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Petrochemicals and LNG key to US economic growth

LNG Industry,

Investments in petrochemical manufacturing and LNG facilities must move ahead to make the most of US shale resources, Steve Pryor, president of ExxonMobil Chemical Company said at the Shale Insight 2013 Conference.

Time is the key

Pryor noted that permit approval times are the leading indicators of how quickly the US is capturing the benefits of shale energy. ‘Delays could add billions to project costs, restrain job creation, and erode America’s competitive advantage,’ said Pryor. ‘As a nation eager for economic growth, the US should be monitoring these approval times the same way it monitors other key economic indicators.’

Pryor also explained that global demand for ethylene, a key petrochemical, is growing more than 50% faster than natural gas. The market for NG is growing even faster. ‘Since most of this demand growth is outside the US, this presents an outstanding opportunity to boost America’s exports,’ he stated.

Chemical and LNG contributions

ExxonMobil is currently planning a multi billion dollar chemical expansion at its Baytown, Texas facility, already the nation’s largest integrated refining and chemical complex. The company is also part of a joint venture plant to build an LNG export facility in Texas. ExxonMobil estimates that its investments in these facilities will create 55 000 new direct and indirect jobs nationwide during construction and more than 12 000 permanent jobs once they become operational.

Over the last five years, capital spending by US chemical manufacturers has risen more than 40% and more is planned. The American Chemistry Council estimates that some 125 US chemical capacity expansion projects that have been announced will contribute as much as US$ 84 billion to the economy.

According to Pryor, chemical manufacturing and other industrial sectors account for nearly 30% of US natural gas demand. ‘Shale development has given the US petrochemical industry a double benefit. In addition to using natural gas as an energy source, the industry uses ethane and other liquids from natural gas as a key raw material to make plastics and other essential products. This cost advantage has reversed the fortunes of the US chemical industry.’

Pryor also noted that the total value of shipments from US chemical manufacturers during the past two years hit an all time high. The American Chemistry Council reports that chemicals are once again America’s single biggest export, larger than agriculture, automobiles and aerospace. He also said that the US is also poised to play a significant role in the global LNG market, which is expected to triple in size from 2010 – 2040. ExxonMobil estimates that LNG exports from North America, which were essentially zero in 2010, will increase to approximately 15 billion ft3/d in 2040.

‘While we don’t know how many LNG projects ultimately will prove viable, we need to let the competitive market determine which ones get build and which don’t. Beyond the issue of permitting, the US must embrace free trade policies for the products of natural gas, whether they are petrochemicals or LNG.’

Adapted from a press release by Claira Lloyd.

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