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Petrochemical Industry in the US - Abundant Feedstock Supply from the Shale Reserves to Revive the US Petrochemical Industry

Abstract

Petrochemical Industry in the US - Abundant Feedstock Supply from the Shale Reserves to Revive the US Petrochemical Industry

Summary

GlobalData, the industry analysis specialist, has released its latest research, "Petrochemical Industry in the US - Abundant Feedstock Supply from the Shale Reserves to Revive the US Petrochemical Industry". The study comes from the company's petrochemical research group and provides in-depth analysis of the US petrochemicals industry, highlighting major features and explaining how the shale gas revolution is driving its revival. The report gives the historic and forecast demand and production figures and also discusses the feedstock supply scenario. Additionally, it profiles major liquid-rich shale plays in the US and explains the factors encouraging the growth of drilling activities in these shale plays. It has been built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GlobalData's research team of industry experts.

The US petrochemicals industry is set to make a spectacular comeback after suffering from low demand and high feedstock costs for most of the previous decade. Emergence of the Middle East as a hub of basic petrochemicals production further eroded its competitiveness. In the middle of the last decade, the discovery of shale gas changed the dynamics of the US petrochemicals industry by leading to the revival of the natural gas industry which improved the ethane supply and created high profit margins at the end of 2011 and 2012. The shale plays are steadily taking center stage in the natural gas industry and so the petrochemicals industry is also hoping for an abundant supply of ethane feedstock in the future.

Drillers in the US are currently focusing on liquid-rich shale plays such as Eagle Ford, Barnett, Bakken and Marcellus, which, in addition to natural gas, provide valuable Natural Gas Liquids (NGL, a mixture of hydrocarbon gases such as ethane, propane, butane and isobutane), as by-product. As a result, NGL production in the US increased from 620 Million Barrels (MMbbl) in 2005 to 809 MMbbl in 2011. Ethane production has also received a boost from high NGL production and has increased from 236 MMbbl in 2005 to 338 MMbbl in 2011. It is expected to increase further as drilling in the liquid-rich shale areas continues into the future.

Scope

The report provides in-depth analysis of the opportunities and challenges facing manufacturers of petrochemicals in the US and abroad. Its scope includes -

  • Geological and economic characteristics of major NGL-rich shale plays in the US
  • Historic and forecast basic petrochemicals production and consumption
  • Historic and forecast ethylene capacity in the US
  • NGL and ethane production in the US
  • Natural gas production and consumption in the US and the share of shale gas in the total natural gas production
  • Natural gas price changes in the last decade
  • Planned ethylene plants based on shale gas
  • Major shale gas-based investments by petrochemicals companies in the US

Reasons to buy

The report will enhance your decision-making capability by allowing you to -

  • Understand the ethane supply scenario in the US
  • Develop market strategies with the help of specific insights into feedstock supply in the US
  • Identify opportunities in the US petrochemicals industry with the help of specific insights into future investments in the US
  • Increase future revenue and profitability with the help of insights into future opportunities and critical success factors in the US petrochemicals industry
  • Understand the current and likely future competitive scenario

TOC

1 Table of Contents

1 Table of Contents 4

  • 1.1 List of Tables 6
  • 1.2 List of Figures 7

2 Introduction 8

  • 2.1 Overview 8
  • 2.2 GlobalData Report Guidance 9

3 Shale Gas - A Vital Source of Energy Made Available Through Continuous Technological Evolution 10

  • 3.1 What is Shale Gas? 10
    • 3.1.1 Shale Gas is extracted through Horizontal Drilling and Hydraulic Fracturing 10
    • 3.1.2 Natural Gas Liquids Fractionated from the Shale Gas are Used in Petrochemical Production 11
    • 3.1.3 The US has the Second Largest Shale Gas Reserves in the World 11
  • 3.2 Increasing Shale Gas Production has Increased Natural Gas Liquid Supply 12
    • 3.2.1 Barnett Shale Play is the Oldest and the Largest Natural Gas Liquid-producing Shale in the US 12
    • 3.2.2 Eagle Ford is One of the Most Liquid-rich Shale Plays and has the Necessary Associated Infrastructure 14
    • 3.2.3 Marcellus Shale Play will Supply Huge Quantities of Ethane after the Completion of Planned Pipelines and Planned Projects 15
    • 3.2.4 Bakken Shale is Primarily an Oil Play with a High Natural Gas Liquid Content 17

