Abundant feedstock supply from the shale reserves to revive the US petrochemical industry

29-Mar-13
The US petrochemicals industry is set to make a spectacular comeback after suffering from low demand and high feedstock costs for most of the previous decade. Emergence of the Middle East as a hub of basic petrochemicals production further eroded its competitiveness. As per GlobalData, in the middle of the last decade, the discovery of shale gas changed the dynamics of the US petrochemicals industry by leading to the revival of the natural gas industry which improved the ethane supply and created high profit margins at the end of 2011 and 2012. The shale plays are steadily taking center stage in the natural gas industry and so the petrochemicals industry is also hoping for an abundant supply of ethane feedstock in the future. Drillers in the US are currently focusing on liquid-rich shale plays such as Eagle Ford, Barnett, Bakken and Marcellus, which, in addition to natural gas, provide valuable Natural Gas Liquids (NGL, a mixture of hydrocarbon gases such as ethane, propane, butane and isobutane), as by-product. As a result, NGL production in the US increased from 620 Million Barrels (MMbbl) in 2005 to 809 MMbbl in 2011. Ethane production has also received a boost from high NGL production and has increased from 236 MMbbl in 2005 to 338 MMbbl in 2011. It is expected to increase further as drilling in the liquid-rich shale areas continues into the future.
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