NEW YORK (ICIS)--The number of US chemical projects planned because of low-cost shale gas feedstock and energy will likely surge to a total of 150-175, representing well in excess of $110bn in investment, the chief economist of the American Chemistry Council (ACC) said on Wednesday.
“The US is truly experiencing a new wave of investment in chemicals, with 54% of the current $93bn in planned new projects related to shale gas representing foreign direct investment,” said Kevin Swift, chief economist of the ACC.
Swift spoke at a meeting of the Chemical Marketing & Economics Group in New York.
Since around 2011, there have been 136 chemical projects announced as a result of the US shale gas boom, noted Swift. These include new projects as well as capacity expansions, some of which have been completed.
“These have mostly been in bulk petrochemicals, fertilizers and resins. But there will be more announced downstream,” said Swift.
The tally comprises projects that the ACC believes have been planned as result of renewed competitiveness from US shale gas as both a feedstock and as an energy source. This includes chlor-alkali, as US shale gas has lowered electricity prices, a major cost component in production.
The 136 projects do not include other chemical projects planned that are unrelated to US shale gas, noted the economist.
Swift projects 2016 as the peak year for capital investment, although shortages in skilled labour and other engineering and construction (E&C) resources could push this back to 2017 or 2018.
Much of the investment in the US will go into boosting the production of polymers. US plastics exports are expected to jump from 10-12% of total production a decade ago, and around 20-21% today, to about 35% by 2023, said the economist.
The US stands to be even more competitive in ethylene and derivatives production in the coming years as the Middle East shifts to using heavier feeds, he noted.
“Limited ethane supplies in the Middle East suggest that new projects there starting at the end of the decade will crack naphtha, and thus have little cost advantage. The US will be even more competitive with the Middle East using blends of heavier liquids,” said Swift.
Ethane, which is a natural gas liquid (NGL) is extremely cost advantaged in the US as a feedstock for ethylene production, in contrast to higher priced naphtha derived from crude oil.
Naphtha is the primary feedstock for petrochemical producers in Europe and Asia.