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ExxonMobil Chemical Co. Vice President of Global Basic Chemical Karen McKee believes the continuing growth of shale and oil production, coupled with the demand for chemical products, is resulting in unprecedented opportunities for the industry.
"If we look at energy demand, we can see that there is growth, but the curve of that growth is much less than the growth in gross domestic product (GDP)," explained McKee, discussing how shale energy powers U.S. chemical manufacturing growth at the recent World Petrochemical Conference.
"Energy drives the economy," she said, noting GDP cannot grow without energy.
McKee acknowledged ExxonMobil "is a very large company," producing approximately 4 million barrels of oil equivalent per day.
"Four million oil equivalent barrels might not mean much, but if we lined those up beside each other, they would reach all the way from Houston to the East Coast, a little bit south of New York," she said. "And we make that much energy every day. But the reality is, in terms of the scale of this industry itself, ExxonMobil makes less than 2 percent of the world's energy.
"It's a huge industry, and there's a huge amount of demand growth. I want to tell you how excited and encouraged I am by all the opportunities that are presenting themselves to the chemical industry right here in the United States."
Seizing low-cost energy opportunities
McKee reminded delegates that only six years ago, before the shale revolution, the U.S. was importing gas.
"Six years!" she emphasized. "And yet, we project going forward that the United States will be a very significant exporter of gas. "The question is, how does this present itself as an opportunity for the chemical industry?"
The answer, she said, starts with the price of energy.
Throughout much of history, energy prices in the U.S., Europe and Japan were essentially in parity, McKee explained.
"What that means is any manufacturer anywhere in the world was paying close to the same amount for their energy," she said. "What happened with the rollup in crude prices to $100 per barrel or thereabout at the same time shale gas production was captivating the United States was you got this real disconnect among the world's gas prices."
McKee added context to this concept by noting that in 2012, manufacturers in Japan were paying four to five times as much for electricity as manufacturers in the U.S.
"Yes, I know crude has come down from the dizzying heights of over $100 a barrel," McKee admitted. "But even today, natural gas prices in Europe are double the price that they are in the Gulf Coast region. So for any energy-intensive industry, this is a tremendous advantage for anybody who is based in the United States."
Seizing this advantage, McKee referred to ExxonMobil's recent announcement of its Growing the Gulf initiative, which will generate $20 billion in investments in 11 different projects through 2022.
"I think this articulates how much confidence we have in the opportunities we have in the Gulf," McKee said.
Growing the Gulf is projected to create more than 45,000 high-skilled jobs that will pay workers approximately $100,000 on average annually.
McKee said ExxonMobil's projections also reflect there will be very significant efficiencies in the way energy is used.
"At ExxonMobil, we're putting our money where our mouth is," she concluded. "We have a lot of confidence in the opportunities in the United States."
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