It’s All About Shale Gas

Business, Company Strategy, Olefins, Polyolefins, Projects, US

By Malini Hariharan

As expected, excitement around shale gas is running strong at the CERAWeek conference in Houston. But an element of caution is also visible with the majors appearing to be in no rush to finalise their investments.

Shell is still a few years away from taking a final investment decision on a proposed cracker in the US, said CEO Peter Voser. Shell is considering Pennsylvania, Ohio and West Virginia as possible sites for the project and is likely to firm up a location one early this year.

But Voser said the company could still have the cracker up and running by 2017 if it began construction in 2014.

Chevron Philips Chemical is still evaluating sites for new polyethylene (PE) plants, said Mark Lashier the company’s executive vice president of olefins and polyolefins. Chevron Phillips plans to build a 1.5m tonne/year ethane cracker and two PE plants, each with a capacity of 500,000 tonnes/year.

The company has already chosen its Cedar Bayou site in Baytown, Texas, for its cracker.

The shale industry is still evolving and that is evident in the reports of US shale operators shifting their focus to oil production because of low gas prices.

Steven Mueller, the president and CEO of Southwestern Energy, said shale gas production has created a glut of 500bn cubic feet of gas.

Charles Stanley, the president and CEO of QEP Resources, said the industry is pulling capital from dry gas plays to plays rich with natural gas liquids and crude oil, which will act as a balancing mechanism by reducing natural gas production.

Shifting from gas to oil requires adjustments in well placement as oil does not flow as easily as gas. But it appears companies are slowly learning how to do this.

Industry players also acknowledged that environmental issues could well delay the progress of shale gas.

Methane emissions are an area of concern. “Some environmental groups that once supported switching from coal to gas for electricity generation are no longer doing so over concerns about methane leakage,” pointed out Voser.

Peter Oosterveer, Fluor’s group president for energy and chemicals, stressed that the industry needs to be upfront and transparent about the potential risks of fracking.

“I don’t think the industry does that particularly well,” he said. “The challenge with shale gas is it is a fragmented industry, with a lot of small players.”

But as pointed out by Oosterveer, the stakes are too high for the industry to dodge their social responsibility.

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