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ACC: Plentiful natural gas creates advantages for US chemical industry

By: Michael Lauzon

December 11, 2012

WASHINGTON (Dec. 11, 12:30 p.m. ET) — The United States will have plenty of natural gas to both convert to chemicals and plastics as well as to export as liquefied natural gas, officials with the American Chemistry Council said in a Dec. 11 conference call.

“The United States has gone from being the highest cost major gas producer four to five years ago to the current lowest cost producer,” said ACC President and CEO Cal Dooley, who said extensive shale gas deposits have flipped the cost equation.

Chemical and related industries have announced $45 billion in projects over the next several years. ACC officials did not have a breakdown on what fraction is for plastics and related feedstocks, but they expect most initial investment will be in established chemical and resin production areas in Texas and Louisiana.

Down the road, shale gas development in the Midwest will spur greenfield investments there.

ACC “will continue to make energy our top priority,” said Dooley. As a corollary, energy efficiency will be at the forefront of how the industry operates.

U.S. expansion of chemical and resin production will not curtail similar investments in the Middle East and Asia, Kevin Swift, ACC chief economist and managing director, said. Some projects need to be located within the markets they serve.

ACC will support negotiations for increased trade with the European Union, Dooley explained.

“There is terrific opportunity for a U.S/EU trade agreement,” Cooley told media dialed into the conference call.

“Already there is a 3 percent tariff on chemical exports but that is still a high cost to exporters,” according to Dooley, who estimated the current tariff amounts to billions of dollars per year.

ACC also supports collaborative research with the European Union on chemical toxicity. Both regions have common interests in science such as endocrine disruption.

Dooley said ACC is disappointed in the lack of discussion in Congress on approaches to toxic chemicals regulation.

“We need to ensure the chemical industry can develop new chemicals while addressing sustainability,” Dooley said.

ACC is, however, encouraged by moves to reform the Environmental Protection Agency.

Dooley and officials held the conference call to outline the association’s strategies for 2013.