Cheap US shale gas spurs plastics boom
by Stuart Hampton
March 12, 2012, 9:26 AM
bizmology.hoovers.com
Over the last five years natural gas has emerged as a major energy growth player in the US. The use of fracking and horizontal drilling and other technological drilling advances have opened up vast domestic gas reserves in the Bakken, Barnett, Eagle Ford, Marcellus, and other shale plays.
In 2010 shale gas contributed a $76 billion share of US gross domestic product, secured $18.6 billion in federal, state, and local government tax and federal royalty revenues, and supported 600,000 jobs. US shale gas also attracted $33 billion in capital investment in 2010.
What can be done with all that cheap natural gas? Well, fuel for power plants, of course. The Obama Administration also seems to be on the same page with T. Boone Pickens when it comes to advocating natural gas as the primary fuel for the nation’s heavy-goods trucking fleet (see the Pickens Plan). In addition, Cheniere Energy Partners wants to export natural gas as LNG.
Here’s another use for it, courtesy of Chevron Phillips Chemical (a joint venture of Chevron and ConocoPhillips). Just one word: Plastics.
Chevron Phillips Chemical EVP Mark Lashier thinks that his industry may spend $30 billion to build factories to convert cheap US natural gas into plastics. He believes that a byproduct of shale formation natural gas production, natural-gas liquids (primarily ethane), can be produced in enough quantity to support the construction of five new US plants (at $5 -$6 billion a piece) to produce ethylene and related plastics.
Chevron Phillips Chemical is itself investing $5 billion to build a new ethylene plant in Baytown, Texas (targeted to be completed by 2017) as well as two polyethylene plants and supporting infrastructure.
Other companies eyeing plans to build new ethane crackers to take advantage of relatively inexpensive domestic natural gas include Dow Chemical, Sasol, Formosa Plastics, and Royal Dutch Shell.
Listen up, you graduates.
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