Prospect of excess U.S. petrochemical capacity not foreseen in the near term despite shale gas boom; approvals will be drawn out and timeframes for completion will vary, say industry executives

LOS ANGELES , March 28, 2012 () –

The U.S. petrochemical industry is not in any near-term danger of an oversupply situation despite the bevy of projects announced as a result of the bounty of domestic shale gas, said industry executives at a March 28 industry forum, Platts reported the same day.

The 17 billion to 22 billion pounds of new capacity announced is “unlikely to happen anytime soon,” said Jim Gallogly, CEO of LyondellBasell Industries NV. Projects will encounter permitting delays and the timeframes will vary depending on the type of project, he said.

Winners that are the first to get permitted and debottlenecking projects will start up the soonest, Gallogly noted during the IHS Chemical world petrochemicals conference in Houston, Texas, Platts reported.

Other successful projects might be those so-called condo crackers built by multiple partners or those aimed at derivatives markets, which could be announced in the next year or so, he said, noting that LyondellBasell will take part in a condo cracker and expand capacity at its La Porte and Channelview, Texas, crackers.

LyondellBasell might build a new cracker “later if ethane continues to grow,” said Gallogly, reported Platts.

All the crackers proposed will “certainly not” be completed in the planned timeframes, said Ben van Beurden, executive VP of Shell Chemicals, a division of Royal Dutch Shell PLC.

When pressed by an IHS moderator, van Beurden said that the company’s proposed project for a site in western Pennsylvania, about 27 miles north of Pittsburgh is “still at the stage of assessing in terms of commercial viability.”

The project, which would include an ethane cracker and possibly polyethylene and monoethylene glycol units, has “intrinsic advantages,” said van Beurden, Platts reported.

Growth in the U.S. petrochemicals industry should take into account federal energy policies and how they might affect the availability of reliable and economic gas, said Jim Fitterling, an executive VP at Dow Chemical Co.

With gas being targeted to solve such problems as pollution from power plants, the only viable solution for energy policy is for market forces rather than government policy to determine how development should proceed, he said, reported Platts.

The primary source of this article is Platts, New York, New York, on March 28, 2012.


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