ExxonMobil Chemical President talks U.S. shale gas advantage

By Heather Caliendo
Published: March 20th, 2013

Houston - Stephen Pryor, president of ExxonMobil Chemical Co., said in every country he visits, the conversation quickly turns to one topic: shale gas and its impact on the chemical business.

"Without question, the reversal of fortunes of the American chemical industry is one of the most remarkable stories flowing from the growth in unconventional oil and gas," Pryor told the audience at the IHS World Petrochemical Conference (March 19-21; Houston, TX).

Pryor said just five years ago, U.S. chemical production was in steady decline due largely to the rising price of natural gas. America was on the verge of becoming a net importer of chemicals, but Pryor said growing supplies of shale gas and gas liquids have changed all that. 

U.S. proven resources of natural gas have grown close to 50% since 2005.

"North America chemical manufacturers have a cost advantage over competitors around the world that rely on more expensive, oil-based feedstock," Pryor said. "This has boosted profitability and enabled the industry to regain its position as America's largest exporter. It has also stimulated new investment. For the first time in more than a decade, major capacity additions have been announced that convert ethane to ethylene, the largest petrochemical building block."

A recent study by the Federal Reserve showed a capacity increase of 33% by 2017, which is the equivalent of six to eight new world-scale steam crackers. ExxonMobil is progressing plans for a multi-billion dollar ethane steam cracker and polyethylene expansion at its Baytown, TX site, which the company says is already the country's largest integrated refining-chemical complex.

Still, Pryor cautioned not to get "complacent" about the current U.S. shale gas advantage as the industry will remain competitive and cyclical.

"The industry is subject to both economic and political cycles, as well as cycles of new capacity that create boom and bust industry conditions," he said. "As we have seen repeatedly in the past, feedstock advantages change over time. New technologies like shale gas extraction migrate quickly around the world."

Pryor emphasized that a focus on sustainability is a key strategy that allows companies to remain successful long-term.

"Sustainability may sound like a buzzword, but it is a driving force in the chemical industry," he said. "Sustainability starts with reducing the environmental impact of our own operations. It also entails supplying value-added products that benefit customers and help them reduce their environmental impact. Both must be done in a manner that delivers attractive returns to shareholders while benefiting society."

For instance, he said that reducing the environmental impact has been an ongoing strategy at Baytown. Over the past decade, the site has invested more than $1.3 billion in environmental improvements, reducing NOx and VOC emissions by more than 50% and achieving double-digit improvements in energy efficiency. 

The new cracker project will be contained within the site's existing footprint. The project will produce products for the company's customers, including "stronger, lighter, lower-cost packaging with reduced environmental impact," Pryor said. These "advanced" polymers are the product of ongoing company research that has reduced film thickness by 2% per year for the last 20 years.

The Houston area may see an estimated 10,000 jobs at the peak of construction, with a potential multiplier effect of new economic activity created by the facilities to add 3800 other jobs in the area and increase regional economic activity by $870 million per year.

"The bottom-line is that sustainability is good business, benefitting the environment, customers, shareholders and society," Pryor said. "It's the strategy for a sustainable future in the global chemical business."

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