AFPM: Putting the shale gas message across

02 April 2012 00:00  [Source: ICB]

AFPM is launching an outreach effort designed to highlight the broad benefits of the shale breakthrough to US producers and the US economy as a whole

AFPM is launching a multi-industry outreach coalition to educate federal, state and local policymakers and the general public about the broad benefits of shale gas developments. "One of the things we're looking at is talking with other trade association partners to help explain what this energy and feedstock breakthrough could mean for other industries," says Jim Cooper, AFPM vice president for petrochemicals.

 Getting the shale message across

 Copyright: RexFeatures

With the advent of vast new natural gas resources from shale deposits, the US petrochemicals industry and downstream chemical manufacturers have regained a feedstock cost advantage that many thought was gone forever. But AFPM is anxious to tell policymakers at all levels and as many members of the general public as possible that "the shale gale" will help fill the sails of many industries and propel improvements for a wide spectrum of US manufacturing, not just chemicals.

Indeed, the shale boon for the nation's petrochemicals producers is remarkable. "There is so much potential now," explains Cooper, "and I haven't seen the industry this excited about anything in quite a while. Companies are talking about multi-billion dollar investments."

Here he refers to plans by petrochemical majors for as many as three or four new crackers in the US, with most of the site-talk centred on Pennsylvania, West Virginia and Ohio. "We simply don't see any limits to the potential in this," Cooper adds.

"Everything from automobile manufacturing to footwear will benefit; anything, really, that includes polyethylene and high molecular weight and high density polymers. They're even talking about new, revolutionary headwear for the military, for example."

Cooper says the automotive industry could be a major downstream beneficiary and that the role of plastics in that sector will become increasingly important. "As we get into ever tighter fuel efficiency requirements, car makers will have to lighten the load and that means greater use of polymers," he says.

Automobile manufacturing, durable goods production, housing and general construction, are all likely to benefit, he says. "Just about anything you can name that involves plastics should be advantaged now and should be in a well-advantaged position globally."

In addition to the trickle-down benefits in energy and feedstock costs, Cooper sees a further advantage in the eventual addition of a cracker or two in North-central US in the form of lower transportation costs for consuming industries. "One of the things we're talking to state governments about is the cost benefit of not having to shift vast quantities of resins by rail to consumer industries," he explains.

"With a new cracker in that area [North-central US], it will bring another cost advantage to manufacturers in the Midwest and the East coast," Cooper says, noting that "anytime you can shorten the distance of delivery, you get savings."

The US manufacturing sectors in the Midwest and the East coast corridor are well supplied with transportation infrastructure. "There is a bastion of plastics manufacturers, molders, converters and ancillary businesses in the Midwest and along the coast here that serve a lot of other industries, medical products, food packaging, a lot of others," he adds, all of which could benefit from the turnabout in US natural gas energy and feedstock fortunes.

To move that message, AFPM has formed a task force, a multi-disciplinary group that is building an education platform and campaign that the trade group will begin to roll out in June. In addition to a broad line of videos, online and print materials, the taskforce is looking at grass-roots efforts.

"We're talking about educational events, pulling in the academic community, for example," says Cooper. "We're really going to go all-out on this because it is so important. This is an education process that is probably going to take a while," he says, perhaps sustained over years, but it will begin in the midst of this US election year.

"Some things will be rolled out this year, so that folks who are up for re-election can take a look at it, bring them[selves] up to speed so they can see how important this is, see the potential for manufacturing and jobs - and so they can do the right thing," he adds.

The taskforce's educational materials will be distributed as far down the chain of influence as possible, even to individual voters. "We want to give voters enough background in this so that they can ask, 'is this candidate really helping manufacturing, or is he or she going to impede it with ill-timed policies?'."

To help spread the word, AFPM is seeking to involve supply chain partner groups in the effort. "We have initiated discussions with other organizations to try to broaden the effort through a coalition," he says, including talks with groups representing specialty chemicals, pharmaceuticals and fine chemicals, among others.

"Most coalitions in this area are energy oriented, but there are not many multi-partner groups focused on how the supply chain works to explain that function. We want to shift the discussion more toward the supply chain. Energy costs are of course important, but the real potential here lies in what this means to the entire world of manufacturing and supply chain."

Cooper adds that rather than try to re-invent the outreach wheel, the AFPM effort will invite participation by broader trade associations such as the National Association of Manufacturers (NAM) and the US Chamber of Commerce. "We can't be NAM and the Chamber, but hopefully we can attract them as well and help focus on shale gas developments and what that can mean for everyone. We want to leverage each others' expertise, not waste resources, and get the right people at the table."

Part of the effort is to counter federal policy initiatives that could broadly threaten the manufacturing renaissance that Cooper and many others see on the near horizon. "There is a big push to bring everything upstream to the raw materials producers," he says, referring to Obama administration efforts to deny to oil, natural gas and process industries the sort of general manufacturing tax credits and other tax benefits that all US manufacturers enjoy.

"It doesn't make sense to raise the costs for raw materials manufacturers because that in turn affects the entire supply chain. That's what we want to try to educate people about."

As are other chemicals-related groups, AFPM is highly concerned over moves by the US Environmental Protection Agency to force public disclosure of confidential business information (CBI) by industry. Federal policy is "getting close to disclosing American intellectual property, critical technology, knowing that there are others out there in the world who don't have this technology - and we're setting up policies that will just give it away," argues Cooper.

Chemical formulae for the earliest commercial-scale hydraulic fracturing fluids took as long as 10 years to develop, he adds, and "if that proprietary information were to be made generally available to the public, where's the return on investment? State governments need information to protect human health and the environment, and producers agree with this, but broadly disclosing this information to the public is simply giving away intellectual property," he argues.

"We have to protect health and the environment, but we have to find a way to do that and at the same time protect our intellectual property."

Cooper also voices concern about multi-party efforts to modernize and reform the principal US statute governing control of chemicals in commerce, the Toxic Substances Control Act (TSCA).

Since it was enacted in 1976, the 36-year-old statute has not been substantially amended and everyone agrees that the outdated law needs a major upgrade.

But industry wants to maintain the TSCA's risk-based and science-based approach to controls, while many in the environmental community are pressing for a rewrite based on the precautionary principal approach ­underlying the EU's programme for registration, evaluation, authorization and restriction of chemicals.

TSCA reform legislation already introduced in the US Congress is considered a non-starter by the chemicals sector, a bill loaded with ­restrictions that industry argues would essentially shut down US process industries. Those bills are not expected to get any traction in this US election year, and stakeholders now are focused on TSCA reform legislation for 2013-2014.

Even that timeline is, for Cooper, perhaps overly ambitious.

"I don't know that 2013 or 2014 is necessarily a deadline," he says. "Most of us on the industry side think this is important enough that we want to do it right and not have to come back and fix it five or six years later. So if it takes a couple of years to get it right, that's fine.

"We want to engage the environmental community and the health sector so we all can get behind something with a multi-stakeholder effort - then it will happen."

By: Joe Kamalick
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