Official predicts chemical sector boost
The stage is set for a significant increase in chemical manufacturing in West Virginia, a leading national expert said Thursday.
Cal Dooley, president and chief executive at the American Chemistry Council, was in Charleston Thursday as part of the Marcellus to Manufacturing Ethane Development Conference taking place at the 34th annual West Virginia Construction and Design Expo at the Charleston Civic Center.
When Dooley was last in Charleston in September 2011, he said the development in the natural gas-rich Marcellus shale region was about to usher in "a golden age in chemical manufacturing in the United States."
Nearly 18 months latest, Dooley maintains the positive outlook.
"I'm even more bullish than I was 18 months ago," he said.
He said the United States is uniquely positioned compared to global competitors to develop downstream products from natural gas.
He said prices for domestic ethane feedstock for chemical manufacturing has fallen more than two-thirds in recent years because of the natural gas boom. The industry expects prices to remain stable at low levels for the foreseeable future.
Since the so-called "wet" natural gas - used for chemical manufacturing - that's produced in the Marcellus shale region is more difficult to transport via pipeline, Dooley expects more chemical companies to begin locating facilities in West Virginia and surrounding states.
While Shell has announced it will locate an ethylene cracker facility in western Pennsylvania, Dooley believes additional facilities will locate to the region in coming years.
"I think it's just a matter of time," Dooley said.
He said in the past 18 months, "there has been increased confidence in the chemical industry that it is going to have a sustainable competitive advantage for an extended period of time."
He said the U.S. stands to lead the way in developing the industry too.
A few years ago, the plastics industry exported 12 percent of all plastic resin produced domestically. That has grown to 22 percent today and is expected to grow to 33 percent in the future.
He said the nation's strong supply of domestic natural gas will fuel the growth in the industry.
"When you really look at the supply picture of natural gas going out for the next 20 to 30 years . . . we are in an incredibly strong position," Dooley said.
He said that while other regions across the world have shale gas, they also have significant impediments to development.
France has banned extraction of natural gas using the process known as fracking, while countries in the Middle East lack the adequate water supply needed to engage in fracking of their shale regions.
Also, while natural gas activity in the United States has grown, in Europe the activity has declined - and that's expected to continue into the future.
"That's just a harbinger of things to come," Dooley said.
He said the regulatory environment on the national and local levels is also boosting confidence in the industry.
He said West Virginia leaders have laid a good groundwork for growth.
"The governor, state Legislature and federal representatives have all been very focused on trying to make sure we have a regulatory environment that's conducive to investment in Marcellus shale," Dooley said.
He also said the federal regulatory environment is much more stable today than it was 18 months ago. He doesn't anticipate any new additional regulations coming from the federal level that could hinder investment in the industry.
"I think we have may have cleared the hurdle," he said.
Contact writer Jared Hunt at firstname.lastname@example.org or 304-348-4836.