Shale gas: Reshaping the US chemicals industry

February 2013
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Shale gas: Reshaping the US chemicals industry

At a glance

Advances in horizontal drilling and fractionation of shale gas basins in North America are altering the chemicals industry value chain. In this analysis, we examine the immediate and longer term effects on the chemicals industry.

Advances in horizontal drilling and fractionation of shale gas basins in North America are altering the chemicals industry value chain, constituting a potential game changer that could affect the entire energy industry. We examine the immediate and longer term effects of shale gas on the chemicals industry in this report.

For chemical companies, the impact of shale gas has been to decrease the cost of both raw materials and energy. The price of US natural gas has declined and prices are expected to decline further, at least in the short term, as a result of excess inventory. Based on industry reports, we estimate that the US chemicals industry has invested $15 billion in ethylene production, increasing capacity by 33%. As these investments take hold, yielding more supply, the United States could become a major, global, low-cost provider of energy and feedstocks to the chemical industry.

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