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November 11, 2014 01:00 AM

Speaker: Shale oil, gas has transformed the plastics industry

Jim Johnson
Staff Writer
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    Michael A. Marcotte
    Phillip Karig, managing director of Mathelin Bay Associates LLC, says shale oil and gas has transformed the plastics industry.

    ROSEMONT, ILL. — Phillip Karig is not saying that the shale gas boom is over.

    But the managing director of Mathelin Bay Associates LLC, a plastics industry consulting firm, wants people to know that today's truths might not be tomorrow's truths.

    And he only has to point to yesterday to prove that point.

    Shale oil and gas is fundamentally changing how America looks at and consumes energy these days, and that transformation includes a plastics business that's riding the wave of business opportunities unlocked by these resources.

    “I'm not here today to say that the shale gas revolution is over. That certainly is not the case. But I do think it's important that we recognize that common knowledge world views are subject to change,” Karig said at the recent Plastics Caps & Closures 2014 conference organized by Plastics News in Rosemont.

    Karig remembered life in the plastics world a decade ago to prove his point that things can, and do, change.

    “Think back 10 years ago. Common knowledge back then was U.S. energy production had peaked. There was nowhere for oil and gas prices except up. Imported resins were going to flood the U.S. Plants were going to shut down. And no one in their right mind was going to invest anything in new polymer production capacity,” Karig said.

    Today, that certainly is not the case. And that's Karig's point. Things change, and they sometimes change in ways that aren't readily anticipated or expected. Like the way hydraulic fracturing — or fracking — has changed the domestic energy market.

    Karig warned that the United States is not the only country that has shale oil and gas reserves and it could be just a matter of time before other locations around the world tap those resources.

    “Revolutionary technologies,” he said, “are hard to contain.”

    He only had to point to cloth production in 1700s England, which unsuccessfully tried to keep the technology from the rest of the world for a competitive advantage. Keeping factories closed to outside eyes and not allowing those with knowledge from immigrating just didn't work.

    Shale gas development also could be limited by infrastructure bottlenecks involving pipelines and production sites and a shortage of skilled and unskilled labor.

    The isolated U.S. energy market as well as unexpected regulatory developments or environmental events could impact the exploration of shale gas and oil reserves.

    While shale and oil gas development currently is riding a wave of development, momentum could be disrupted by a train derailment or earthquake associated with the industry, for example, he said.

    Politics and regulation, from the White House to city council, also can change the playing field.

    “I want to emphasize the shale revolution is not over. It's just important that we understand the assumptions that it's built on and understand that things can change and can change very quickly in the event that something catastrophic happens,” Karig said.

    “The U.S. oil and gas industry is the envy of the world because of fracking,” he said. “And a lot of U.S. polymer producers are in a very good position.”

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