22 March 2013 13:41 [Source: ICB]
The so-called shale revolution has nurtured hopes that the US petrochemical industry - and the wider manufacturing sector - can regain the lustre it once had before a wave of offshoring sent factories and jobs overseas. Companies such as INEOS Olefins & Polymers North America, one of the newer players in the neighbourhood, are vying to take full advantage of what CEO Dennis Seith terms a "manufacturing renaissance."
"It's been nothing short of phenomenal," Seith says of the new developments in shale oil and gas, brought on by improved technologies such as hydraulic fracturing and horizontal drilling. Seith notes that the US petrochemical sector is expanding its midstream capabilities through the expansion of pipeline capacity and other resources designed to move vast new quantities of shale gas to manufacturing facilities.
The expansion of the refining and chemical production sector, with many millions of dollars worth of announced capital projects, will create a new wave of jobs, Seith adds.
INEOS is moving to take advantage of the new shale gas opportunity by expanding capacity at its Chocolate Bayou facility in Texas with the construction of a new ethylene furnace that will add 211,000 tonnes/year of capacity. That comes on top of an already-planned 115,000 tonne/year debottlenecking project at the facility, which is slated for completion at the end of 2013.
ECONOMY STILL A WORRY
Meanwhile, INEOS Group is considering three sites on the US Gulf Coast as possible locations for a planned 500,000 tonne/year ethylene oxide (EO) and derivatives capacity investment. Those sites are the Battleground facility in La Porte, Texas; the Chocolate Bayou faculty; and a third facility in Plaquemine, Louisiana.
But in the near term, macroeconomic concerns are still a worry. "We had a great recession in the economy, a major downturn," says Seith. Such an event always has an effect on consumer demand for end-products. At the end of the day, he says, the US petrochemical industry depends on both a strong US economy and global economy.
With economic headwinds still blowing in the eurozone and slowing growth in China, and continuing political wrangling over US fiscal policy, Seith believes there are still concerns for the next couple of years. But, he notes, in 2012 the global petrochemical industry ran assets at 86-88% of capacity, indicating that worldwide demand for products is getting healthier.
Still, there are some major areas of concern, Seith concedes, including a long-discussed transition as many US-based petrochemical companies struggle to find younger skilled workers to replace those who are retiring.
"It's been a long time since we were hiring people at levels of this significance," Seith explains, alluding to the years when much of the petrochemical industry shifted overseas. In that period, much of the training in technical skills such as welding was not being done at the same pace as during the last boom period.
But with US economy still showing only modest improvements in unemployment rates, Seith says, one of the other bright spots of the shale gas phenomenon is that displaced workers may be drawn to new careers in a booming petrochemical industry.
Another, more controversial, aspect of the shale gas picture is how much of the new bounty should be kept within US borders for energy and feedstock purposes, and how much should be allowed to be exported.
While gas producers say that there should be few if any limits on the amount that can be exported in the form of liquefied natural gas (LNG), some companies that use gas for energy and feedstock purposes, wary of possible increased prices, have argued for more limited exports.
Seith says his company supports a policy based on free trade. "It's hard to set limits on exporting one product when you're arguing for open exports of others [such as crude oil]," he says. Moreover, he adds, building the infrastructure necessary to support LNG will pay other dividends in the near term and in the future.
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