Shale gas drives chemical industry growth - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Shale gas drives chemical industry growth

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The abundance of shale gasand natural gas liquids could lead to $100 billion in capital investment in theU.S. chemical industry in the next 10 years, according to a study released thismonth by the American Chemistry Council.

"With the development of new shale gas resources, U.S.industry is announcing expansions of capacity, reversing a decade-long declineand providing opportunities for new jobs at a time when the United State isfacing persistent high unemployment," the study report says.

While much of that investment will go to the Gulf Coast, theAppalachian region in general and West Virginia in particular will see some ofit, says an author of that study.

 "It's a very exciting time to be in this industry," said Martha Moore, seniordirector of economics and statistics at the American Chemistry Council.

Moore said her husband is from Parkersburg, and her in-lawsare excited about potential for the ethane cracker project announced by Odebrechtlast fall.

Odebrecht has not committed to building a cracker and relatedfacilities in Wood County. At the announcement, company officials would onlysay they are studying the possibility.

Ethane is a liquid produced by some natural gas wells in theMarcellus Shale region of northern West Virginia. It is used by chemical plantsto produce ethylene and other materials that are themselves used to makevarious plastic products.

"The availability of natural gas liquids is going toquadruple by 2025, and a large part of that is going to come from theAppalachian region," Moore said.

The question is whether those liquids will be processed inAppalachia, providing investment and jobs here, or if they will go to placessuch as the Gulf Coast and Canada, which have crackers in place already.

The chemical industry in the United States is heavilyconcentrated on the Gulf Coast and other major industrial areas, including Ohioand Virginia, the ACC report says.

Moore said large amounts of ethane are moving now by pipelinefrom the Marcellus Shale region to the Gulf Coast. Still, there is enoughethane in the Marcellus region to supply several crackers, she said.

"The resource is there," she said. "There are a lot of goodreasons to be in that region."

The Marcellus Shale region of Appalachia is close to exportfacilities at Baltimore, and ethylene can be moved by barge down the Ohio andMississippi rivers to ocean ports on the Gulf, she said.

"I would certainly think they're viable," she said.

Thanks to the supply of ethane, the U.S. is now one of thelowest-cost suppliers of ethylene on the global market. It's competitive withthat produced in the Middle East, Moore said.

As ethane-based ethylene replaces that produced from naphtha,U.S. producers should see their market share increase in Asia and Latin Americaas it replaces that produced in Europe, she said. Naphtha is a petroleum-basedproduct, and ethane has a price advantage now and should have for severalyears, Moore said.

The ACC report says existing ethane crackers are running at95 percent capacity.

The report says, "The new investments arising from therenewed competitiveness arising from shale gas will largely occur in the GulfCoast. Nonetheless, a cluster of projects will likely occur in the Ohio Valleyand in the Midwest."

It also says, "With the advent of low-cost feedstocks, theU.S. chemical industry is presented with the most significant opportunity in 75years."

But there are things that could hinder the growth of theethane cracking industry, the report says. One is the possibility of local bansor moratoria on drilling that could present barriers to private sectorinvestment.

Then there is the problem of transport, especially inAppalachia.

"The Marcellus and some othershale gas deposits are located outside the traditional natural gas supplyinfrastructure to access the shale gas," the report says.