Foreign investors are helping fuel the US petrochemical renaissance, as overseas companies scramble to take advantage of the supply of cheap domestic natural gas, according to a new industry analysis.
Twelve of the 25 companies proposing to build or expand ethane crackers in the United States are international firms, underscoring the competitive advantage the US continues to reap from the shale boom, according to Petrochemical Update, which analyzes construction trends for the petrochemical industry, Fuelfix reported.
Foreign interest in the US petrochemical industry spiked after advances in horizontal drilling and hydraulic fracturing unleashed a wave of natural gas. Prices collapsed, quickly transforming the US from one of the world’s highest-cost chemical and plastics producers to the world’s second cheapest producer behind the Middle East, Petrochemical Update said.
Three of the six ethane crackers already under construction are under development by foreign companies, including Taiwan-based Formosa Plastic’s new cracker in Point Comfort, South African Sasol’s $8.1 billion project in Louisiana and a joint venture between OxyChem and Mexico-based Mexichem for a $1.5 billion cracker in Ingleside, the group’s report found.
In addition, nine foreign companies have announced plans for a second wave of plants and 10 other petrochemical manufacturers from Asia and the Middle East are considering investing in ethylene projects in North America.
This second round of petrochemical projects will likely crank out products that will be shipped overseas, making it critically important for companies to ensure construction costs stay within budget, the group said.
The projects, ranging from $250 million to $8 billion, represent a significant investment for the Persian Gulf coast, where a bulk of the projects have been slated. But future investments may spread across the country, with two companies, Braskem and Shell, eying investments near the Marcellus Shale formation in the Northeast, and another plant possibly headed to Ohio, the group found.
