Shale gas is the North American petrochemical industry’s “Ace in the Hole”

Ace.jpgTHE NORTH American petrochemical industry has endured through the worldwide economic storm as well as the onslaught of new capacity in the Middle East and Asia. But North America will compete at the global table if it plays its cards right. Its ace in the hole? – Shale gas.

In the past few years, the US has gone from a natural gas shortage, to racking up an estimated 100 years of supply of the key petrochemical feedstock, mainly from shale gas discoveries and the ability to exploit these reserves.

Abundant gas supplies and the resulting lower prices could be a real game changer for the US petrochemical industry, according to Citi analyst P.J. Juvekar, who says the current US cost advantage over European and Asian producers is likely to continue.

Yet challenges remain, and it is all too easy to become complacent. In the next five years, Asia will become an even more dominant driver of chemical growth, and US companies are poorly prepared, according to Barclays Capital analyst Sergey Vasnetsov.

Plus, the US has the potential to squander any advantage from abundant gas supplies if onerous regulations are imposed. National Petrochemical and Refiners Association (NPRA) president Charles Drevna lays down the impact of proposed US policies on the industry in the context of a global fight for market share.

 

Photo credit: partymakerdiscountmegastore.com

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