Shale Gas Production and Changes in Ethylene Industry, 2007-2013

Solomon Associates has conducted studies of the olefins manufacturing industry for more than 27 years.  As part of these Olefin Studies, Solomon gathers and analyzes data on the feedstock mix for crackers (olefin plants, also called ethylene plants) around the world.  The North American shale gas production boom, which started in 2008 continued to grow into 2014, has had a marked effect on the current feedstock mix of flexible-feed crackers and the planned future feedstock mix for plants willing to invest capital for converting to light-feed (LPG) cracking.

In 2013, Solomon acquired Ziff Corporation, an Ontario, Canada-based firm that benchmarks oil and gas production (upstream).  Solomon can now perform data-driven comparative performance analysis on all energy-related industries from the wellhead to the downstream derivative chemical manufacturing, and all stages in-between.  The contribution of Ziff’s North American gas production studies to this paper is significant.  Ziff’s knowledge of natural gas and, more importantly (for the ethylene industry), LPG production from shale gas wells provides insights about cracker feedstock supply.  When combined with Solomon’s knowledge of feedstock demand based on the Olefin Study data, a comprehensive picture of the future of cracker feedstock emerges. 

Among the topics discussed are:

• Driving/Resisting Forces for Shale Gas/LPG Production
• Location of “Wet” Gas in North America and Relative NGL Content of Shale Plays
• Effect of $50 per Barrel Crude on Relative Feedstock Economics
• Olefin Study Feedstock Mix Data from 2007-2013
• Announced Cracker and Other Petrochemical Projects/LPG Export Contracts
• Other (Non-Feedstock) Uses for LNG, LPGs from Shale
• Long-Term Supply Forecast---Impact of Building More Ethane Crackers
• Which Resisting/Driving Forces for Shale Gas/LPG Production are Strongest