Conway & Mont Belvieu NGL Supply
Conway, Kansas and Mont Belvieu, Texas are the two pricing hubs for natural gas liquids in the United States, and almost every domestic NGL contract prices against one of them. VP Ventures holds positions at both hubs with transport between them, so supply follows the cheaper route and is priced against the hub that suits the buyer's location.
Two hubs, different advantages
Mont Belvieu is larger and sits next to Gulf Coast fractionation, storage, and export infrastructure. Conway serves the midcontinent. The two prices do not move in lockstep, and the spread between them is real money for a buyer between the regions.
Supply and basis matched to location
Transport between the hubs gives VP Ventures flexibility to source against the route that makes the most commercial sense. The buyer's location, terminal access, product specification, and delivery timing determine which hub and movement plan fit the transaction.
Why the two hubs price differently
Mont Belvieu sits on the Texas Gulf Coast beside the largest concentration of fractionation, underground storage and export capacity in the country. Conway sits in Kansas and serves the midcontinent. Because Mont Belvieu is where the export barrels leave from, its price responds to international demand in a way Conway's does not. Because Conway is inland, its price responds to midcontinent production and to the cost of moving product south.
The result is a spread that widens and narrows with production, storage levels, pipeline capacity between the regions, and the season. It is not a fixed differential and it is not noise. For a buyer sitting between the two regions, it is the difference between a good year and an average one.
What this means for a buyer
A buyer who prices against one hub by default is accepting whatever that hub does. A buyer with access to both can price against the one that suits their location and take supply by the route that is cheaper at the time.
Three things decide which is right for a given transaction:
- Where the product is going. Freight from the hub to the terminal is real money, and it often outweighs a modest difference in the hub price itself.
- Which product. Propane, butane, isobutane and natural gasoline do not all trade at the same relative value between the hubs, and the spread on one is not the spread on another.
- When. Winter demand in the midcontinent and export demand on the Gulf Coast peak on different calendars.
Frequently asked questions
What is the Conway to Mont Belvieu spread?
The price difference for the same NGL product between the Conway, Kansas hub and the Mont Belvieu, Texas hub. The two do not move in lockstep, so the spread changes with production, storage, transport capacity between the regions and the season.
Why are there two NGL pricing hubs in the United States?
They serve different regions and different infrastructure. Mont Belvieu sits beside Gulf Coast fractionation, storage and export terminals. Conway serves the midcontinent. Almost every domestic NGL contract prices against one of the two.
Which hub should my contract price against?
Usually the one whose freight to your terminal is lower, rather than the one with the lower headline price. Where the two differ, the delivered cost is what matters.
Can supply be sourced from both hubs?
Yes, where a supplier holds positions at both with transport between them. VP Ventures does, which is what allows supply to follow the cheaper route rather than the default one.
What is basis?
The difference between the price at a hub and the price where the product is delivered. It covers transport and local supply and demand.
Which hub prices my supply?
Usually the one your region is served from, though not always. Ask, because it decides what your price does when the spread moves.
Does the spread move much?
Yes, seasonally and with pipeline and storage conditions. It is one of the more variable parts of a delivered NGL price.
Can the spread be fixed?
Exposure to it can be managed as part of a price risk arrangement. See Price Risk Management for Fuel and NGL Buyers.