gas industry chemical supply chain

Booming U.S. Shale Gas Industry Impacting Downstream Chemicals Supply Chain

Since last decade, there has been the substantial change in the fields of global energy market, coupled with the significant change in preferred global energy sources. While looking back around 15 years ago, when majority of the global petrochemical refiners investments was shifting to China, the U.S. refiners were facing plant shutdowns and had made increasingly difficult for U.S. to fill out domestic assets. But in recent years, the huge exploitation of natural gas by new fracking technologies has imitated astonishing revival of U.S.-based chemical manufacturing. The vast abundance of shale gas reserves and having capability to exploit them has made U.S., the low cost chemical producer except the Middle East. This huge revival have attracted numerous chemical manufacturers in establishing U.S. based facilities in order to take advantage of low cost feedstock and increased supply. This in turn has impacted the whole supply chain and transformed U.S. from a key energy importer to energy exporter.

Furthermore, this transformation has created huge opportunities for the midstream and downstream players. As, the various global integrated players including petrochemical producers from Europe such as Chevron Phillips, ExxonMobil, and Dow are jointly investing with Total, SABIC and Borealis in order to capitalize more than hundred million tons of new petrochemical expansions from shale. The key products which would be developed from these new expansions are ammonia, methanol, natural gas derived propylene, ethylene, and olefins.

Also, this sudden huge revolution has enhanced the US production and led to exceeding domestic demand helping them in growing exports of surplus products to key growth markets such as India, China, ASEAN and Mexico. These growing economies has helped in being the key targets of the U.S. goal for addressing overall trade imbalances and further helps in reducing the overall US trade deficit. These surpluses in the U.S. trade has helped in creating additional revenue for U.S. ports, including trading partners such as logistics & shipping companies. Furthermore, the fear of declining feedstock base and delayed feedstock trade of the shale gas-derived ethane, the countries such as Scotland, and other countries in Europe, India and some Latin America countries are welcoming these exports in order to revive their petrochemical facilities and lead them in creating same economic benefits which US is enjoying.

For instance, INEOS Group Holdings, which has key operations in Europe, is now making ethane shipments directly from the Enterprise Hydrocarbons Terminal on the Houston Ship Channel to the Grangemouth manufacturing complex in Scotland. Previously, Grangemouth had been targeted for closure due to its inability to compete with cheap feedstock advantaged by the producers in the Middle East.

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