CLEVELAND (Nov. 7, 1:45 p.m. ET) — They drilled more than a mile beneath the soil and bedrock of eastern Ohio, into millions of years of cooked dinosaur carcasses and found ... polyethylene?
Well, not exactly. What the drillers found, as just about everyone knows by now, is billions of dollars of natural gas and oil. But along with the oil and gas is billions of dollars of other “liquids,” as the industry calls them. They are the raw materials that go into plastic resins and many other specialty chemicals — and they might be as much a boon to Ohio's economy as the gas and oil itself, experts say.
“It's huge for our industry,” said Cal Dooley, president of the American Chemistry Council in Washington. “There's just been a dramatic shift in the conversations in the boardrooms of U.S. chemical companies because of shale gas.”
Dooley said the mere fact that he was traveling around Ohio pitching the media and lobbying government officials on the benefits of shale gas last month shows how important the matter is to the chemical industry.
Rod MacDonald, managing director and specialty chemicals analyst for KeyBanc Capital Markets, said natural gas already costs twice as much in Europe as it does in the United States, and that's giving U.S. plastic and chemical companies a cost advantage.
“What this does is really change the dynamic of the pricing as we know it now,” MacDonald said.
As a result, specialty chemical plants might locate in Ohio or surrounding states, as could more plastics plants, he said.
“I think each individual company will run a costing model to make that determination,” MacDonald said. Lower feedstock prices, lower delivery prices for those feedstocks and proximity to their source all could play a part in their decision-making.
A complete version of this story is available at www.crainscleveland.com.