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Shale has fueled $164B in US chemical investments; weaker summer propane builds could support prices

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Shale has fueled $164B in US chemical investments; weaker summer propane builds could support prices

Shale has fueled US chemical industry to $164B in investments, tradegroup says

An analysisby the American Chemistry Council found that shale-gas-related investments in theexpanding U.S. chemicalindustry have amounted to $164 billion and are expected to support 738,000 permanentnew jobs by 2023.

The investmenttotal represents 264 projects in the planning stages, in progress or already completed.Based on the analysis, the investments could result in $105 billion per year innew chemical industry output, according to an April 6 news release from the council.

The newdata supplements a May 2013 reportthat tallied $71.7 billion of chemical industry investments in 97 projects and 537,000jobs supported through the supply chain. That study found that the chemical industryinvestments were expected to lead to $66.8 billion in increased output.

Weaker propane builds this summer could support prices later in 2016

Inventoriesof propane and propylene have started to stabilize and increase as the winter heatingseason draws to a close; however, the outlook for the summer build season is notas bright as it was last year at this time, owing to the increased capacity to export.

Propaneinventories gained 599 Mbbl in the week ended March 25, according to the U.S. EnergyInformation Administration, and marked the second increase of the year after a smalladdition was reported in the week ended March 11.

If thereare no more net withdrawals from inventories in the weeks to come, it would leavethe week ended March 18 as the low point for the winter withdrawal season with 62.23MMbbl on hand.

NGL stocks fall sharply on strong propane exports, weak demand

Followinga year in which ever-increasing amounts of propane and other natural gas liquidswere produced from natural gas plants, growing exports appear to be the early featureof 2016 and could create a "silent" recovery in prices throughout theyear to come.

The averageNGL barrel was priced at $14.17/bbl on Jan. 29 and compared to $16.34/bbl on Dec.31, 2015, according to data from S&P Global Market Intelligence. The calculationis made using weightsfrom Midstream Energy Group's June 2012 presentation, in which the average NGL barrelcomposition is 42% ethane, 28% propane, 8% normal butane, 9% iso-butane and 13%natural gasoline.

Inventoriesof NGLs reportedly fell 32.36 MMbbl sequentially in January to 164.91 MMbbl, accordingto data from the U.S. Energy Information Administration published April 4. Inventorieswere 10.82 MMbbl higher than the same month a year ago but remained below the recordof 228.71 MMbbl reached in September 2015.

Rex Energy inks NGL agreement with INEOS, for delivery to Europe

on April 11 saidit has signed an NGL sale and purchase agreement with INEOS Group Ltd.'s INEOS Europe AG for ethane, propane andbutane delivery through the MarinerEast system.

The NGLswill be exported by sea to INEOS' cracker complexes in Europe, according to thenews release. Transport of ethane supplies have begun in April and propane and butanedelivery will begin upon completion of the MarinerEast 2 pipeline, which is expected in 2017.

Propane market drops on strong inventory build, weak demand

Strongproduction of propane along with another pullback in demand for the fuel helpedcreate a stronger-than-normal build in propane inventories, causing prices to fallnearly a penny per gallon in the week ended April 8.

Tradingwas reported to be light on Friday as many dealers and trading companies attendedthe National Propane Gas Association's Southeastern Convention and Expo in Nashville,Tenn., running through April 10.

LoneStar pipeline grade propane at Mont Belvieu fell 0.90 cent to trade at 43.25 centsper gallon in the week ended April 8, while non-LST propane dropped 0.95 cent totrade at 43.15 cents per gallon. Prices at the hub in Conway, Kan., declined 0.20cent and traded at 39.30 cents per gallon. It marked the fourth consecutive weekof declines across all three hubs.

Pembina Pipeline, Kuwait Petroleum study plans to build integrated polypropylenefacility in Alberta

said it willconduct a joint feasibility study with KuwaitPetroleum Corp subsidiary Petrochemical Industries Co. K.S.C. to evaluatethe development of a combined propane dehydrogenation and polypropylene upgradingfacility in Alberta.

The studyintends to determine the project's economic feasibility and its alignment with eachparty's respective investment criteria, according to Pembina's April 11 news release.

Pembinasaid the project could consume approximately 35,000 barrels per day of propane andproduce up to 800,000 tonnes of polypropylene per year.

As BlueStone/Quicksilver acquisition closes, contracts with Crestwoodstay

has withdrawnits motion to reject 's legacygathering agreements relating to its Barnett Shale assets following the closingof BlueStone Natural Resources II LLC's acquisition of said assets, according toan April 6 news release.

CrestwoodEquity has entered into a 10-year commercial agreement with BlueStone, under a fixed-feeand percent of proceeds fee structure, to gather and process natural gas acrossits Alliance, Lake Arlington and Cowtown systems in the Barnett Shale.

Underthe agreement, BlueStone provided assurance that it will return currently shut-inwells to production across all systems by July 1 and that it will not shut in orchoke back production for economic purposes through the end of 2018.