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Stuart Hampton

Cheap US shale gas spurs plastics boom

by Stuart Hampton | Dun & Bradstreet Editor

March 12, 2012 | 2 Comments »


Over the last five years natural gas has emerged as a major energy growth player in the US. The use of fracking and horizontal drilling and other technological drilling advances have opened up vast domestic gas reserves in the Bakken, Barnett, Eagle Ford, Marcellus, and other shale plays.

In 2010 shale gas contributed a $76 billion share of US gross domestic product, secured $18.6 billion in federal, state, and local government tax and federal royalty revenues, and supported 600,000 jobs. US shale gas also attracted $33 billion in capital investment in 2010.

What can be done with all that cheap natural gas? Well, fuel for power plants, of course. The Obama Administration also seems to be on the same page with T. Boone Pickens when it comes to advocating natural gas as the primary fuel for the nation’s heavy-goods trucking fleet (see the Pickens Plan). In addition, Cheniere Energy Partners wants to export natural gas as LNG.

Here’s another use for it, courtesy of Chevron Phillips Chemical (a joint venture of Chevron and ConocoPhillips). Just one word: Plastics.

Chevron Phillips Chemical EVP Mark Lashier thinks that his industry may spend $30 billion to build factories to convert cheap US natural gas into plastics. He believes that a byproduct of shale formation natural gas production, natural-gas liquids (primarily ethane), can be produced in enough quantity to support the construction of five new US plants (at $5 -$6 billion a piece) to produce ethylene and related plastics.

Chevron Phillips Chemical is itself investing $5 billion to build a new ethylene plant in Baytown, Texas (targeted to be completed by 2017) as well as two polyethylene plants and supporting infrastructure.

Other companies eyeing plans to build new ethane crackers to take advantage of relatively inexpensive domestic natural gas include Dow Chemical, Sasol, Formosa Plastics, and Royal Dutch Shell.

Listen up, you graduates.


Photo by Montgomery City Division of Solid Waste Services used under a Creative Commons license.


The growth of fracking in shale to develop natural gas may come with its own set of problems, however. Not only are there concerns over toxic chemicals leaking into water supplies, there’s also discussion of fracking possibly causing earthquakes near the injection sites. Last week the Ohio Department of Natural Resources issued a set of fracking-related rules after seismologists linked earthquake activity around Youngstown to the injection of fracking wastewater into a disposal well.

@ Bobby,

Thanks for your comments. On the one hand, some environmentalists point to fracking as a dangerous practice (water pollution, earthquakes, et al). On the other hand, the Oil Lobby points out that the practice is decades old, extensively used, and safe. Barring some definitive ban from the EPA, the pro-fracking lobbyists will win the argument, as the boom in shale oil and gas production over the past five years attests.

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