Natural gas driving industrial development

04 05, 2013 by The Advocate

The significant growth in Louisiana’s petrochemical and chemical industry is being driven by the ample supply of cheap natural gas in the Haynesville Shale in northwest Louisiana, an official with Chesapeake Energy said Thursday.

Kevin McCotter, a vice president of corporate development for Chesapeake who is based in Shreveport, said the Haynesville Shale contains 250 trillion cubic feet of natural gas. One cubic foot of natural gas is about the size of a basketball and provides enough energy to keep a hot water heater running for about an hour and 15 minutes.

“That’s one of the benefits of Haynesville, 250 trillion cubic feet of natural gas, 250 miles straight down a pipeline to the Gulf Coast,” said McCotter, who was one of the speakers at a BIC Alliance State of the Industry seminar held at Ashley Manor. About 100 people attended the seminar, which was sponsored by the BIC Alliance, which has offices in Baton Rouge and Houston and works to connect various industry groups.

Right now, there is about $62 billion in plant construction set to get underway in Lake Charles and along the Gulf Coast, McCotter said.

Earl B. Heard, the CEO and founder of BIC Alliance, said that amount of work “is almost like what happened in the late 1960s, when we had the industrial expansions up and down the Mississippi River and along the Houston ship channel.”

Along with the ample supply of natural gas, other factors are powering the petrochemical activity, said Tommy Kurtz, director of the Louisiana Department of Economic Development’s Business Expansion and Retention Group. A favorable tax and regulatory environment in Louisiana, political instability in the Middle East, the ongoing fiscal crisis in Europe and improved technology, such as geographic information sciences and horizontal drilling, are also playing a role.

One of the companies building on the Gulf Coast that was lured by the ample supply of natural gas is Methanex, a Canadian firm that is a major supplier of methanol. Methanol can be found in everything from windshield washer fluid to recyclable plastic bottles, plywood floors, paint, silicone sealants and synthetic fibers.

Methanex is spending $550 million to move a methanol plant from Chile to Geismar.

Glynn Fontenot, plant manager for Methanex in Geismar, said nearly 75 percent of the plant in Chile has been disassembled and stacked on a massive ship big enough to accommodate a 175-foot-tall distillation tower that is 10 feet in diameter.

That ship will travel 7,500 miles in the Atlantic Ocean into the Gulf of Mexico and up the Mississippi River to Geismar, where it will unload the plant parts to be reassembled. The first of two shipments should arrive in Geismar in July or August, with the second shipment arriving in the first quarter of 2014, Fontenot said. The plant is set to begin production by December 2014.

Chad Burke, president and CEO of the Economic Alliance Houston Port Region, a nonprofit group that works to attract economic development projects, said the cheap natural gas has changed the competitors for his region. Burke noted that a few months ago, natural gas was selling for $2.61 per thousand cubic feet in the U.S., compared with nearly $9 in the United Kingdom and more than $17 in Japan.

“Three, four and five years ago, we used to compete with Mexico, China and Asia for projects. The fear was we were mothballing facilities and they were being shipped overseas,” Burke said. “Now Louisiana is our biggest competitor. It’s a friendly rivalry between the two states because there’s a lot of work to go around. It’s a good time to be in the industry.”