PwC: Expansion of Shale Gas Market Bolstering Outlook for US Chemicals Industry

By Rob Starr, Content Manager, Big4.com

According to a new report released today by PwC US titled, Shale Gas: Reshaping the U.S. Chemicals Industry, the expansion of the shale gas market could potentially drive significant benefits to the U.S. chemicals industry, including decreased raw material and energy costs.  Major oil and gas companies and upstream commodity industry participants are evaluating their business models and actively moving forward to take advantage of emerging shale gas opportunities.  Some are considering whether to restart mothballed assets, invest in green field projects, form strategic alliances, and expand and upgrade existing assets. Many of these companies are also executing large capital projects, identifying engineering and construction resources, and establishing strategic sourcing agreements with NGL providers.

As manufacturers replace petroleum-based raw materials with products based on ethylene, their cost structures should also change significantly, as well as supply and demand for certain products.  This pattern may be repeated for other petroleum-based raw materials, many of which are used in building, construction, adhesives, paint, coatings, plastics, packaging and carpeting.

Further downstream, specialty chemical entities are starting to feel the effects of natural gas and NGL prices on their business models.  Moreover, as the commercial distribution of ethane and ethane-based raw materials increases, it could trigger new innovations and investment in new technologies