They say “Everything’s Bigger in Texas,” and right now, shale gas is BIG

As the no. 1 chemical producing state in the nation, Texas enjoys many of the economic benefits for which chemistry is so well known — billions of dollars in revenues, and thousands of good American jobs. Now, the economic outlook in Texas is set to brighten once more because of what chemistry can do with the Lone Star State’s vast supply of natural gas from shale.

As Hector Rivero of the Texas Chemical Council wrote in the Houston Chronicle earlier this month:

Fueled by an abundant and affordable supply of natural gas from nearby shale deposits, Texas is poised for a manufacturing renaissance that begins with thousands of chemical industry products that supply manufacturers throughout the U.S. and around the globe. The new shale gas economy has created a competitive advantage for chemical manufacturers in the global marketplace, which translates into new investment, increased exports and tens of thousands of new jobs. Already, Houston has become the first and only metropolitan region in America to regain all the jobs lost during the recession.

The equation is simple, really. Abundant shale gas reserves, plus the chemical industry’s ability to transform natural gas into a feedstock for creating the products we rely on every day, equals increased manufacturing output and hiring throughout the supply chain.

A recent ACC study found that an $8.5 billion capital investment in new and existing ethylene production infrastructure in Texas would generate $37 billion in chemical industry revenue, over $5 billion in wages for Texas workers, and create 81,000 permanent jobs. Across Texas, major chemical producers like The Dow Chemical Company and Chevron Phillips Chemical have taken note, already investing millions in expanded petrochemical production.

In addition to job creation, abundant shale gas supplies are helping to make the U.S. chemical industry far more competitive globally, ACC President and CEO Cal Dooley explained to Bill Loveless on Platts Energy Week TV earlier this month.

The key factor is the ratio of oil to natural gas prices. Most U.S. chemicals are derived from ethane, a liquid found in shale gas, while international competitors rely on a more expensive, oil-based raw material to make their products. The U.S. chemical industry is competitive at an oil-to-natural-gas ratio above 7:1.

With global oil prices at more than $100 a barrel and gas at a mere $2 per million BTUs, the U.S. petrochemical industry now enjoys a 50 to 1 price advantage over its global competitors. And, just as Texas would have it, the bigger the advantage, the better for U.S. manufacturing.

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