Some of the u.s. shale naysayers get to say, “I told you so,” these days.

Many shale opponents harped on the huge amounts of natural gas liquids (NGLs) that are produced as a result of fracking and what to do with it all.

NGLs include some very useful products like propane, butanes, natural gasoline, and ethane – which is used in many plastics.

But with the slide in crude oil prices has come an even more vicious drop in the price of natural gas liquids, causing the NGL market to come under extreme pressure.

NGL Prices Nosedive

From September 1 to mid-December, the price of all NGLs dropped by at least 40%. Propane prices, for example, fell to below $0.54 per gallon and are currently at a 10-year low.

The one exception to the three-month plunge was ethane prices, which fell by only 23%. But ethane prices have dropped 41% over the past six months.

NGL prices are following oil and the cause is the same – too much supply.

You see, during the shale boom last year natural gas producers concentrated on producing NGLs since they were selling at a premium to the depressed price of natural gas.

As a result, NGL production topped three million barrels per day (bpd) in 2014, and output climbed more than 60% over the past decade. Supplies of both ethane and propane climbed above one million bpd, according to the U.S. Department of Energy.

This has created a massive surplus, and thus the plunge in prices.

The Financial Times report that companies are loading as much ethane as they can into pipelines instead of selling to petrochemical firms at a depressed price. The product can be stored in the pipelines until prices move higher or sold to power plants as fuel.

But ethane pipeline capacity is limited, and the existing network is quickly filling up.

Plans for expanding the capacity of the network are already in the works, but it will still be several years before more storage is available.

The Capacity Solution