Shale Gas to Reshape the U.S. Chemicals Industry

Oct. 30, 2012
A Potential Impact of Shale Gas on U.S. Manufacturing Is Lower Raw Material and Energy Costs

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, according to a new report by PwC U.S. titled, "Shale Gas: Reshaping the U.S. Chemicals Industry." In fact, another recent PwC report estimated that the potential impact of shale gas on U.S. manufacturing could enable U.S. manufacturers to lower their raw materials and energy costs as much as $11.6 billion annually by 2025.

Before natural gas from shale can be transported efficiently and sold commercially, impurities must be extracted. The byproducts of this process, known as natural gas liquids (NGL), include hydrocarbons such as ethane, butane and propane. The chemical industry uses NGL's to produce a variety of derivative products that ultimately become raw materials for multiple manufacturing sectors. In the case of ethane, they convert it to ethylene—the most significant single chemical in terms of volume and value—and then a range of downstream products. A sampling of manufacturing sectors that ultimately benefit from greater capacity and more attractive pricing of NGLs spans apparel and accessories, computers and electronics, machinery, textile and fabrics and transportation equipment, among others.

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