The reversal in fortunes of the U.S. chemical industry is one of the most remarkable stories flowing from the tremendous increase in domestic energy production from shale and other sources.
Speaking at the annual IHS CERAWeek conference in Houston today, ExxonMobil Chemical president Steve Pryor offered a good summation of the chemical industry renaissance that has been sparked by a new abundance of natural gas, which chemical manufacturers use as a feedstock.
Five years ago, the chemical industry was in decline in the United States, an example of American manufacturing’s weakening position.
Today, the industry is America’s leading exporter and has led to a wave of new domestic investment.
As Steve noted, new chemical projects announced by the industry “represent a capacity increase of 33 percent by 2017, which is the equivalent of six to eight new world-scale steam crackers. On top of that are smaller debottleneck projects already completed, equivalent to at least one steam cracker.”
While not every one of these proposed projects may materialize, these announcements represent a resurgent chemical industry. Considering that plastics and chemicals are “the bricks and mortar of contemporary civilization,” to quote CERAWeek host Dan Yergin, that is good news for the American economy.
That’s particularly true on America’s Gulf Coast, home to many U.S. chemical facilities and the location for much (though not all) of the industry’s proposed expansions.
Take just one example: ExxonMobil Chemical’s planned expansion in Baytown, TX. If developed, the project to convert ethylene into premium polyethylene products would be expected to create 10,000 jobs at the peak of construction and add about 350 permanent jobs to the company’s existing Baytown workforce of 6,500. “The multiplier effect of new economic activity created by the facilities will add 3,800 other jobs in the area and increase regional economic activity by $870 million per year.”
Steve also noted the economic stimulus that would be generated by the development of a proposed liquefied natural gas (LNG) export facility in Texas at an ExxonMobil joint venture – a $10 billion-dollar investment generating an estimated $31 billion in economic gains in the U.S. over the life of the project. It could create 45,000 direct and indirect jobs nationwide during the estimated five-year construction period, and thousands more permanent positions as well.
Given that the American economy grew by an almost imperceptible 0.1 percent in the fourth quarter of 2012, numbers like those should make everyone sit up and take notice.