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Shale Gas Boom Spurs Race New Chem Factories

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  • #2002

    basil parmesan

    Shale-Gas Boom Spurs Race

    States Vie for New Chemical Factoriesand JobsPowered by Lower Energy Costs

    By James R. Hagerty Wallstreet Journal Dec 27, 2011

    The boom in low-cost natural gas obtained from shale is driving investment in plants that use gas for fuel or as a raw material, setting off a race by states to attract such factories and the jobs they create.

    Daymon Gardner for The Wall Street Journal

    Ethylene cracker at Dow Chemical plant in Hahnville, La.
    Shale-gas production is spurring construction of plants that make chemicals, plastics, fertilizer, steel and other products. A report issued earlier this month by PricewaterhouseCoopers LLC estimated that such investments could create a million U.S. manufacturing jobs over the next 15 years.
    West Virginia is vying with Pennsylvania and Ohio to attract an ethylene plant that Royal Dutch Shell PLC said it plans to build in the Appalachian region to take advantage of the plentiful new gas supplies.
    Shell is due to announce a site early in 2012. Ethylene, produced from ethane in natural gas, is used to make plastics and other materials that go into an array of products, including pipes, paint and antifreeze.
    West Virginia’s legislature, meeting in a special session, passed a bill this month setting rules for shale gas drilling and production. The legislation ensures “a reliable supply” of shale gas in West Virginia and should dispel regulatory uncertainty that could slow investment, Keith Burdette, the state’s commerce secretary, said in an interview.
    The U.S. chemical industry is the biggest potential winner from the shale boomwhich involves a technique opposed by some environmentalists called hydraulic fracturing, or fracking, to obtain gas locked in rock formationsbut other industries also see benefits.


    Development of shale gas has been ramping up over the past two years and now accounts for more than one-third of all U.S. natural-gas production, according to IHS Global Insight, an economic think tank that earlier this month released a shale-gas study financed by energy-production companies.
    “This shale gas development is a game-changer of huge proportions,” said Dan DiMicco, chief executive officer of Nucor Corp., a steelmaker based in Charlotte, N.C. Nucor is building a $750 million plant to make iron from natural gas and iron-ore pellets near the Mississippi River in St. James Parish, La. Mr. DiMicco said the investment wouldn’t have been possible without the lower costs that have come with shale gas.
    The surge in production has pushed down U.S. natural-gas prices. After climbing to as high as about $15 per million British thermal units six years ago, near-term futures prices have fallen below $3.20 in recent days.
    Because electric utilities often burn gas, that price drop has helped bring down average electricity costs.
    However, long-run energy price and supply projections always are suspect. “Anything we think is going to be a 20-year trend has never turned out to be a 20-year trend,” said Amy Myers Jaffe, a senior energy adviser at Rice University’s Baker Institute.
    There’s another big caveat: shale-gas production volumes will depend on environmental-protection rules being set by state and federal regulators. Many environmentalists say that the chemicals pumped into the ground to unlock shale gas are a threat to water supplies, though energy companies say they take precautions to protect water sources.
    Even so, Shell and other big companies are proceeding on the assumption that shale gas production is likely to keep growing. Jim Fitterling, an executive vice president at Dow Chemical Co., said the U.S. now has the lowest cost for natural gas outside of the Middle East. The cheap gas makes the U.S. “dramatically more competitive” as a place to produce petrochemicals used in plastics and a variety of other products. As a r esult, Dow plans to build two new chemical plants near the U.S. Gulf coast and upgrade or reactivate others as part of a planned investment of $4 billion over the next six years. Some of the chemicals will be exported to Latin America.
    U.S. production of ethylene, valued at about $21 billion a year, is heavily concentrated in Louisiana and Texas, which have large supplies of conventional gas. But the new supplies of shale gas in the Appalachian region are luring some of the industry there.
    For producers of nitrogen fertilizers, “the economics have changed radically,” said Stephen R. Wilson, CEO of CF Industries Holdings Inc. of Deerfield, Ill. Natural gas is by far the biggest raw-material cost for making anhydrous ammonia, the base nitrogen fertilizer made by CF. The company, which has gone from a high-cost producer by world standards to a low-cost producer, plans to spend $1 billion to $1.5 billion over several years to boost capacity at some of its North American plants.
    Even foreign manufacturers are joining in. Low U.S. electricity and natural gas costs were a factor in the decision by Brazil’s Santana Textiles to build a $180 million denim plant now under construction in Edinburg, Texas. Santana initially considered putting the factory in Mexico but found that electricity costs would be 30% lower in Texas.
    Write to James R. Hagerty at

  • #4785

    Charles Randall

    Here is some upbeat news on US New Chemical Plant Boom from Shale-Gas ……And potentially Gasifiers?

    See Article with Charts (in case they dont post) @


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