The shale gas boom could be a major factor in cutting costs for the chemical industry as well as benefiting other industries, says a report from PwC US.
“As the U.S. chemical industry expands natural gas liquids conversion into a higher volume of downstream products, the positive impacts could flow through the value chain into other manufacturing sectors, particularly given that chemicals are used in an estimated 90% of all manufactured products,” said Anthony J. Scamuffa, U.S. Chemicals leader for PwC.
“Not only could the abundance of NGLs help drive reduced pricing for derivative products, it could also potentially drive domestic re-shoring activity and possibly bring about a favorable shift in the U.S. balance of trade as ethylene capacity comes on line.”
The report, Shale Gas: Reshaping the U.S. Chemicals Industry, followed an earlier PwC U.S. report that estimated shale gas could cut raw material and energy costs for manufacturing up to $11.6 billion annually by 2025.
PwC said specialty chemical companies are starting to feel the effects of lower natural gas and NGL prices and companies might look for longer-term sourcing relationships and partnerships with suppliers.