Petrochemicals executives at a recent conference agreed that plastics and other materials will drive demand for oil and gas in the coming decades, but warned that the industry must spend carefully and seek advances in materials that help curb greenhouse gas emissions, reduce waste and improve agricultural productivity to help feed a ballooning population.
Speaking at the World Petrochemical Conference in March, leaders from companies with major Houston-area operations outlined plans to invest more heavily in producing lightweight, durable plastics while emphasizing the need to hold down the costs of building and operating plants to remain competitive if the costs of natural gas and petroleum feedstocks rise.
The panelists each addressed the overarching question of how to preserve the rapid growth of the petrochemicals industry during a boom in U.S. shale production that has generated a steady flow of inexpensive natural gas liquids to turn into feedstocks for plastics, building materials and consumer products. The surge has fueled a wave of multi-billion-dollar investments in chemicals manufacturing plants along the Gulf Coast.
Chevron Phillips Chemical, for example, completed its first new ethane cracker in decades at its Cedar Bayou complex in Baytown. The company, a joint venture of the oil company Chevron and Houston refiner Phillips 66, built the cracker to process the natural gas liquid ethane into ethylene, the building block of most plastic. The new plant has the capacity to produce 1.5 million tons of ethylene a year to feed the production of advanced polyethylene resins at two new facilities in Old Ocean.
Chevron Phillips Chemical chief executive Mark Lashier said the company had no problem finding labor to construct the cracker, but underestimated the cost of training construction crews to adhere to a high level of safety and productivity. He added that reducing the cost to complete a new wave of petrochemicals projects will be critical to remain competitive as the industry expands along the Gulf Coast to meet burgeoning demand for plastics and consumer goods in emerging markets in China, India and elsewhere.
“Shale is here to stay,” he said. “The key issue to address is rising capital costs.”
Thomas Casparie, vice president of the Americas for Shell Chemicals, agreed that the industry must maintain financial discipline in the coming years, particularly if the cost of natural gas increases from its current lows. “Advantaged feedstock,” he said. “We have been overly focused on this as the savior of everything.”
He emphasized that global efforts to address climate change have even greater significance for an industry in flux. He said his company is focused on petrochemical products for use in renewables, such as solar panels, as well as lighter-weight materials that can help reduce emissions from automobiles and airplanes by reducing their weight. “Petrochemicals is a growing business and can be a force for good,” he said, “but we need all of us in the industry to act on that.”
Nick Clausi, senior vice president of polymers for Exxon Mobil Chemical Company, said his company is also focused on producing advanced materials for the auto industry as well as new polyethylene products that can help improve agricultural yields to feed a growing population. But he noted that reducing waste will also be critical to address environmental concerns as new middle-class consumers use more plastics and packaging. “The plastic waste we see in the streets and the landfills is not an acceptable outcome,” he said. “We have to do more.”