4 The US Natural Gas Industry Witnessed a Turnaround after Shale Gas Significantly Enhanced Production 19

  • 4.1 Historic US Natural Gas Production and Consumption, 1970-2000 19
  • 4.2 Natural Gas Imports Continued to Increase until Advanced Drilling Technologies Made Production from Shale Plays Viable 20
    • 4.2.1 Natural Gas Supply Shortage until 2005 20
    • 4.2.2 Breakthrough in Drilling Technology Improved Natural Gas Production 20
    • 4.2.3 Shale Plays have created a Plentiful Supply of Natural Gas Production for the Rest of the Decade 22
  • 4.3 Natural Gas Prices Fell as a Result of Excess Production 23
  • 4.4 Lower Natural Gas Prices have Forced Producers to Seek Liquid-rich Shale Plays 24

5 Turnaround in the Natural Gas Industry to Enhance Ethane Supply for the US Petrochemicals Industry 25

  • 5.1 The US Petrochemicals Industry Became Less Competitive with the Emergence of the Middle East as the Most Economic Production Center 25
  • 5.2 The US has been Overtaken by China as the Leader of the Global Petrochemicals Industry 25
    • 5.2.1 China has emerged as the Leader of the Global Petrochemicals Industry in the Last Decade 25
    • 5.2.2 Slower US Petrochemicals Demand Growth due to Mature Domestic Market 26
    • 5.2.3 Chinese Production Increased at an Unprecedented Pace to Fulfill Domestic Demand 28
  • 5.3 US Poised to Regain Strength as Shale Reserves will Provide Abundant Supply of Ethane Feedstock 30
  • 5.4 Lower Cost of Ethane has Driven Ethylene Margins in the US 32
  • 5.5 More Ethane Crackers are Being Planned in the US to Benefit from the Advantageous Feedstock Scenario 34
  • 5.6 Increase in Natural Gas Liquid Production has Boosted Fractionation Capacity 35
  • 5.7 Increasing Investment will Increase Ethylene Capacity Substantially by 2017 36

6 Government Regulation and Inadequate Pipeline Infrastructure May Hamper the Ethane Supply in the US 38

  • 6.1 Tightening Fracking Regulations to Make Drilling More Difficult 38
  • 6.2 Pipeline Infrastructure Must be Improved to Bring Ethane to Petrochemical Markets 40

7 Major Companies Utilizing Shale Resources for Expanding Petrochemicals Business 41

  • 7.1 The Dow Chemical Company 41
    • 7.1.1 Business Overview 41
    • 7.1.2 Dow's Ethylene Capacity by Country 42
    • 7.1.3 Dow's Active Olefins Capacity in the US 43
    • 7.1.4 Dow's Shale Gas-based Investments in the US 44
  • 7.2 Chevron Phillips Chemical Company LLC 45
    • 7.2.1 Business Overview 45
    • 7.2.2 CPC's Ethylene Capacity by Country 45
    • 7.2.3 CPC's Active Olefins Capacity in the US 46
    • 7.2.4 CPC's Shale Gas-based Investments in the US 46
  • 7.3 ExxonMobil Corporation 47
    • 7.3.1 Business Overview 47
    • 7.3.2 ExxonMobil's Ethylene Capacity by Country 48
    • 7.3.3 ExxonMobil's Active Olefin Capacity in the US 49
    • 7.3.4 ExxonMobil's Shale Gas-based Investments in the US 49
  • 7.4 The Royal Dutch Shell 50
    • 7.4.1 Business Overview 50
    • 7.4.2 Shell's Ethylene Capacity by Country 51
    • 7.4.3 Shell's Active Olefins Capacity in the US 52
    • 7.4.4 Shell's Shale Gas-based Investments in the US 52
  • 7.5 Sasol Limited 53
    • 7.5.1 Business Overview 53
    • 7.5.2 Sasol's Ethylene Capacity by Country 53
    • 7.5.3 Sasol's Active Olefin Capacity in the US 54
    • 7.5.4 Sasol's Shale Gas-based Investments in the US 54

