Shale investment surge may be 'much bigger than we expected'

By Frank Esposito
Senior Staff Reporter

Published: March 26, 2014 4:24 pm ET
Updated: March 28, 2014 1:39 pm ET

Image By: Caroline Seidel, Plastics News Jim Fitterling

Related to this story

Topics Materials, Materials Suppliers
Companies & Associations Dow Chemical Co.

HOUSTON — The U.S. petrochemicals market is riding four waves of investment thanks to the feedstock advantage provided by North American shale gas, according to a top executive at Dow Chemical Co.

“The investment surge could be much bigger than we expected it to be,” Dow’s Jim Fitterling said March 26 at the IHS World Petrochemical Conference in Houston. Fitterling — a 30-year Dow veteran — now serves as the company’s executive vice president of feedstocks, performance plastics and supply chain.

He added that there are at least 120 energy-related chemical expansions currently announced for the U.S., with more than $100 billion being invested. The four waves of investment cited by Fitterling were:

• Upstream oil and gas producers who “have jumped in with both feet.”

• Makers of products “close to the base,” such as chemicals and steel. “Their bet on the recovery is real and sustainable,” he said.

Ten new U.S. ethane crackers have been announced by petrochemical firms, including one by Dow in Freeport, Texas. Fitterling estimated that six of these eventually will be built, but he added that the scope of the announcements “is indicative of what they think of the investment thesis.” Dow’s Freeport project will include a large amount of new polyethylene capacity.

• Downstream users — including plastics processors and makers of such products as computers, appliances and furniture. These expansions could create as many as 3 million new U.S. jobs, Fitterling said.

“This validates everything we’ve been trying to say about the potential of energy resources to recharge the U.S. economy,” he added. “It’s coming and it’s real and it will have an impact.”

• Knowledge-based R&D and technology centers. Dow is taking part in this trend by building a new R&D center that’s set to open in Lake Jackson, Texas, in 2016. “These investments will be a huge jolt to R&D and will help us protect intellectual property,” Fitterling said.

But he also cited a pair of issues that could slow down shale-based progress in plastics and chemicals. The first issue was the lack of skilled workers and workers with science, technology, engineering and math (STEM) knowledge.

“Even without the construction frenzy, we had a shortage of STEM workers,” Fitterling explained. “STEM talent is scarce and could be a damper on planned projects.”

The second issue is the possible export of liquefied natural gas (LNG) and other shale-based products from the United States.

“How much growth we have is dependent on how we manage our energy resources,” he said. “There’s a rush to license LNG [for export], but we want a balanced, measured approach.”

“We can’t afford to stumble with this once in a lifetime opportunity.”

Dow ranks as one of the world’s largest makers of plastics and chemicals. The firm employs about 53,000 worldwide and posted sales of $57.1 billion in 2013.


Comments

Shale investment surge may be 'much bigger than we expected'

By Frank Esposito
Senior Staff Reporter

Published: March 26, 2014 4:24 pm ET
Updated: March 28, 2014 1:39 pm ET

Post Your Comments


Back to story


More stories

Image

Ineos closing Barex plant, exiting business

October 29, 2014 3:58 pm ET

Materials maker Ineos Group is closing its only global Barex-brand polyacrylonitrile (PAN) resin plant in Lima, Ohio. Ineos – based in Rolle,...    More

Image

DSM picks Augusta, Ga., for nylon plant

October 29, 2014 11:49 am ET

Materials firm Royal DSM NV has chosen Augusta, Ga., as the site of its new North American nylon resin plant.    More

Image

Teknor Apex expands production of recycled nylon to Europe

October 29, 2014 10:12 am ET

Materials firm Teknor Apex Co. is making its recycled nylon compounds available in Europe for the first time.    More

Image

Unplanned disruption in Texas hits Huntsman's quarterly earnings

October 29, 2014 9:30 am ET

Huntsman Corp. saw its earnings drop in the third quarter of 2014, due in part to an unplanned disruption at its Port Neches, Texas, plant.    More

Image

Majority of China's future polyolefin capacity will come from coal

October 28, 2014 3:45 pm ET

China's polyolefin suppliers are shifting from using oil to coal or natural gas as their feedstock, according to experts at the FlexPO conference, hel...    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events