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Shale gas and cash race

On February 27th the gas price in North America reached a new low at $2.57 per million btu with all chances to stay below $3 for a while. In dividing the gas price by four since its peak at $13.5 per million btu in July 2008, the massive development of the shale gas is not only reshaping the gas market, but also the petrochemical industry.

According to the Diplomatic Center for Strategic Studies in Kuwait, the Gulf Co-operation Council (GCC) members are planning to invest $50.3 billion in petrochemical projects over the next five years. Kuwait, Qatar or Saudi Arabia are multiplying announcements of new petrochemicals projects to reduce their dependency to this gas price decline and benefit from their extreme low cost gas feed. The intention is to boost the petrochemical production from the actual 105 to 158-million t/y by 2016. Those investments include new production facilities, pipelines and export facilities.

But in parallel in USA, the global chemicals companies like Bayer, Chevron Phillips Chemical, Dow Chemical, Huntsman, Nova, Sasol, Shell, Westlake Chemical are building plans to re-start or revamp and debottleneck their old facilities, to perform extension of existing ones and build new ones. For these companies, the benefit comes from the both ends, on the supply side the shale gas price, which represents 80% of the costs, turns to be competitive, and on the demand side the US market is the second biggest in the World.   

On the top of this new economic balance, the American Chemistry Council estimates that 25% increase of local gas production will generate 17000 new jobs in the chemical industry and 395000 in all sectors.

In these conditions the petrochemical industry should know a significant and sustainable growth not only in Asia, but also in Middle East and North America calling for massive investments until at least 2015-2017 according to actual published projects.

The cash race has already started.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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