What Comes After Shale Gas

By John Richardson

YachtIF the blog had a dollar for every occasion it had heard the phrase “ the shale gas revolution” over the last five years, we would be sitting on the deck of our yacht in Monte Carlo harbour right now, pondering the dilemma of when would be a good time for us to drink our first pre-dinner cocktail.

But, sadly, of course, we are in no such comfortable financial position, hence, along with many other people, we have to worry about what happens if the revolution comes to an end.

This was the topic of a fascinating discussion during the 3rd ICIS World Polyolefins conference, which is taking place in Amsterdam on 19-20 March.

Here is the gist of what was discussed:

  • Tight oil production in the US heavily comprises light oil, which contains high percentages of condensate and light naphtha.
  • At the moment, exports of condensate and light naphtha from the States are pretty much maxed-out because of infrastructure constraints. But in the future, they might increase.
  • And/or if the US lifts its ban on exporting crude, lots of these light crudes could find their way to Europe and the US. This would result in higher condensate/naphtha production from European and Asian refineries, thus improving the economics of liquids/naphtha cracking in both regions.

Add all the uncertainties over longer-term gas prices in the US and one day you can foresee a scenario where naphtha cracking comes back into fashion (this adds to the arguments we made on this same topic last October).

And what about demand?

There is value is in this type of discussion, we think.

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