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Boom times: American ethylene's reversal of fortunes

Steve Zinger discusses how the US shale gas revolution has affected ethylene markets in North America

1 minute read

Steve Zinger, Senior Vice President Chemicals, assesses changing investment patterns of US chemicals companies in a major article by the Wall Street Journal entitled The shale gas revolution in just one word: Plastics

Global ethylene consumption is growing. It topped 147 million metric tonnes in 2016. More than 186 million tonnes will be needed by 2023. While natural gas, its feedstock, remains at a low price petrochemical companies have been pouring money into building ethylene facilities. U.S. polyethylene exports are expected to reach US$10.5 billion by 2020.

Ten years ago the picture was very different.

More than a dozen ethylene facilities on the U.S. Gulf closed between 2008 and 2009. Companies moved operations to the Middle East and Asia, attracted by cheaper prices and proximity to manufacturers. The American industry looked inward and concluded ‘ethylene’s not dead but it’s not going to grow anymore’.

The US shale revolution changed all that.

Fracking has almost doubled US natural gas production, reaching 3.5 million boe per day in 2016. Chemicals companies are now responding to this increased supply. The next challenge will be how to get the product to market, particularly through Houston’s congested shipping lanes. Those who succeed in today’s market will invest not just in production capacity, but also in infrastructure.

Read the full article

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