NOVA Chemical CEO sees golden opportunity in shale gas

11 May 2011 03:35  [Source: ICIS news]

PITTSBURGH, Pennsylvania (ICIS)--The exponential growth of North American shale gas production is a once-in-a-lifetime gift, NOVA Chemicals CEO, Randy Woelfel, said on Tuesday, but he cautioned that the feedstock windfall must be secured with sustainable economic, social and environmental policies.

Speaking at the close of the Pittsburgh Chemical Day conference, Woelfel described the recent eruption of shale gas supply as akin to the 1850s California gold rush in that it has reversed the once poor fortunes for the continent’s chemicals sector.

“As recently as 2005, funeral music was being played for the North American chemicals industry,” Woelfel said.

“The industry was facing a dwindling supply of feedstock, higher costs and a sophisticated but mature market, and 97% of new capital investment was going into Asia and the Middle East,” he said.

“No new polyethylene [PE] plants had been built in North America in almost 10 years,” he noted, adding that “just a few years ago we would have said that those trends would continue and we thought that domestic natural gas would die”.

“We were dependent on LNG [liquefied natural gas] imports and the pipeline from Alaska,” he said.

“But just since 2005 - a heartbeat in industrial time - we have gone from import terminals to export facilities,” he said, adding that “today our industry is back, and once again we are a competitive force to be reckoned with on the global stage”.

“There is talk of a ‘super cycle’ for the North American chemicals sector," he said, "and it will require a tremendous investment in new plants just to keep up."

“If I may quote Mark Twain, it really does seem like the impending death of our industry was a bit exaggerated,” Woelfel said.

He said the windfall in shale gas feedstock supply that has revived North American chemicals will provide a payoff to the broader manufacturing sectors and the general economy, “and we need to share this fact with policymakers”.

“But we also need to be cautious,” he said.  “In the race to grow, the decisions we make now have to last and be good for years to come.”

He argued that the boom in shale gas development was indeed like the famous 1850s California gold rush in that “something local became global, small towns became boom towns and there is the risk of thinking about the dollar for today without thought for tomorrow”.

“For the shale gas boom to be a real success, it has to be sustainable economically, socially and environmentally,” he said.  “This is our triple bottom line.”

He said that the chemicals and gas industries must work to ensure the environmental sustainability of shale gas by meeting the challenge of public concerns over the chemicals and water volumes used in hydraulic fracturing.

“If society does not embrace the right balance of risk and reward in shale gas, that opportunity will close for us. Society holds our permit to operate, not us," Woelfel said.

The Pittsburgh Chemical Day conference was held on 10 May.

By: Joe Kamalick
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