Brian Ames recognizes the rise of unconventional feedstocks as providing a new paradigm for the entire petrochemical industry, one that is “staring us right in the face.”
“What we’re seeing are new horizons filled with opportunities,” he said. “We are seeing a whole turnaround across the industry. We’re seeing it happen with a lot of complexity, and we need to get it all right.”
Ames, senior vice president, portfolio development, feedstocks and performance plastics at The Dow Chemical Company, likens these opportunities provided by the shale revolution as a “comeback challenge” for the entire U.S. economy.
“So many people had written us off a few years ago, but we’re here to tell them we’re coming back,” he said.
From 2000 to 2010, ethylene demand growth in the U.S. was on the decline, Ames noted at the North American Petrochemical Conference and Exhibition 2014.
“Ten years ago, all people could talk about was that knockout punch of low-cost feed-stocks in the Middle East being converted into polyethylene resin and shipped to China to convert into converted resins,” Ames recalled. “Then those converted polyethylene resins were being shipped to the U.S., displacing U.S. production.
“Today, we’re seeing a seismic shift in the conversation,” Ames continued, noting domestic producers are now pushing away imports. “Now the forecast for ethylene is a positive 3.7-percent average growth rate over the next decade, and the forecast continues to go upward on demand. All this is due to shale gas and our industry’s capability to act on this opportunity.”
The ‘three waves’ of the shale gale
Ames said the transformation to shale gas can be viewed in three waves, the “first wave” inspiring the development of new technologies to economically extract oil and gas from shale.
“The extraction of shale gas and shale oil in North America is now economically viable, and affordable domestic hydrocarbons resources are readily available,” Ames said.
In the “second wave,” once the delivery of affordable shale gas became a reality, investment by the upstream petrochemical industry could proceed.
“Dow was one of the first movers on all of this,” Ames said. “Overall, our capacity in the Americas will grow by more than 2 million tons a year, which strengthens our leading position in this region and, also, globally.”
Ames said Dow will invest downstream in production units for specialty products serving its transportation, infrastructure, packaging and telecommunications customers, as well as other customers across the broader economy.
According to Ames, the American Chemistry Council estimates shale gas has led to the development of at least 211 new chemical industry investments.
“That’s $135 billion in new capital investments, and more than 400,000 direct and indirect jobs that will be created by 2023,” Ames said. “And this continues to grow.”
As upstream investments come on line, so will the “third wave,” Ames predicted, with customers investing in building new downstream North American manufacturing facilities and expanding existing assets.
“The full impact of this investment could take at least another five years to fully kick in,” Ames said. “When our customers start building plants, there will be even greater benefits to the economy including significant job creation.”
Ames also noted U.S. imports of crude in September were the lowest in 18 years, with domestic crude output climbing to more than 9 million barrels a day in November.
“These records continue to be broken because we have the reserves and technical know-how. The world is taking notice,” Ames said. “With the advent of shale gas — that unconventional feedstock — U.S. manufacturing has pulled itself up from the mat. Now we’re standing tall.”
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