Marcellus to Manufacturing: Ethane fueling chemical industry in West Virginia

During a 2011 visit to the Mountain State, American Chemistry Council President and CEO Cal Dooley predicted “a golden age in chemical manufacturing in the United States,” with West Virginia sharing the bounty from affordable and abundant supplies of Marcellus shale gas.

In an interview with the Charleston Daily Mail, Dooley reiterated his upbeat forecast:

When you really look at the supply picture of natural gas going out for the next 20 to 30 years . . . we are in an incredibly strong position.

U.S. chemical manufacturers enjoy an enormous cost advantage over foreign competitors. The prices for ethane from natural gas have dropped by more than two-thirds in recent years because of falling prices for natural gas, Dooley said, and these prices are expected to remain low for years.

The bottom line, Dooley stated:

I’m even more bullish than I was 18 months ago. There has been increased confidence in the chemical industry that it is going to have a sustainable competitive advantage for an extended period of time.

The plastics industry has used the price advantage to boost America’s trade prospects. It exported 12 percent of plastic resins produced in America a few years ago but that has grown to 22 percent today and is expected to grow to 33 percent.

West Virginia is already benefiting from inexpensive supplies of natural gas and additional economic growth is in the offing as chemical manufacturers locate plants in the state. The valuable “wet” natural gas produced in the Marcellus shale and valued by chemical manufacturers is difficult to ship via pipeline, so the industry will increasingly look to build facilities in states like West Virginia closer to supplies.

The state’s regulatory environment is boosting the chemical industry’s confidence and laying the ground work for economic growth, Dooley said, adding that he does not anticipate any new regulations at the federal level, which could inhibit investment in the production of natural gas from shale:

The governor, state legislature and federal representatives have all been very focused on trying to make sure we have a regulatory environment that’s conducive to investment in Marcellus shale.

Dooley was in Charleston last week to deliver a keynote address at the second annual Marcellus to Manufacturing Ethane Development Conference, an event that attracted numerous commentators who touted the value of inexpensive natural gas for the nation’s manufacturing sector.

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