The American Chemistry Council (ACC) lauded an IHS report
released Wednesday that predicts a lasting competitive
advantage for the US chemical industry thanks to plentiful,
affordable natural gas -- part of a manufacturing renaissance
that includes industrial expansion and new jobs.
The unconventional revolution is contributing to a
shift in global competitiveness for the United States by
unlocking new production cost advantages, the report
said, which is particularly pronounced in
energy-intensive industries, such as chemicals. The
chemical industry will enjoy a profound and sustained
competitive advantage that is expected to last for decades,"
according to the report.
This report from IHS affirms that revitalization of
Americas chemical industry will endure, said Cal
Dooley, chief executive for the ACC.
Natural gas supply growth is leading to unprecedented
investment and capacity expansion in the United States, in
stark contrast with other areas," he added. "We are truly the
bright spot around the world.
While North American basic chemical and plastics production is
expected to more than double by 2020, Western Europes will fall by about
one-third, according to IHS projections.
By 2025, unconventional energy will help lead to as much as
$100 billion in investment in US chemical and plastics facilities and boost industry
capacity by nearly 89 million tons, IHS data showed. A recent
ACC report found that investment has already begun, with dozens
of companies planning shale-related projects.
As of this week, 126 chemical industry projects representing $84 billion in
capital investment has been announced -- 54% of which is
foreign direct investment in the US.
Robust supplies of natural gas liquids (NGLs), especially
ethane, are key to the chemical industrys newfound
competitiveness. NGLs are the principal feedstock for basic chemical and
plastics in the US, while companies overseas mostly use
naphtha, which is oil-based.
Since feedstock comprises about 75% of
production cost, lower prices favor US chemical makers in
global markets. IHS foresees NGL growth reaching 3.8 million
bpd by 2020 -- a 100% increase over current levels. The
positive outlook for NGLs is driving much of the chemical
industrys investment and expansion by building confidence in
a long-term advantage.
Unconventional energy will help drive a manufacturing
renaissance beyond Americas chemical industry as
industries benefit from lower costs for energy, electricity and
raw materials. Over the forecast period 2012 2025,
improving cost competitiveness for domestic manufacturers will
lead to increased US industrial production, the report
said. The increase is equivalent to $258 billion in new
manufacturing output in 2020 and $328 billion in 2025.
The IHS report, Americas New Energy Future:
The Unconventional Oil and Gas Revolution and the U.S.
EconomyVolume 3: A Manufacturing Renaissance,
cautioned that governmental policies could limit the
nations ability to reap the rewards of shale gas
development. Restrictive regulations have the potential
to fundamentally alter the break-even economics of extraction,
pace of development, or access to these energy resources,
and could slow or reverse the manufacturing
renaissance, it said.
The ACC said it shares those concerns. Government
policies will play an important role in ensuring the United
States optimizes its competitive advantage, grows its economy
and creates jobs, Dooley said.
The ACC has testified that needed policies include access to
natural gas reserves on government and private lands,
continuing state-based regulation of unconventional production,
reliable infrastructure to transport supplies and accelerated
depreciation schedules for chemical industry investments in
plant and equipment.
More details on the report can be found at the IHS website.