What鈥檚 driving Exxon鈥檚 big Gulf Coast investments?
The oil giant is trumpeting a $20 billion US investment. But shale gas has been leading a boom in US chemical and plastics manufacturing for years, reversing a decades-long drift overseas.
The oil giant is trumpeting a $20 billion US investment. But shale gas has been leading a boom in US chemical and plastics manufacturing for years, reversing a decades-long drift overseas.
Exxon Mobil announced plans on Monday to invest $20 billion over the next decade in 11 petrochemical and oil refining plants in Texas and Louisiana, billing the investment as part of a Gulf-Coast manufacturing renaissance that would bring thousands of jobs to the region and fill state coffers with tax revenues.
"Exxon Mobil is building a manufacturing powerhouse along the U.S. Gulf Coast," said Exxon CEO Darren Woods, according to Reuters.听"These businesses are leveraging the shale revolution to manufacture cleaner fuels and more energy-efficient plastics."
The White House鈥檚 reaction was jubilant, with President Trump issuing a string of Twitter posts that linked the announcement to his 鈥淏uy American鈥� agenda.
"This is exactly the kind of investment, economic development and job creation that will help put Americans back to work," he said in a听statement released by the White House.
But some observers say that the investments are in large part a continuation of plans dating back to 2013, raising doubts about whether Exxon might have launched a rebranding to curry favor with a media-savvy president. The White House鈥檚 congratulatory statement was largely an echo of Exxon鈥檚 own release, reported The Wall Street Journal, and a slew of tweets from President Trump claiming credit for the decision came in the hours after he met with former Exxon CEO and current Secretary of State Rex Tillerson.
But the announcement may also elevate and give political resonance to a mostly overlooked branch of the 鈥渟hale revolution鈥�: the role of shale gas in powering an under-the-radar boom in US chemical and plastics manufacturing.
鈥淚t鈥檚 kind of a new world we鈥檙e in, right? Because the whole plastics industry moved overseas decades ago, and now we鈥檙e seeing bits and spurts, or resurgences, tied totally to shale,鈥� says Robert Howarth, a biogeochemist at Cornell University鈥檚 Department of Ecology and Evolutionary Biology in Ithaca, N.Y., in a phone interview with 海角大神.
That may be an understatement. According to a 2014 study from University of Michigan researchers, the US chemical industry went from a $9.4 billion trade听deficit in 2005 to a $3.4 billion surplus in 2013, a turnaround that came in large part off the strength of ethylene production 鈥� a chemical derived from natural gas.
Ethylene is used for a huge range of plastic products, from PVC pipes to diapers to Coca-Cola bottles. And it鈥檚 much cheaper than the crude-oil-based feedstock used by many European and Asian plastics companies, meaning the recent glut of shale gas has translated into a price advantage for US chemical and plastics manufacturers. In 2014,听American Chemistry Council Cal Dooley cited the abundance of shale gas in calling the United States 鈥渢he most attractive place in the world to invest in chemical and plastics manufacturing.鈥�
鈥淚t鈥檚 an astonishing gain in competitiveness,鈥� he said then.听
It鈥檚 unclear exactly how much of Exxon鈥檚 Gulf Coast plans will focus on chemical and plastics production, but the firm says it will ramp up processing of polyethylene 鈥� a compound used in film and plastic bags 鈥� at its Beaumont, Texas, facilities, and potentially build a new refinery to produce ethane, from which ethylene is derived, according to Reuters. But a similar expansion may be in the works in Appalachian states such as West Virginia, Ohio, and Pennsylvania, where oil and gas firms have been planning ways to open up processing alongside shale extraction.
That is likely to worry environmentalists, who say the 鈥渃racker鈥� plants where ethylene is processed pose pollution hazards to nearby communities, while feeding an 鈥渋nherently wasteful鈥� plastics industry that clogs landfills and oceans. That鈥檚 on top of the dangers environmentalists attribute to the extraction of shale gas itself.
鈥淭his cheap and dirty fossil fuel is also proliferating its toxic legacy by facilitating the expansion of petrochemical plants, which are polluting and unsustainably producing materials that often end up in landfills,鈥� wrote Food and Water Watch in a February report.
It comes as industry experts say the US might be on the verge of a second shale gas boom. Since September, oil production has been growing even faster than during the 2011-2015 period, reported Bloomberg in February.
Barry Rabe, a climate policy expert at the University of Michigan鈥檚 Gerald R. Ford School of Public Policy in Ann Arbor, Mich., says it remained unclear whether that growth might continue.
鈥淎n ongoing question is, what is the future of shale or offshore development here?鈥� he tells the Monitor. 鈥淲ith the slight increase now in oil and gas prices, does that really trigger an increase in production?鈥