America & # 39; s Natural Gas Boom Drives A Global Plastics Boom: NPR

Kevin Ross, president of the Scottish Plastic and Rubber Association, in front of the INEOS Grangemouth refinery and chemical plant.

Reid Frazier / The Allegheny Front

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Reid Frazier / The Allegheny Front

Kevin Ross, president of the Scottish Plastic and Rubber Association, in front of the INEOS Grangemouth refinery and chemical plant.

Reid Frazier / The Allegheny Front

In a quiet street overlooking Scotland's largest refinery and chemical plant, Kevin Ross maps the latest growth of the US oil and gas boom.

Since 2016, natural gas from the United States has fed Grangemouth petrochemical plants, a large complex of cooling towers, flaring towers and pipelines. The gas was originally harvested in western Pennsylvania, sent through a pipeline to Philadelphia, and sailed across the Atlantic.

"It comes here, gets taken off the ships, put in big storage tanks," explains Ross, who is president of the Scottish Plastics and Rubber Association and runs a local plastic testing company.

Natural gas is most commonly used for heating homes or for power plants. But when it comes off the ground it contains another key ingredient – ethane, a building block of plastic – and it now runs another thriving industry.

America produces so much ethane that over 300 new petrochemicals and plastics plants are planned or under construction around the country. President Trump has highlighted the economic benefits of this, and recently told workers at a Shell Ethane plant in Pennsylvania that "we are reclaiming our noble heritage as a nation of builders."

But there is more ethane than existing US plants can use, so in short order the United States has also become the world's leading exporter of ethane. There is growing plastic industry in India and China, as well as Europe – including the Grangemouth plant – and these exports are expected to continue to grow.

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American shale gas "drives investment decisions"

America's ethane boom was a lucky break for the European chemical company INEOS. In 2011, own supplies from the North Sea were low, says Warren Wilczewski, an economist with the US Energy Information Administration.

"INEOS looked at the United States, where ethane supply grew, and especially in the Appalachian region, that ethane somehow had nowhere to go," Wilczewski says. "And they recognized an opportunity."

INEOS commissioned a fleet of ships, the first ever to carry ethane at sea, to move the gas from a port near Philadelphia to facilities in the United Kingdom and Norway.

It also signed an agreement with Sunoco Logistics to send that gas from Western Pennsylvania through the Mariner East pipeline. Sunoco's construction on it has been controversial due to its spotty environmental protocol and the use of prominent domain. It is the subject of criminal investigation, including one by the FBI. But the pipeline has proved important for INEOS 'plan.

Ross, of the Scottish Plastics and Rubber Association, says that the arrival of Pennsylvania shale gas has enabled the company to reopen a unit of the Grangemouth petrochemical plant that was closed down for years; the plant is now in full production.

"I cannot underestimate the importance of US shale gas and raw material costs for INEOS," says Ross. "It is driving investment decisions into Grangemouth, which would not have been made had it not been for the availability of shale gas."

INEOS did not agree to an interview for this story. But in a company video, CEO Jim Ratcliffe said the cost of ethane from Pennsylvania was about a quarter of what he would have had to pay for it in Europe.

"I think for some of these [chemical plants] in Europe it is the only way they can survive if we can bring some of the US economy over to Europe," Ratcliffe said.

Pushback to fracking & # 39; s "toxic element"

Plastics and petrochemicals are increasingly important for the oil and gas industry. They are expected to account for more than one-third of global oil demand growth by 2030, and half of all growth by 2050, according to the International Energy Agency. This is of concern to environmentalists, who point out that the plastics industry accounts for around 4% of all carbon emissions and that the number is expected to increase.

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Much of the growth in plastic will be in Asia, with millions of people moving into the middle class over the next few decades, says Jennifer Van Dinter, analyst at S&P Global Platts.

"If you add plumbing to a home, you will use PVC pipes," she says. "You might be using insulation, which will come from petrochemicals." She says more people will also buy cars, and although it's an electric model, "there are a lot of plastic components."

In Scotland, INEOS received over US $ 350 million in loan guarantees from the United Kingdom to retrofit the Grangemouth plant to US shale gas. But the company also wants a local offer, and there is pressure for the UK to allow fracking. It is the controversial technology that breaks rock deep underground to obtain hard-to-access oil and natural gas, and that has made the United States gas boom possible. The

idea was met with intense resistance.

Norman Philip, with Friends of the Earth Scotland, grew up in Grangemouth, where his father worked at the plant under a previous owner. But he is against fracking because of what he has heard about it from communities in the US and Australia.

"People told us about gas leaks. They told us about kids who had headaches," he says. "It was a toxic element of it."

The pushback has resulted in an ironic twist: in 2015 Scotland in place in the moratorium on fracking, and the British government recently did the same. And yet it is still legal to import shale gas produced by fracking in the United States.

Lee Sinclair is a railway engineer at the Grangemouth petrochemical plant and has mixed feelings about it. "The only thing I don't like about it is, Scotland said, & # 39; No, you're not fracking here & # 39; so they decided to go to America to get this gas," Sinclair says.

He would rather have the UK get its own local supply. But for now, he says, the US boom in gas and ethane is helping him keep his job.