Nexant Analyzes Impact of Future Shale Gas Production on Global Ethylene Markets

Aug 10, 2012

WHITE PLAINS, NY – Nexant, Inc. today announced the release of a special report forecasting North American shale gas output and its effects on natural gas pricing and natural gas liquids production.  This new Nexant report—North American Shale Gas: Opportunity or Threat for Global Ethylene Producers?—examines the fall in natural gas prices and increase in gas liquids production that have been driven by dramatic increases in North American shale gas production over the past five years.

This increased production has been the primary driver for renewed profitability and growth in the North American petrochemical industry.  Companies are now considering major capacity additions in the United States for the first time in decades.  This is in response to rising margins and enhanced U.S. competitiveness due to attractively priced ethane relative to the cost of naphtha, the principal steam cracker feedstock in other major markets.  Specifically, multiple brownfield capacity additions are being considered as well as several greenfield projects in the U.S. Gulf Coast and U.S. Northeast near the Marcellus shale gas resource.

These major capacity additions are being developed even though growth in North American demand for ethylene derivatives over the next five to ten years is not expected to be able to absorb more than minor increases in regional production.

Although the remarkable turnaround in the competitive position of the North American (NA) olefins industry has improved its prospects, its future remains subject to many new uncertainties. These include:

  • Will currently low natural gas prices negatively impact future growth in NA shale gas production?
  • Will environmental concerns lead to new regulations that will limit NA shale gas production increases?
  • How will different NA shale gas production scenarios impact the availability of ethane as a petrochemical feedstock?
  • Which export markets will be able to absorb increased NA production of ethylene derivatives and which regions supplying these markets will be most impacted?

In addressing these issues, the report builds on Nexant’s extensive expertise in the area of shale gas production, North American NGL supply, petrochemical market dynamics, and regional competitiveness of ethylene production.

North American Shale Gas: Opportunity or Threat for Global Ethylene Producers? is available immediately. For more information on this and other Nexant reports, please visit: http://www.chemsystems.com or contact John Boepple at jboepple@nexant.com.