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Abundant and affordable supplies of natural gas from shale are reinvigorating America’s chemical industry and producing thousands of new jobs nationwide, Dean Cordle, President and CEO of AC&S Inc., said at a joint subcommittee hearing of the House Energy and Commerce Committee entitled “U.S. Energy Abundance: Manufacturing Competitiveness and America’s Energy Advantage.”
Cordle testified on behalf of the American Chemistry Council.
The shale gas boom directly benefits companies like Nitro, W.Va.-based AC&S, which relies on natural gas for fuel and manufactures oil field chemicals used for upstream production in the Appalachian Basin. Natural gas from shale has transformed the U.S. chemical industry from the world’s high-cost producer five years ago to among its lowest-cost producers today, Cordle said, adding:
[quote]The United States is emerging as the place to manufacture chemicals now, as European and Asian companies, as well as U.S. firms, make plans to source production here. In a few short years, the U.S. chemical industry has moved from an industry in contraction to an industry facing an era of unprecedented expansion.[/quote]
An ACC report has identified nearly 100 projects, valued at $72 billion, with half of the planned investments from firms based outside the United States.
Petrochemical companies based in the U.S. now enjoy a decisive competitive advantage in production, primarily because 75 percent of production costs are tied to energy-derived materials.
In America, it now costs less than $400 a ton to produce ethylene, a critical manufacturing ingredient from natural gas liquids. In Europe, the cost is more than $1,000 a ton, and in Asia, even higher. This competitive advantage in petrochemicals is creating an export boom for ethylene derivatives.
Thanks to tremendous supplies of low-cost natural gas, North American chemicals and plastics production is expected to more than double to 70 million tons by 2020, while Western European output contracts to 20 million tons, Cordle testified.
Accompanying this tremendous growth in investments are hundreds of thousands of new jobs. In his prepared testimony, Cordle said:
[quote]The supply response from shale gas will directly create 46,000 jobs in the US chemical industry due to expanded chemical production. In addition to the jobs created in the US chemical industry, another 264,000 indirect jobs would be created in supplier industries, and another 226,000 payroll-induced jobs would be created elsewhere in the economy through household spending of wages, leading to a total of 537,000 new jobs.[/quote]
Government policies can ensure the United States optimizes its competitive advantage, especially by encouraging responsible domestic natural gas and oil production.
Key policies include: implementing a true, all-of-the-above energy policy that enables all energy sources, including energy efficiency, to compete fairly in the market; retaining state oversight of unconventional oil and gas production; and expediting permitting and construction of infrastructure needed to transport natural gas and natural gas liquids to market, Cordle said.
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