The rapid expansion in shale gas development portends large future benefits not only for the oil and gas industry, but also for other industries that stand to benefit from affordable and abundant domestic natural gas. Developments in several such industries have been in the news in the past week. On October 10, the Pennsylvania DEP announced its approval of an air quality plan and water permits for an $800 million power plant in Asylum Township in north central Pennsylvania’s Bradford County. The plant purports to be the first in the state to run entirely on natural gas, including locally-extracted Marcellus Shale gas. The state determined that the proposed levels of air emissions from the plant fell below federal and state limits and would not cause or contribute significantly to air pollution violating national ambient air quality standards.
DEP’s approval allows Moxie Liberty LLC (a business unit of Moxie Energy LLC) to proceed with plant construction, which is estimated to take 2-3 years and at its peak will create 500 jobs, according to the DEP press release. About 30 permanent jobs will be available at the plant once construction is complete. The plant will be capable of producing up to 936 megawatts through two gas-fired combustion turbine generators when operational. Moxie also is pursuing a similar facility in Pennsylvania’s Lycoming County; DEP staff is reviewing an application for that plant currently.
Also last week, PricewaterhouseCoopers (PWC) issued a report titled Shale Gas: Reshaping the U.S. Chemicals Industry. The PWC report addressed the vast potential that the development of affordable domestic shale gas can bring to various downstream industries. Specifically, because “wet” shale gas contains various hydrocarbons (ethane, methane, butane, and propane) that can be refined into various petrochemicals, those products ultimately become raw materials for multiple manufacturing sectors — and, eventually, finished products. PWC estimates, based on industry reports, that as chemical supply increases, “the United States could become a major, global, low-cost provider of energy and feedstocks to the chemical industry,” cutting domestic raw material and energy costs by as much as $11.6 billion per year by 2025.
Key passage from the report’s executive summary:
For manufacturing companies, the initial opportunity has been in supplying products and services to support shale gas expansion. Subsequently, they may be able to take advantage of low-cost chemicals to create plastic-based substitutes for other materials, such as metal, glass, wood, leather, and textiles. For manufactured products with a high chemical content, such as automotive bumpers, plastic sheets and panels, electronic components, and packaging films, lower natural gas prices could provide a strong economic incentive for US manufacturers to reverse offshoring of manufacturing activity and build production facilities in the United States. Longer term, lower energy costs could help revive manufacturing in the United States and positively affect the competitive position of American manufacturing.