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North America will remain a net exporter of polyethylene (PE) for the immediate future, turning forecasts from as recent as last year on their head, thanks in large part to the rapid development of shale gas in the U.S. and its knock-on effect on ethylene production. Bill Sanderson, president of energy consulting firm Purvin & Gertz, summarized the new resource's impact at Chemical Market Associates Inc.'s (CMAI) World Petrochemical Conference (WPC; March 23-25; Houston). "U.S.

Tony Deligio

March 30, 2010

2 Min Read
Shale gas a “game changer” for North American petrochemical industry

) World Petrochemical Conference (WPC; March 23-25; Houston). "U.S. shale gas supplies have changed the game," Sanderson said, noting that estimates of potential reserves are up more than 60% over 2006. Ron Gist, also of Purvin & Gertz said in presentation on North American ethylene feedstocks that recoverable gas reserves have almost doubled in less than two years thanks to the rapid development of shale gas technology. Horizontal drilling and hydraulic fracturing have helped gas companies readily exploit natural gas embedded in large shale formations found throughout North America.

Ethylene, which is a chemical forerunner to a number of plastics, including polyethylene and vinyl, can be derived from the petroleum product, naphtha, or natural gas, with the growing divergence between oil and gas prices creating an advantage for producers that take the natural gas route. According to Gist, there is currently a record gap between crude and gas, which looks to remain high by historic standards, even as it narrows in coming months.

Cheap, abundant natural gas, and therefore advantaged ethylene and polyethylene, helped the North American PE industry ramp up its export business in 2009. Howard Rappaport, global business director plastics and polymers at CMAI, told the WPC audience that PE exports last year totaled 3.3 million tonnes. "For several years, North America will enjoy a significant cost advantage over other naphtha-based regions," Rappaport said. In spite of the Middle East nearly tripling its PE exports from 4.5 to 11 million tonnes/yr, CMAI said the U.S. will remain a net exporter through its forecast period to 2014. Rappaport noted that the explosion in PE exports in 2008 and 2009 did reveal some inefficiencies in Houston's export infrastructure, however. "[The industry] reached a bottleneck and we were unable to get any more material out the door," Rappaport said. "The logistics issue is going to be a top level one for the industry going forward."

According to the U.S. Energy Information Administration's 2008 annual report, about 11% of all newly added natural gas pipeline capacity in 2008, equivalent to 4.6 billion cu ft/day, was attributable to new intrastate pipelines built to transport expanding Barnett shale production in the Dallas/Ft. Worth, TX area to local markets, as well as interconnections with the interstate natural gas pipeline network. Across the country, shale gas production grew from 1.184 trillion cu ft to 2.022 trillion cu ft, with nearly half of that production in Texas. 

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