Monday, August 8, 2011

Chemical Industry Touts Widespread Benefits From Shale Gas Production

Editorial: The Marcellus shale has huge potential
West Virginians would welcomea renewed chemical industry

This is a reprint of an editorial that was published in the August 8, 2011 edition of the Charleston Daily Mail.

Cal Dooley, president and CEO of the American Chemistry Council, recently laid out in a letter to the Wall Street Journal the impact that shale gas could have on the U.S. chemical industry. In a word, huge.

Production from the Marcellus shale already has turned a $100 million deficit in the U.S. balance of trade for chemicals to a $3.7 billion surplus last year. "Plastic exports alone were up 10 percent last year," he said. "Industry leaders such as Dow Chemical and Eastman Chemical have re-started plants idled by the recession. Other companies are expected to announce expansion plans in the U.S."

The council's March study of shale gas potential found that a theoretical but realistic 25 percent increase in U.S. ethane supply would bring:
* 17,000 new knowledge-intensive, high-paying jobs in the U.S. chemical industry.
* 395,000 jobs in related industries, and 230,000 jobs from new capital investment by the chemical industry.
* $4.4 billion more in federal, state, and local tax revenue, annually ($43.9 billion over 10 years).
* A $32.8 billion increase in U.S. chemical production.
* $16.2 billion in capital investment by the chemical industry to build new petrochemical and derivatives capacity.
* $132.4 billion in U.S. economic output - $83.4 billion related to increased chemical production, including additional supplier and induced impacts, plus $49 billion related to capital investment by the U.S. chemical industry).

The executive summary of the council's study notes that the scenario outlined in the report is corroborated by trends in the chemical industry. "Member companies, including the Dow Chemical Company, Shell Chemical, LyondellBasell, Bayer MaterianScience and others have announced new investments in U.S. petrochemical capacity..."

"Some of these investments are bring made in areas of the country that have been hardest hit by declines in manufacturing, improving the outlook in economically depressed areas of the country."

If that sounds like West Virginia, that's because it is. Dominion Energy announced Friday that it will build a half-billion-dollar natural gas processing plant adjacent to PPG's Natrium plant in Marshall County. It will process "wet" gas from the Marcellus and Utica shales and ship products via barge, rail, truck and pipe. The company has already converted an existing pipeline to handle the gas.

West Virginians know the value of the chemical industry, now a shadow of its former economic self. State, county and city officials should make sure development-friendly policies are in place. The industry has an almost unbelievable chance to recover.