8 Latest Trends in the US Petrochemicals Industry Triggered by Shale Gas Developments 55

  • 8.1 Improved Ethane Supplies will Drive the Use of On-Purpose Technologies in the Future 55
  • 8.2 Ethane from Marcellus Shale will Fulfill Demand from Overseas Markets 56
  • 8.3 Utica Shale May Emerge as Another Source of Ethane 57

9 The US Petrochemicals Industry has a Bright Future as the Advantaged Feedstock Supply will Remain in the Long Term 58

10 Appendix 59

  • 10.1 Abbreviations 59
  • 10.2 Definitions 59
    • 10.2.1 Installed Capacity 59
    • 10.2.2 Process 59
    • 10.2.3 Technology 59
  • 10.3 Bibliography 59
  • 10.4 GlobalData's Research Methodology 61
    • 10.4.1 Coverage 61
    • 10.4.2 Secondary Research 61
    • 10.4.3 Primary Research 62
    • 10.4.4 Expert Panel Validation 62
  • 10.5 Contact Us 62
  • 10.6 Disclaimer 62

List of Tables

1.1 List of Tables

  • Table 1: Natural Gas Industry, Global, Technically Recoverable Shale Gas Resources (tcf), 2011 12
  • Table 2: Natural Gas Industry, US, Geological and Economic Characteristics of Barnett Shale Play 13
  • Table 3: Natural Gas Industry, US, Geological and Economic Characteristics of Eagle Ford Shale Play 14
  • Table 4: Natural Gas Industry, US, Geological and Economic Characteristics of Marcellus Shale Play 15
  • Table 5: Natural Gas Industry, US, Geological and Economic Characteristics of Bakken Shale Play 17
  • Table 6: Natural Gas Industry, US, Production and Consumption (tcf), 1970-2000 20
  • Table 7: Natural Gas Industry, US, Share of Shale Gas in Total Natural Gas Production (%), 2000-2035 21
  • Table 8: Natural Gas Industry, US, Production and Consumption (tcf), 2001-2011 22
  • Table 9: Natural Gas Industry, US, Average Quarterly Natural Gas Price ($/MMbtu), 2000-2012 24
  • Table 10: Petrochemical Industry, US and China, Basic Petrochemicals Demand (MMtpa), 2000-2016 27
  • Table 11: Petrochemical Industry, US and China, Basic Petrochemicals Production (MMtpa), 2000-2016 29
  • Table 12: Petrochemical Industry, US, Ethane Production (MMbbl), 2000-2012 31
  • Table 13: Royal Dutch Shell and ConocoPhillips, US, Ethylene Margins ($/Ton), January 2010-April 2012 32
  • Table 14: Ethylene Industry, Global, Cost of Production ($/Ton), 2005 and 2011 33
  • Table 15: Petrochemicals Industry, US, Shale Gas-based Ethylene Capacity Expansion Details, 2012-2017 34
  • Table 16: Natural Gas Industry, US, NGL Production (MMbbl), 2000-2011 36
  • Table 17: Ethylene Industry, US, Inactive Plants, 2009 36
  • Table 18: Ethylene Industry, US, Capacity (MMtpa), 2000-2017 37
  • Table 19: Natural Gas Industry, US, Number of Pending Bills Related to Hydraulic Fracturing, by State, As of May 30, 2012 39
  • Table 20: The Dow Chemical Company, Key Facts 41
  • Table 21: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011 42
  • Table 22: The Dow Chemical Company, US, Active Olefins Plants, 2011 43
  • Table 23: The Dow Chemical Company, US, Shale Gas-based Planned Projects, 2012-2018 44
  • Table 24: Chevron Phillips Chemical Company LLC, Key Facts 45
  • Table 25: Chevron Phillips Chemical Company LLC, Ethylene Capacity by Country (%), 2011 46
  • Table 26: Chevron Phillips Chemical Company LLC, US, Active Olefins Plants, 2011 46
  • Table 27: Chevron Phillips Chemical Company LLC, US, Shale Gas-based Planned Projects, 2013-2018 47
  • Table 28: ExxonMobil Chemical Company, Key Facts 47
  • Table 29: ExxonMobil Chemical Company, Ethylene Capacity by Country (%), 2011 48
  • Table 30: ExxonMobil Chemical Company, US, Active Olefins Plants, 2011 49
  • Table 31: ExxonMobil Chemical Company, Shale Gas-based Planned Projects Details in the US, 2013-2016 49
  • Table 32: Royal Dutch Shell plc, Key Facts 50
  • Table 33: Shell Chemical LP, Ethylene Capacity by Country (%), 2011 51
  • Table 34: Shell Chemical LP, US, Active Olefins Plants, 2011 52
  • Table 35: Sasol Limited, Key Facts 53
  • Table 36: Sasol Limited, Ethylene Capacity by Country (%), 2011 54
  • Table 37: Sasol Limited, US, Active Olefins Plants, 2011 54
  • Table 38: Cracker Yield by Feedstock (%) 55
  • Table 39: Propylene Industry, US, Planned Plant Details, 2012 56

