Despite the decades low prices of spot natural gas, companies that have diversified portfolios of oil production and natural gas liquids production have managed to weather the rough waters of energy production. One company that has provided great value to shareholders is Devon Energy (DVN). Devon provides 3% of all the natural gas consumed in North America and produces about 600,000 barrels of oil per day. In 2011 the company drilled over 2,000 wells in the U.S. and Canada. Along with exploration, development and production of oil, natural gas and natural gas liquids (NGL), it owns natural gas pipelines, plants and treatment facilities in many of it areas of production.
The NGL value chain is more capital intensive than gas transport by pipeline. Liquefaction facilities, which lower the temperature of the gas to liquid point can cost up to $5 billion. NGL tankers are specialized equipment that offload production from the liquefaction plans cost from $150 to $250 billion each. Terminals that convert the liquid back to gas form cost $500 million to $1.5 billion. All of these facilities have to be in place before the gas can move to market. The cost of these facilities is usually offset by production capacity, cost sharing agreements with other producers and midmarket activities in marketing and selling to distributors. ConocoPhillips (COP) is one of the largest natural NGL producers in North America. It markets its refined products to petrochemical companies through its specialized division which sells to a network of distributions who market to commercial and residential consumers.
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