Natural gas liquids, also known as natural gasoline, are by-products of natural gas that are extracted as liquid. Chemically, natural gas liquids are hydrocarbons that are exclusively made of hydrogen and carbon. Natural gas liquids are also in the same molecular family as crude oil and natural gases.
Natural gas liquids are separated from natural gases through condensation or absorption; the processes typically occur in natural gas field facilities or at refineries.
In general, natural gas liquids are a commodity, like gold or silver, that can be traded, and their prices are highly correlated to crude oil prices.
How are Natural Gas Liquids Used?
Natural gas liquids are very versatile, as they come in many forms – butane, ethane, isobutane, pentane, and propane. In households, natural gas liquids can be used for cooking and heating and are blended in gasoline for cars.
Natural gas liquids can be used to form other compounds that create other products; for example, ethane can be used to produce ethylene, which, in turn, is used to create plastic. They can also be used as an input to produce oil sands.
How are Natural Gas Liquids Extracted?
It is economically beneficial to extract natural gas liquids from natural gases. They also command a higher value as a separated product. The two most common ways to extract natural gas liquids are absorption and cryogenic expansion.
1. Absorption method
In the absorption method, oil is used to absorb the natural gas liquids; this works as the absorbing oil has an affinity with natural gas liquids. The absorption method is generally used to pick up heavier natural gas liquids like butane and pentane.
Natural gases passed through an absorption tower where it comes in contact with absorbing oil that soaks up most of the natural gas liquids.
The natural gas liquid-rich oil is then passed into oil where the natural gas liquid-rich oil is heated past the boiling point of the natural gas liquids but not the oil, thus separating the oil from the natural gas liquids.
2. Cryogenic expansion method
The cryogenic expansion method is used to extract light natural gas liquids like ethane. In cryogenic expansion, the temperature of the natural gas is dropped through a turbo expander process, which is the most common way. It is achieved by using external cooling agents to cool the natural gas.
An expansion turbine is used with the cooling agents to rapidly drop the temperature of the gas; the rapid decrease in temperature causes natural gas liquids to condensate. It can also convert a portion of the energy released when the natural gases are expanded due to the drop in temperature, which can save energy costs.
It is argued that the cryogenic expansion method is a cleaner way to extract natural gas liquids from natural gases.
Types of Natural Gas Liquids
The six main types of natural gas liquids are:
Butane (C4H10) is used as a petrochemical feedstock and to mix with propane or gasoline; some of the end products of butane are rubber for tires and light fuels.
Ethane (C2H6) is used as ethylene for plastic production and petrochemical feedstock; some of the end products of ethane are plastic bags and detergent.
Isobutane (C4H10) is generally used as refinery feedstock and petrochemical feedstock; the end products are alkylate for gasoline and refrigerants.
Pentane (C5H12) is used as natural gasoline and as a blowing agent for polystyrene foam; end products are gasoline and polystyrene solvents.
Pentane plus (C5H12) is a heavier form of pentane and is blended with vehicle fuel and exported for bitumen production in oil sands; end products of pentane plus are gasoline, ethanol blends, and oil sands productions.
Propane (C3H8) is used for residential and commercial heating, cooking fuel, and petrochemical feedstock; the end products of propane are for heating, stoves, and barbeque.
CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful: