May 22, 2017 - 2:00pm

Why American Plastics Producers Love the Shale Boom


Senior Editor, Digital Content

The shale boom is powering innovation and industrial investment on Texas’ Gulf Coast, the Houston Chronicle reports:

The next technological evolution of plastics into lighter, stronger materials will soon call Houston home, thanks to expansions from petrochemical giants such as LyondellBasell and other companies.

LyondellBasell, headquartered in Houston, is starting construction Monday on its $700 million plant in La Porte to churn out thinner, more durable and less environmentally harmful versions of the world's most common plastic, polyethylene. The facility should come online in 2019.

Similarly, Exxon Mobil, Chevron Phillips Chemical and Dow Chemical are building modern plastics expansions near Houston in Mont Belvieu, Old Ocean and Freeport, respectively, although their technologies and types of polyethylene vary.

They're all capitalizing on Texas' cheap and abundant shale natural gas, which contains ethane, the natural gas liquid that provides the feedstock for the chemical ethylene. Ethylene, the primary building block of most plastics, is converted into pellet form and either consumed domestically or exported to demand in Asia and Europe.

This news is part of an on-going energy success story. Because of fracking, the United States is producing immense amounts of shale natural gas and oil and making our country more attractive to domestic and foreign investment.

In March, ExxonMobil announced it would “be investing $20 billion to build or expand 11 different facilities—creating 45,000 new American jobs.” It also announced it finished an expansion of two plastics facilities.

Also in March, Dow Chemical completed its $6 billion ethane cracker near Houston. This investment happened because of “the advantaged shale gas supply available in the U.S.,” said Andrew Liveris, Dow’s chairman and CEO.

Last year, Dutch oil giant Shell announced it would build an ethane cracker near Pittsburgh, Penn. to process natural gas liquids from the Marcellus and Utica Shales.

Beyond access to low-cost feedstocks, electricity-intensive manufacturers are investing in the U.S. because of lower electricity costs from natural gas-powered generators. Boston Consulting Consulting estimates U.S. industrial electricity costs are 30% to 50% lower than competing countries.

Overall, the shale boom means big things for industry. An American Chemistry Council analysis found that plentiful shale energy could lead to $164 billion in new investments in the U.S., supporting 738,000 permanent new jobs by 2023.

Not only is the shale boom keeping gas and electricity prices down, it’s making American manufacturing more competitive.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean has written for various Chamber properties since 2012. In 1999, Sean launched a “weblog” and never looked back, becoming a self-proclaimed pioneer of the medium.

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