IHS Study: Unconventional Energy Making U.S. Chemical Industry More Competitive

The chemical industry will gain a “profound and sustained” advantage that is “expected to last for decades,” concludes an IHS report on unconventional oil and gas. Unconventional energy is making the U.S. more competitive due to lower costs for energy, electricity and raw materials, IHS reports.

The shift is “particularly pronounced in energy-intensive industries, such as chemicals,” according to the report.

Report findings from the IHS study include:

  • Unconventional energy will help lead to as much as $100 billion in new investment in U.S. chemical and plastics facilities by 2025
  • Chemical industry capacity will grow by almost 89 million tons by 2025
  • More than $51 billion in chemical industry output will be added to the economy by 2025
  • New U.S. jobs related to chemical industry activity will grow to almost 318,000 by 2025

Robust supplies of NGLs, especially ethane, are key to the trend.  Natural gas liquids (NGLs) production will reach 3.8 million barrels per day by 2020, double the current levels, according to a study released by IHS. NGLs are the principal feedstock for basic chemical and plastics in the U.S., while companies overseas mostly use naphtha, which is oil-based. 

An American Chemistry Council study found that investment is already underway, with dozens of chemical companies are planning shale-related projects.  As of this month, 126 projects representing $84 billion in capital investment has been announced – 54 percent of which is foreign direct investment in the U.S.

IHS cautioned, however, that governmental policies could limit the nation’s ability to reap the rewards of shale gas development.

For more information, visit www.ihs.com.

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