Petrochemical industry takes note of shale bounty

The North American shale boom has excited petrochemical companies eager for a new era of cheap resources to feed production of plastics that go into everything from diapers to plumbing, executives said Wednesday.

“It will turn out to be a renaissance in this industry,” said Jim Gallogly, CEO of LyondellBassell, speaking at the IHS World Petrochemical Conference at the Hilton Americas-Houston.

Advances in drilling techniques that give drillers improved access to hard-to-reach hydrocarbon reserves have unlocked natural gas liquids that can be used to develop more cheaply some of the building blocks of plastics.

Caution is the word

The new access to ethane, which is used as a feedstock for the plastics that go into products including water bottles and vinyl, has inspired talk of major investments, although some in the petrochemicals industry are proceeding with caution.

“Shale gas will be monumental. Maybe,” said Jim Fitterling, president of feedstocks, energy and corporate development for Dow Chemical Co.

Fitterling and others said it’s still unclear whether the public has the appetite for more production of shale gas using advanced technologies like hydraulic fracturing that many Americans don’t understand.

It’s also possible that government policies might promote the development of other resources, or move toward exports of the products, rather than encouraging their use in chemical production, he said.

“This will either be the golden age of low-cost energy security and feedstocks, or a cautionary tale on shortsighted policies and bad decisions,” Fitterling said.

Big investments

Dow Chemical plans to invest $4 billion in six projects along the Gulf Coast, to capitalize on cheap natural gas liquids from the Eagle Ford and other shales.

Shell is evaluating development of an ethane cracker in Pennsylvania, which would draw on production from nearby shale development and would feed into a high concentration of nearby industrial users, said Ben van Beurden, executive vice president of Shell Chemicals.

“It is rare that you have both feedstock and market in the same vicinity, and we have that situation in the Appalachian region,” he said.

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