Oct 07, 2016 - 4:15pm

Fracking is Making American Chemical Manufacturing More Competitive


Senior Editor, Digital Content

One point on this Manufacturing Day 2016 that shouldn’t be missed is how American’s fracking boom is helping American manufacturing.

To be competitive in international markets, manufacturers need access not only to affordable energy but to the raw materials that become the products we use daily. By unlocking immense amounts of natural gas, fracking has been a catalyst for new, job-creating manufacturing investment.

Chemical manufacturers have gained from the shale boom as illustrated in this FuelFix.com story on a new petrochemical plant being built near Houston, Texas that will produce ethylene, a plastics feedstock, and create jobs [emphasis mine]:

The idea for the U.S. project began in 2010, after Chevron Phillips had focused most of its growth in the Middle East with major projects in Qatar and Saudi Arabia, said Ron Corn, Chevron Phillips senior vice president of projects and supply chain,

“It was quite radical at the time,” Corn said of building massive petrochemical projects in Texas. “These are big, big projects — very complex.”

The effort is the continuation of the petrochemical boom primarily along the Gulf Coast to take advantage of cheap and ample ethane derived from natural gas through the ongoing shale revolution. The American Chemistry Council, a chemical industry trade group, estimates that more than 250 petrochemical projects are under construction or planned across the country through 2023, and they will create about 70,000 jobs. The combined cost is about $160 billion, including about $50 billion in Texas.

The growing demand for plastics is mostly coming in Asia, primarily China, but also India and Indonesia.

“They’re basically entering the consumer class,” Corn said, and demanding products like single-serve shampoo packets for the first time.

We see similar chemical investments in the Northeast where abundant natural gas from the Utica and Marcellus Shales are being developed:

Shell Chemical Appalachia’s long-awaited decision on a multibillion-dollar ethane cracker arrived early Tuesday and it’s a go. The company plans to build the petrochemical complex on the site of the former Horsehead zinc smelter in Potter and Center townships, Beaver County [northwest of Pittsburgh].

The site will house the cracker; three units that will convert ethylene into polyethylene pellets; a natural gas-fired power plant; a loading dock; and a wastewater plant. Main construction will start in about 18 months, with commercial production expected to begin early in the next decade, the company said in a statement.

Shell has said constructing the plant would employ 6,000 workers, giving way to 600 permanent operational positions when it opens. Shell had previously put the number of permanent jobs at 400 or 500, but spokesman Ray Fisher said Tuesday that those were just “speculation.”

Along with plastics, abundant natural gas is a boon for fertilizer makers, according to a Brookings Institution report:

[T]hey find that gas-intensive manufacturing has indeed experienced an expansion of activity as a result of the shale boom, with the most pronounced effect in fertilizer manufacturing – the most gas-intensive sector of all.

 

Being the world’s number one natural gas producer has it benefits. Policies that encourage and don’t hinder continued domestic energy development will be a hand up for American manufacturers.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.