Shale gas multiplier: Benefits abound for plastics makers

The plastics industry will harvest an abundance of economic advantages from robust and inexpensive supplies of shale gas, including a reduced dependence on foreign energy and a manufacturing resurgence in the United States.

These were just several of the upbeat messages from speakers at the inaugural SPI/IHS Global Plastics Summit recently held in Chicago.

“One clear benefit is jobs,” Greg Jozwiak, North America commercial vice president, Dow Packaging and Specialty Plastics, said. The “shale gale” could produce 485,000 petrochemicals-related construction jobs as well as 55,000 resin production jobs.

Jozwiak added:

My perspective is that shale gas presents an opportunity to collaborate and innovate for growth – to re-shore the manufacturing of film bags; replace traditional material in packaging and export finished goods.

Scott Farmer, an executive vice president at Berry Plastics, called the shale gas boom “the most exciting thing to happen to the plastics industry in a long time.” Plastics makers are adding capacity for the first time in years because cheap natural gas is used to make low-cost ethane and then ethylene, a key feedstock for plastics such as polyethylene and PVC.

More than 20 states have seen three or more plastic product manufacturer projects announced since June 2012, with Michigan, Ohio, Indiana, Texas and Kentucky leading the pack with 73 combined projects.

The American Chemistry Council has attributed much of the chemical industry’s  competitive edge in the global marketplace to ethane and other natural gas liquids, which are much cheaper than the oil-based feedstocks such as naphtha that foreign companies use.

A recent IHS report projected ethane supplies to double to 3.8 million barrels a day by 2020. The positive outlook for ethane and other natural gas liquids is driving much of the chemical industry’s investment by building confidence in a long-term competitive advantage, helping to spark a manufacturing renaissance.

The upbeat forecasts herald exciting times, Jozwiak said at the conference, “especially when you think that just a few years ago, people weren’t thinking they’d be investing in North America at all.”

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