as hydraulic fracturing), potential spills during transportation, and emissions associated with processing and storage.

Related Finance Terms

  • Extraction Process
  • Fractionation
  • Propane
  • Butane
  • Condensate

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