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US chemical investment linked to shale gas reaches $100B

American Chemistry Council

The American Chemistry Council (ACC) reports that potential US chemical industry investment linked to plentiful and affordable natural gas and natural gas liquids from shale formations has topped $100 billion. As of this month, 148 projects valued at $100.2 billion have been announced. These projects – new factories, expansions, and process changes to increase capacity – could lead to $81 billion per year in new chemical industry output and 637,000 permanent new jobs by 2023. More than half of the investment is by firms based outside the US.

"This is a historic milestone for America's chemical industry and proof that shale gas is a powerful driver of manufacturing growth," said ACC President and CEO Cal Dooley. "Thanks to the shale gas production boom, the US is the most attractive place in the world to invest in chemical and plastics manufacturing. It's an astonishing gain in competitiveness."

Chemical makers are transforming domestic energy into a stronger economy and new jobs. Between 2010 and 2023, $100.2 billion in increased capital spending can create an estimated 55,000 permanent new chemical industry jobs, 314,000 jobs in supplier industries, and 267,000 payroll-induced jobs in communities where workers spend their wages, ACC's analysis showed. An additional 222,000 temporary jobs will be created during the capital investment phase, which peaks in 2016.

During his recent State of the Union address, US President Obama highlighted shale gas and the need for prompt approval of manufacturing projects.

"Given the enormous benefits of shale-related manufacturing, we are encouraged by President Obama's pledge to help make sure these projects happen," Dooley continued. "We're glad the White House agrees that regulatory permitting issues must not be a roadblock to new US investment, and we are excited to get these projects approved and built."

Companies investing in large-scale manufacturing projects, such as new factories and expansions, face a complex permitting process that includes federal, state, and local requirements. To go forward, these companies need certainty as to the processes and timing for obtaining permits. Other policies that are key to realizing the shale gas opportunity include access to domestic natural gas resources; responsible, state-based regulation of production; and rapid development of infrastructure to transport supplies.

The ACC May 2013 report "Shale Gas, Competitiveness, and New US Chemical Industry Investment – An Analysis of Announced Projects" analyzed nearly 100 chemical and plastics projects totaling $71.7 billion in potential investment that had been announced through March 2013. Cumulative potential investment is growing as new projects are announced. 

ACC's analysis employed the IMPLAN input-output methodology, an economic model that quantifies interdependencies among industries or economic sectors. IMPLAN is used by government agencies including the Army Corp of Engineers, US Department of Defense, US Environmental Protection Agency, and over 20 others, and by over 250 colleges and universities, local governments, nonprofits, consulting companies, and other private sector companies.

 

 

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