By: Frank Esposito
April 4, 2014
HOUSTON — New petrochemical capacity around the world isn’t just about adding more polyethylene pellets, it’s about lifting more people into the middle class through economic growth.
That’s the vantage point of ExxonMobil Chemical Co. President Stephen Pryor, who spoke March 26 at the IHS World Petrochemical Conference in Houston.
“A growing middle class will have the income to afford cars, air conditioning and other items,” he said. “The middle class is growing around the world. And most manufactured goods are made with plastics and chemicals.”
For its part, Houston-based ExxonMobil Chemical recently doubled production capacity at its petrochemicals complex in Singapore. In North America, the firm is embarking on building a new ethylene cracker in Baytown, Texas, and is adding additional PE capacity in nearby Mont Belvieu.
In an interview after his speech, Pryor said that both of those projects are set to begin construction soon, with production scheduled to begin sometime in 2017. He added that he expects most of the new PE capacity there will be exported outside of North America.
“We’ve already got a very adequate [PE] footprint to meet all North American requirements,” explained Pryor, who joined ExxonMobil predecessor Mobil Oil Corp. in 1971. “There’s big growth in parts of the developing world like South America and Asia. North America will grow, but just a little.”
North American expansions by ExxonMobil and other firms are being made possible by newfound supplies of shale gas throughout the region. Shale development could create as many as four million new jobs in the U.S. by 2025 while adding $500 billion to national GDP, Pryor said.
“After three decades, the U.S. is back in the game as a low-cost producer,” he added. “We have the opportunity to add high-paying jobs in chemicals and manufacturing. We’re seeing the recapitalization of the U.S. chemical industry.”
Pryor also repeated ExxonMobil’s support of potential exports of liquefied natural gas (LNG) from the region. This topic has divided some in the industry, but Pryor said that “it’s very simple – LNG is good for chemicals.
“By exporting LNG, we’ll produce more U.S. gas and chemical feedstocks, and these growing investments in chemicals will go on,” he added. “If we constrain the free market, LNG will constrain investment.”
Challenges facing this boom, however, include a growing shortage of skilled labor needed to build these many plants. As a result, the cost of building a chemical plant on the U.S. Gulf Coast has doubled in the last ten years.
In some cases, regulatory permits for pipelines and plants have been held up by what Pryor called “opponents of development,” causing some projects to be stalled or canceled. “We have the natural resources, all we need is a green light,” he said.
A deeper problem is lower proficiency by U.S. students in science, technology, engineering and math – known as the STEM subjects. These areas of knowledge are needed for future economic growth. “This is a national problem,” Pryor said. “It means more than writing a check.”
ExxonMobil has backed up its intentions since 2005 with the Mickelson ExxonMobil Teachers Academy. The program — co-sponsored by pro golfer Phil Mickelson — provides additional math and science training for grade school teachers across the country. To date, 4,000 educators from around the country have attended the Academy impacting more than 230,000 students.
ExxonMobil also has partnerships with nine community colleges in the Houston area, including Baytown-based Lee College, which provides a large number of trained workers for the firm’s complex there.
While looking to the future, Pryor recalled growing up outside of New York City, when middle-class growth allowed his family to buy a new car for the first time — and when his father went so far as to cut a hole in the wall of the family home to accommodate their first air conditioner.
“The U.S. has overcome a challenge of this type before,” Pryor said. “An entire generation was lifted into the middle class — and we can do it again.”