WSJ – The Shale Revolution’s Staggering Impact in Just One Word: Plastics

June 25, 2017 – The Wall Street Journal

The Shale Revolution’s Staggering Impact in Just One Word: Plastics

Petrochemicals, once simply a cheap byproduct, are powering a U.S. manufacturing boom and export bonanza

By: Christopher M. Matthews

When new parents in Rio de Janeiro buy baby food in plastic containers, they are bringing home a little piece of the U.S. shale revolution.

That boom in drilling has expanded the output of oil and gas in the U.S. more than 57% in the past decade, lowering prices for the primary ingredients Dow Chemical Co. DOW -0.56% uses to make tiny plastic pellets. Some of the pellets are exported to Brazil, where they are reshaped into the plastic pouches filled with puréed fruits and vegetables…

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…Then came the fracking revolution. By 2010, as U.S. drillers used horizontal drilling and hydraulic-fracturing technologies to release vast oil and gas deposits trapped in rocks, they also unlocked raw materials for petrochemicals. U.S. production of natural gas byproducts has grown from two million barrels a day in 2008 to more than 3.7 million in 2016, according to energy consultant RBN Energy LLC.

The petrochemical industry was slow to react due to uncertainty about the long-term viability of U.S. shale drilling. Initially, companies invested only in adding capacity to existing U.S. facilities. By 2012, they started building.

Later this year, a new Chevron Phillips facility capable of producing 1.5 million metric tons of ethylene a year is coming online in Baytown, Texas. It covers a plot the size of 44 football fields and is made up of 350 miles of pipe, 40,000 tons of steel and 140,000 tons of concrete. It has taken four years to finish.

During the height of its construction, more than 4,500 construction workers and engineers were on site. Once operational, it will only take around 200 employees to run.