Chemical Companies in the Shale Gas Industry

Chemical Industry Growth


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Thursday, May 23rd, 2013

If a friendship is nothing more than the mutual trading of benefits, shale gas is about to make a very good friend in the chemical industry.

The American Chemistry Council just released a report predicting huge growth in the chemical industry. This growth can undeniably be attributed to the ongoing success of shale gas in the United States.

Simply put, the shale boom has ensured the affordability of resources – byproducts of shale gas extraction such as methane and ethane – that are essential to chemical production in the U.S.

Though shale gas consists of anywhere between 70-90% methane gas, the real goldmine for many chemical companies is the valuable liquid byproduct, ethane, which can be used in the production of plastic for water bottles and vinyl through ethylene-cracking.

Shale gas byproducts are also essential components for chemically-produced fertilizer and various petrochemicals. Even fracking fluids themselves require a specific combination of chemicals. The two industries are feeding each other.

A boom in the chemical industry is expected to have a huge impact on the job sector. The ACC report predicts 46,000 chemical, 246,000 supplier, and 226,000 payroll-induced jobs in the chemical industry alone over the next ten years – all ultimately a result of confidence driven by the shale gas boom.

And that doesn't even take into account a predicted 1.2 millions temporary jobs during what is anticipated to be a ten year capital investment phase.

Of course, jobs aren't the only benefit of growth in the chemical industry.

The American Chemistry Council's report examined almost one hundred plastic and chemical projects and declared a predicted $71.7 billion in U.S. investment potential.

Let that sink in. $71.7 billion in U.S. investment potential.

Half of these investments are coming from inside the U.S. Chemical companies in various states are showing great confidence in their ability to thrive alongside shale gas.<

Ohio-based Dupont Flow Polymers LLC has added both plastics and plastic capacity to it's Cleveland location along with an increase in polymide capacity in it's Circleville location.

In Freeport, Texas, Fluor Corp (NYSE: FLR) will be building new plants for Dow Chemical Company (NYSE: DOW). The four billion dollar ethylene-cracker expansion will no doubt see the benefits of affordable ethane.

It's no surprise Fluor Corp referred to shale gas as a “miracle” and a “gift”. It is also no surprise that large investments are being made in Texas, home of the Eagle Ford, one of the nation's biggest shale plays.

Other notable growth is also occurring within companies such as ExxonMobil Chemical, Chevron Phillips Chemical, and LyondellBasell Industries (NYSE: LYB).

The bottom line is that this relationship between the chemical and shale gas industries not only shows a strong external confidence in shale, but it will naturally drive shale even further.

In fact, there are compounding benefits to be experienced by the shale gas industry. While the shale gas industry drives the growth of the chemical industry, it will also be driving demand for natural gas – after all, the chemical industry can't function without it.

Energy insider Keith Kohl talks more about that growth here.

 

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