It's a simple statement, but one that bears repeating. "Petrochemicals, and plastics in particular, are great products," said Steve Prusak, senior vice president of corporate planning and technology for Chevron Phillips Chemical Co. (CPChem).
"There's a reason why they exist today. They're highly efficient. We're looking at decades' worth of development and growth. They're good for society and its development, and there are some opportunities out there."
The opportunities, Prusak admitted, do not come without challenges. To address challenges of future demand, sustainability, waste management and a circular economy, Prusak said, "[Industry] must implement collaborative work with regulators, academia and citizens in general.
"The opportunity is not only how you find sustainable solutions for our needs from an environmental stance, but from an economic sense as well," he said. "While our customers are demanding these products, our investors are also demanding a certain level of return on their investments, so there's a lot of work in front of us."
Speaking at the 23rd World Petroleum Congress, Prusak noted that the oil and gas industry's fundamentals are strong, as evidenced by a thriving middle class.
"We think 350 million individuals will join the middle class in the next decade. As a result, development will [result in] a demand for the products our industry produces," he said. "And, again, those products are good."
Prusak ventured to predict several scenarios and drivers for petrochemical demand in 2030, 2035 and beyond. Demand and regulatory considerations shape this future vision, he said.
"One [prediction] is: The line of energy transition is solid. The simplest way I can describe it is to ask, 'What is the shape of the ethylene cost going forward? What are its feedstocks, and is enough margin left so you can satisfy each element of the supply chain?'"
Achieving a circular economy is another driver, he said.
"We can clearly see a business case there, but the question is scale. Our view is that it's coming. We are spending time, human resources and capital to look at these issues. I think we're talking about decades until we see any sort of significant, huge change," he said. "I never would have thought that we would be having a conversation about or contemplating venture capital investments or the type of hard-asset investments we're contemplating."
Transformation begins at the top
Prusak said CPChem has been on a "business transformation journey."
"There are really three prongs to that," he said. "The first is what we call 'performance by design.' It's a renewed commitment to continuous improvement. Ultimately, we have to earn our right to grow every day. That means being a top performer, closing benchmark gaps and performing with excellence."
Leaders at CPChem have put "considerable effort into this program" in the past several years, Prusak said. This program requires that every employee know they have leadership's sanction and support to innovate.
Conversely, it's also not a "free-wheeling" atmosphere, Prusak said. "There's got to be some degree of top-down direction in terms of what you want to put your time, energy and resources into. We've been very pleased with that program, and we think it's struck a nerve. It parlays, maybe, into the expectation of business transformation process, which is a cultural piece."
Secondly, Prusak said leaders are also focusing on social projects. "We've invested in water missions and other projects to be good stewards in the communities where we operate," he said.
The third prong, Prusak said, is digital implementation. "In terms of digital implementation, we've probably come to the game a little later than others," he said. "We're trying to make sure, with the limited resources we have, that we're putting our time and energy into those things that are closing gaps, creating a lower cost structure and helping to secure our margin."
Prusak said he is confident that all three of those prongs together "ultimately make us a better supplier to our customers. We hope we attract talented people who want to work for CPChem."