List of Figures

1.2 List of Figures

  • Figure 1: Natural Gas Industry, US, Shale Gas Production Process 10
  • Figure 2: Natural Gas Industry, Global, Technically Recoverable Shale Gas Resources (tcf), 2011 11
  • Figure 3: Natural Gas Industry, US, Barnett Shale Area 13
  • Figure 4: Natural Gas Industry, US, Eagle Ford Shale Area 15
  • Figure 5: Natural Gas Industry, US, Marcellus Shale Area 16
  • Figure 6: Natural Gas Industry, US, Bakken Shale Area 18
  • Figure 7: Natural Gas Industry, US, Production and Consumption (tcf), 1970-2000 19
  • Figure 8: Natural Gas Industry, US, Share of Shale Gas in Total Natural Gas Production (%), 2000-2035 21
  • Figure 9: Natural Gas Industry, US, Production and Consumption (tcf), 2001-2011 22
  • Figure 10: Natural Gas Industry, US, Average Quarterly Natural Gas Price ($/MMbtu), 2000-2012 23
  • Figure 11: Petrochemical Industry, US and China, Basic Petrochemicals Demand (MMtpa), 2000-2016 26
  • Figure 12: Petrochemical Industry, US and China, Basic Petrochemicals Production (MMtpa), 2000-2016 28
  • Figure 13: Petrochemical Industry, US, Ethane Production (MMbbl), 2000-2012 30
  • Figure 14: Royal Dutch Shell and ConocoPhillips, US, Ethylene Margins ($/Ton), January 2010-April 2012 32
  • Figure 15: Ethylene Industry, Global, Cost of Production ($/Ton), 2005 and 2011 33
  • Figure 16: Natural Gas Industry, US, NGL Production (MMbbl), 2000-2011 35
  • Figure 17: Ethylene Industry, US, Capacity (MMtpa), 2000-2017 37
  • Figure 18: Natural Gas Industry, US, States with Hydraulic Fracturing Disclosure Requirements, As of May 30, 2012 38
  • Figure 19: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011 42
  • Figure 20: Chevron Phillips Chemical Company LLC, Ethylene Capacity by Country (%), 2011 45
  • Figure 21: ExxonMobil Chemical Company, Ethylene Capacity by Country (%), 2011 48
  • Figure 22: Shell Chemical LP, Ethylene Capacity by Country (%), 2011 51
  • Figure 23: Sasol Limited, Ethylene Capacity by Country (%), 2011 53
  • Figure 24: Utica Shale Area, 2012 57
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