Natural gas development attracts chemical companies

July 1, 2014

Natural gas has become quite abundant in the U.S., thanks to rapidly increasing production. This was made possible by hydraulic fracturing, or "fracking," the process by which pressurized liquid is used to fracture rock and free previously unreachable supplies of natural gas. 

Fracking is largely responsible for falling natural gas prices, but it is doing much more than that for the U.S. economy. According to a Bloomberg News article republished on Hydrocarbon Processing, natural gas development is incentivizing foreign chemical companies to increase their investments in the domestic chemical industry. All told, the American Chemistry Council claims that foreign companies account for 62 percent of announced capital investments in the industry.

Thanks to those low energy prices that are about half of what they are in Europe, chemical facilities can operate in the U.S. for much less than in other countries.

For example, Germany's BASF is planning a propylene facility on the Gulf Coast. Representatives from BASF told the news source that the cheap and abundant gas will power the facility at a lower cost.

"We came to the conclusion this will be a sustainable advantage for the US," said Hans-Ulrich Engel, BASF's North American chief. "That is why we are comfortable making an investment."

It is clear that continued investment in this area will lead to sustained demand for natural gas in the long run. To maintain this trend, it is important for stakeholders to work with environmental consultants to ensure that fracking operations are sound. Given the concerns that many have with the environmental impact of this process, a sustainable plan is needed to ensure minimal effects.