Emily Pickrell
HOUSTON — Foreign companies are making big bets on the Gulf Coast petrochemical corridor, where capital investment is surging because of cheap U.S. natural gas, other lower costs and the existing industry infrastructure.
Domestic natural gas and its byproducts including ethane — a building block petrochemical companies use to make plastics and other materials — are low-priced relative to most of the world because of the surge in oil and gas production from U.S. shale plays.
A big part of the attraction is the price advantage of U.S. produced ethane over naptha, a similar chemical building block derived form petroleum. The price of domestic oil, which is influenced more by global markets than the price of U.S. natural gas, has stayed high despite the U.S. shale boom.
“If you are in a region of the world that doesn’t have the same natural gas prices, you are more or less forced to use naptha as your feedstock,” said Christopher Guith, vice president of policy at the U.S. Chamber of Commerce.
“It is giving people who use ethane here a competitive advantage,” he said, “which is why you are seeing companies around the world wanting to come here to take advantage of the price spread of the feedstock.”
Read the full article at FuelFix.