Shale Gas and a Refining Revival
Mark Green
Posted July 2, 2012
NPR/State Impact Texas reports on the economic growth that’s being generated by Gulf Coast refineries revitalized with the help of affordable natural gas produced through hydraulic fracturing. It’s a good-news story:
"Along the Texas Gulf coast in cities where the skylines are formed by the stacks of refineries, they’re talking about a perfect storm headed their way. But this storm has nothing to do with the tropics and everything to do with natural gas. 'It’s almost a perfect storm of low energy costs, low financing costs, low construction costs,' said Bob Leiper, the city manager of Baytown."
Here’s what that “perfect storm” looks like:
- Exxon Mobil’s announced plan to expand its refinery/petrochemicals complex with construction of an ethane cracker.
- Shell and Saudi Aramco’s newly expanded Motiva refinery in Port Arthur, which opened last month after a $10 billion upgrade.
- Chevron Phillips Chemical’s plan to spend $5 billion on its Baytown petrochemical plant.
- Seven thousand to 15,000 high-paying construction jobs, which Leiper says will produce a positive ripple across Baytown’s housing and retail sectors.
At the heart of it, NPR says, is surging natural gas production via fracking:
"Hydraulic fracturing has dramatically increased the amount of gas extracted from shale plays around Texas and nearby states with much of it sent in pipelines that come right through Baytown. The cheap gas can be used in a variety of processes to make petrochemicals and plastics and make them more cheaply than competitors overseas. 'This has led to a rebirth of the U.S. petrochemical industry,' said A.J. Teague, COO of Enterprise Products which last month announced its plans to build what it said would be one of the world’s biggest facilities to process 'natural gas liquids' into propylene which is used in plastics."
According to NPR, Texas has spent more than $11 million in state economic development funds on companies to encourage expansion of plants or offices over the past few years. In terms of jobs, the oil and natural gas industry has proven to be a sound investment:
"When a watchdog group, Texans for Public Justice, analyzed whether the public money actually promoted new jobs, it found the companies delivered largely as promised, especially compared to other industries. 'I don’t recall much criticism of oil and gas,' said Craig McDonald, the group’s executive director."
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.