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ExxonMobil Chemical chief says shale gas is 'transforming America's energy future'

By: Frank Esposito

March 26, 2013

HOUSTON — North America's ongoing shale gas revolution can lead even an experienced executive like Stephen Pryor to speak in extremes.

"The world is on the cusp of a new age of unconventional energy," Pryor, president of global plastics and chemicals giant ExxonMobil Chemical Co., said March 20 at the IHS World Petrochemical Conference in Houston. "It is transforming America's energy future, unleashing economic growth and improving the environment."

"It's unlike anything we've seen in this country since the dawning of the age of oil, some 150 years ago in Pennsylvania's Marcellus Shale region."

In an interview with Plastics News, Pryor added that the rise of shale gas "is positive news for everybody in petrochemical value chain — for an efficient producer like ExxonMobil and for custom fabricators in the U.S. and around the world."

For Houston-based ExxonMobil Chemical, the shale boom is manifesting itself in a massive expansion of its petrochemicals site in Baytown, Texas. The multibillion dollar expansion will add a new ethylene cracker and almost 3 billion pounds of PE capacity. Pryor said the expansion will double the site's PE capacity and increase its ethylene capacity by as much as 70 percent.

Across the industry, at least six world-scale ethylene crackers are planned for North America — projects that could boost the region's ethylene capacity by 33 percent.

"These projects may not all materialize, but the U.S. is clearly in an expansion mode," added Pryor, who joined ExxonMobil predecessor Mobil Oil Corp. in 1971. "It's a tremendous opportunity for growth of U.S. chemical exports."

New resin and feedstock capacity resulting from shale gas also could have an echo effect on North American plastic processing and fabricating, according to Pryor.

"For fabricators, they're going to see a major wave in new investment," he said. But Pryor stopped short of saying that the new capacity could lead to lower or even more stable PE prices. "The [PE] market sets the price, and it's hard to say how that's going to play out," he explained.

A portion of that new PE likely will be exported from the region, since, as Pryor pointed out, "the growth of [PE] supply will be larger than the growth of demand in this country."

In a larger sense, shale gas and oil has had a dramatic impact on the U.S. and North America. Pryor said the region could be a net exporter of energy by 2025. Oil and gas development could create as many as 3 million jobs in the U.S. alone and could increase U.S. GDP growth by 2-3 percent by the end of the decade.

U.S. oil and gas reserves have increased 50 percent since 2005. The country now is estimated to have enough shale gas reserves to last 100 years. And, according to Pryor, this growth was accomplished by "private enterprises and innovative entrepreneurs … not a government policy that picked winners and losers."

"Five years ago, the U.S. was on the verge of being a net energy importer," he said. "Growing supplies of natural gas changed that."

ExxonMobil also has kept an eye on environmental impact as it has moved ahead. In the past decade, the firm has spent $1.3 billion on environmental efforts at Baytown, resulting in improved efficiency and reduced omissions. Those investments also have created "stronger, lighter, lower-cost packaging solutions" — including thinner PE film — with reduced environmental impact, Pryor said.

He added that oil and natural gas discovery methods — primarily hydraulic fracturing ("fracking") and horizontal drilling — can be done safely.

"The environment is always of major importance, but fracking isn't new," said Pryor, whose 42-year career includes numerous refining and chemical posts with Mobil and ExxonMobil and a current position on the American Chemistry Council's executive committee. "The industry has drilled a million wells without any impact on the water table. We know how to do it safely without any environmental damage."

He also defended proposed exports of liquefied natural gas (LNG) from the United States. ExxonMobil is working on a $10 billion LNG export project, but competitor Dow Chemical Co. has been vocal in opposing LNG exports, saying it would adversely affect natural gas pricing in the United States.

Pryor did not mention Dow by name, but he said that "calls to restrict exports … are a harmful departure from free trade principles."

Restricting exports, Pryor explained would make it difficult for the U.S. to sanction China for exporting rare earth minerals and to ask Japan to stop importing oil from Iran. Restrictions also could return the United States to the era of the price controls of the 1970s and 1980s which, he said, resulted in drops in production, supply shortages and diminished economic activity.

"Why would we discriminate vs. liquid natural gas but say it's OK to solidify it into plastic pellets?" Pryor asked. "Both are American products that create jobs. We have loads of gas, so we should do both."