A new IHS report predicts that plentiful, affordable supplies of natural gas will provide America’s chemical industry with a “profound and sustained” competitive advantage “expected to last for decades.”
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Natural gas liquid (NGL) supplies, especially ethane, are key to the chemical industry’s newfound competitiveness. NGLs are the principal feedstock for basic chemical and plastics in the U.S., while foreign competitors use oil--based naphtha, which is more expensive. IHS sees NGL production doubling to 3.8 million barrels a day by 2020.
By 2025, unconventional oil and natural gas will help lead to as much as $100 billion in new investment in U.S. chemical and plastics facilities, with industry capacity growing by nearly 89 million tons, according to the IHS study. The industry will add 318,000 jobs in 2025, up from 53,000 new jobs in 2012, according to the IHS study.
A recent ACC report found that chemical industry investment is already underway. As of September, 126 projects worth $84 billion in capital investment have been announced. Fully 54% of this is foreign direct investment.
Beyond the chemical industry, unconventional energy will drive manufacturing growth, supporting just over 500,000 jobs in 2025, the IHS report said.
America’s bright outlook is in stark contrast with other areas of the world. While North American basic chemical and plastics production is expected to more than double by 2020, Western Europe’s will decrease by about one-third due to lower energy and feedstock costs in the U.S., IHS data has shown.
The new IHS report cautioned that restrictive government policies could limit the nation’s ability to reap the rewards of shale gas. The U.S. could forego as many as 289,000 chemical industry jobs by 2025 if projected natural gas production does not take place.
ACC has told Congress that appropriate government policies are needed to ensure the nation is able to realize the shale gas opportunity.