“The resurgence of the U.S. chemical industry can be explained in two words: natural gas,” Bloomberg Businessweek reports, while scores of major chemical companies, including Chevron, Dow Chemical, and ExxonMobil Chemical Co., continue to move forward with investments of $100 billion to build or expand chemical plants in the U.S.
That’s because the chemical industry uses natural gas as fuel and feedstock — and prices have fallen 75 percent since 2005, Businessweek noted.
Dow is investing $4 billion to build factories in Freeport, Tex., and reopen a plant in Hahnville, La., creating 500 manufacturing and 5,000 construction jobs.
Just five years ago, the company was closing U.S. plants and moving production to the Middle East to gain access to cheaper raw materials and be closer to Asian markets. Now, the U.S. has become the world’s lowest-cost chemical producer outside the Middle East.
Now, chemical industry employment is rising after decades of decline, while the sector’s trade surplus is expected to reach $46 billion by 2020, compared with $800 million last year, American Chemistry Council chief economist Kevin Swift told Businessweek.
ACC’s running tab of 117 projects represents a cumulative investment of more than $80 billion.
Roughly half of that investment comes from firms outside the United States, like South Africa’s Sasol, which is “plowing $21 billion into at least nine Louisiana plants that turn gas into plastics and diesel,” Businessweek noted.
Sasol is especially bullish on its U.S. investments in Louisiana, announcing steps to advance its $5-$7 billion ethane cracker and derivatives in Westlake, La.
Earlier this month, Sasol and Ineos Group announced plans to form a joint venture that would build a plant in southwest Louisiana with annual capacity of just over 1 billion pounds of bimodal high density PE.
“Thanks to low-priced shale gas, another 1 billion pounds of polyethylene capacity is headed for North America,” Plastics News said of the joint venture.