March 24, 2025 – A recent report by ICIS highlights that the production of ethane, propane, and other natural gas liquids (NGLs) in the United States is set to rise in the near future, while domestic demand for these chemical feedstocks remains stable. ICIS reached this conclusion due to the absence of final investment decisions by U.S. chemical companies on new domestic cracking or propane dehydrogenation (PDH) units, which are used to produce ethylene or propylene. Instead, the U.S. is vigorously pushing forward new export terminal projects aimed at shipping these additional chemical feedstocks to expanding overseas markets.
Steady Increase in U.S. Alkane Production
Recently, U.S. midstream oil and gas companies have announced new NGL projects, which will further boost the production of ethane and liquefied petroleum gas (LPG), namely propane and butane. These projects are expected to commence construction in the coming months. For instance, Targa plans to complete and commission four natural gas processing plants in western Texas by 2026.
ICIS forecasts that U.S. NGL supplies will surge in the coming years, with ethane supplies projected to increase from 2.821 million barrels per day (mb/d) in 2024 to 2.874 mb/d in 2025, and reaching 3.099 mb/d by 2026. Propane supplies are also expected to rise from 2.526 mb/d in 2024 to 2.619 mb/d in 2025, and 2.684 mb/d in 2026. Butane supplies will grow from 1.235 mb/d in 2024 to 1.292 mb/d in 2025, and are anticipated to reach 1.347 mb/d by 2026.
According to analysts, the continuous growth in U.S. NGL supplies is primarily attributed to the year-on-year increase in crude oil and natural gas production. The U.S. Energy Information Administration (EIA) predicts in its latest report that U.S. crude oil production will rise from 13.21 mb/d in 2024 to 13.59 mb/d in 2025, and reach 13.73 mb/d by 2026. Natural gas production is also expected to increase from 103.08 billion cubic feet per day (bcf/d) in 2024 to 104.6 bcf/d in 2025, and 107.29 bcf/d in 2026.
As per insights from AsiaMB’s industry sources, analysts note that as major U.S. shale basins mature and age, the proportion of natural gas in shale oil production is rising, driving up natural gas production and, consequently, NGL supplies.
No New Cracking Unit Plans in the Pipeline
In contrast to the increasing NGL supplies, there have been no recent announcements of plans for new cracking units in the U.S. In fact, 2025 will mark the first year since 2010 without an increase in new ethylene production capacity. However, Chevron Phillips Chemical and QatarEnergy will break this trend in 2026 with the completion of their Golden Polymer joint venture project.
Moreover, there are no other new project plans for 2025 and 2026. Previously, ExxonMobil Chemical and Shin-Etsu Chemical had considered building new cracking units but have not announced final investment decisions (FIDs). Westlake Chemical remains open to the possibility of expanding its joint venture cracking unit capacity with Lotte Chemical in Louisiana, but an FID will be made after evaluating costs. Thailand’s PTT Global Chemical (PTTGC) had considered building a new cracking unit in Ohio to supply ethylene for its new polyethylene production capacity. However, the project faced obstacles in July 2020 when its joint venture partner decided to withdraw.
Recently, no companies have announced plans to build new PDH units in the U.S. to convert propane into propylene.
Rising labor and raw material costs have reduced the attractiveness of chemical capacity expansions in the U.S. Additionally, the global oversupply of many plastics and chemicals provides another reason for producers to abandon expansion plans.
According to the EIA’s latest forecast, due to the lack of new chemical projects, U.S. demand for NGLs will remain stable in the coming years. Ethane demand is projected to be 2.3 mb/d in 2024, 2.27 mb/d in 2025, and 2.35 mb/d in 2026. Propane demand is forecasted at 0.74 mb/d in 2024, 0.78 mb/d in 2025, and 0.76 mb/d in 2026. Butane demand is expected to be 0.3 mb/d in 2024, 0.27 mb/d in 2025, and 0.27 mb/d in 2026.
Promising Overseas Markets for U.S. NGLs
ICIS points out in its report that U.S. companies can expand NGL production despite insufficient downstream demand because companies outside the U.S. continue to expand their cracking and PDH unit capacities. According to ICIS’s supply and demand database, by 2029, cracking capacity in Northeast Asia will increase by nearly 43% compared to 2024, and capacity in the Asia-Pacific region will grow by over 10% during the same period. In India, GAIL and Nayara Energy have each proposed building a new 1.5 million tonnes per annum (mtpa) ethane cracking unit. In Vietnam, Siam Cement Group (SCG) plans to build Vietnam’s first integrated petrochemical plant, which will use ethane from the U.S. as feedstock.
For propylene, chemical capacity using propylene as a feedstock in Northeast Asia will increase by nearly 28% by 2029 compared to 2024, and capacity in the Asia-Pacific region will grow by nearly 25% during the same period. Additionally, overseas demand for LPG continues to rise as consumers switch from wood and other biomass fuels. The increase in U.S. chemical feedstock supplies and growing demand in other parts of the world present an opportunity for U.S. midstream oil and gas companies to expand their export capabilities and connect producers with customers.