An unprecedented boom for the U.S. chemical industry is under way thanks to cheap, abundant energy from shale natural gas, says a new report from the American Chemistry Council, an industry trade group.
ACC predicts multiple benefits from plant building boom.
Value of projects: $100 billion
Chemical output: $81 billion per year
Total economic output: $244 billion per year
Chemical industry jobs: 55,000
Total jobs: 637,000
New tax revenue: $16 billion
NOTE: All figures are by 2023. SOURCE: ACC
More than $100 billion worth of new chemical facilities that will take advantage of natural gas from shale are planned for the U.S. over the next 10 years, ACC says.
Even after adjusting for inflation, “we can say that this dwarfs the 1940s, 1950s, or 1960s investment waves,” ACC Chief Economist T. Kevin Swift says. “Actually, it dwarfs everything.”
The planned projects could lead to $81 billion in annual chemical output and more than 600,000 permanent jobs by 2023, according to the report. ACC counts 148 U.S. chemical expansion projects tied to shale gas; more than half of the investment is by firms based outside the U.S. A similar tally by ACC in March 2013 found 97 projects with a value of $72 billion.
The investment boom is a sharp contrast from the situation only a few years ago when the chemical industry seemed to be fleeing the U.S. for the Middle East and China. In 2005, according to ACC, chemical production costs were higher in the U.S. than in any other major world region. Today, production costs are lower than anywhere but the Middle East.
“Thanks to the shale gas production boom, the U.S. is the most attractive place in the world to invest in chemical and plastics manufacturing,” ACC CEO Calvin M. Dooley says. “It’s an astonishing gain in competitiveness.”
One of ACC’s reasons for publicizing the investment is to ensure that the juggernaut isn’t stopped by government regulations. Dooley says he is encouraged that President Barack Obama highlighted shale gas during his State of the Union address and pledged to facilitate permitting of new manufacturing plants.
Among the policies that ACC says will help realize the potential of shale gas are access to oil and gas reserves on government and private lands, continued state-based regulation of shale-derived oil and gas, and expedited construction of infrastructure that would link oil and gas production to chemical facilities.