Although many of its nations have so far spurned their own shale development, European chemical and energy service companies are benefiting from the U.S. shale gas development and the resulting low natural gas prices on this side of the Pond, according to an American Chemistry Council (ACC) economist.
Amplifying what ACC said earlier in the fall (see Shale Daily, Oct. 24) in jointly sponsored research with the American Petroleum Institute, the Natural Gas Supply Association and others, ACC economist Kevin Swift told NGI’s Shale Daily Friday that “this is the place to be” for chemical, oil/gas service and other industrial companies either using natural gas or supporting the shale gas buildout.
Swift said the ACC is seeing this manifest itself in new plants and plant expansions all over the nation, and it is driven by the greater availability and lower prices of the shale-driven U.S. gas supplies. “The chemical industry is unique in that we use a lot of gas as a fuel and we also use it as our raw material,” he said.
“We have an abundant supply of natural gas here, and it is among some of the lowest cost supplies in the world,” Swift said. “It is a real game-changer and competitive advantage,” he said, citing the rapid turnaround of the fertilizer industry. “Last decade we lost 40% of the ammonia-producing capability in this country, importing most of it from Trinidad Tobago and Venezuela, but we’re seeing a lot of interest now in expanding or building new fertilizer plants in Texas and the Midwest.”
Like some of its individual member companies, the ACC is cautiously approaching the current issue of proposed U.S. liquefied natural gas (LNG) exports. A spokesperson reiterated the organization’s stance as “strong proponents” of free trade, but drawing short of saying yes or no to U.S. exports.
“We believe that when used wisely, natural gas has enormous potential to renew and grow the American chemistry industry, the entire domestic manufacturing sector, and the U.S. economy at large, creating jobs and more exports of manufactured goods.”
In France, where the government has blocked shale interest by international energy giants such as Total and others, the privately held chemical company, SNF, specializing in the water-soluble polymer market, is expanding its footprint in the United States. It will continue to double the size of its operations in Louisiana next year, a Georgia-based technical marketing manager told NGI’s Shale Daily on Thursday.
With the shale-driven U.S. drilling boom, SNF’s polymers are needed more than ever by exploration and production (E&P) companies to extract oil and extend the life of older oilfields. SNF, itself, is not a large user of natural gas, but depends heavily on a liquid byproduct, propylene, in manufacturing its products.
A multi-billion-dollar company that has plants all over the world, SNF has an increasingly big presence with U.S. E&P companies as they have ramped up shale gas and oil production. It has three production lines operating in the new Louisiana plant, and they will become six lines next year, according to Geeta Nakra, technical markets manager.
A long-time supplier to the enhanced oil recovery (EOR) sector, SNF has been able to grow with the spread of the shale boom, and if shale’s projections for growth hold up, the polymer provider expects to expand in kind, Nakra said, with more expansions like the one in Louisiana, which she said was in the $200-400 million range.
In a report earlier this year from some Houston-based researchers, shale gas was characterized as the “magic bullet” the U.S. petrochemical industry needed to make a full recovery from a decade of economic stagnation (see Shale Daily, July 19). Chemical Market Resources Inc., authored a 10-page report as an extension of its consulting work in the chemical, petrochemical and plastics industries.
In the report, “Shale Gas Impact on C2, C3 and C4 Downstream Derivatives,” Balaji Singh and J.N. Swamy predicted that shale gas would have separate impacts on ethylene, propylene and C4 derivatives with global implications, most of which may not materialize for the next five years but could peak in 2017.
Earlier in the year, Swift and his economic colleagues who published the ACC study found that increased natural gas production could create 1.2 million manufacturing jobs, generate $121 billion in new industrial output and create $26 billion in additional tax revenue.
In response to concerns that the shale boom may not last, Swift said ACC’s analyses, which he characterized as conservative, have supported a bullish outlook. “We’re looking at a 35%-40% expansion in basic ethylene or olefins [synthetic fiber] capacity,” he said. “By mid-decade, we [the U.S.] will be grabbing market share away from the rest of the world as a lot of these [oil/gas and chemical] projects are built and come on stream.”
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