The U.S. had a trade deficit of nearly $280 billion for the first seven months of 2013, so any ideas for significantly boosting exports deserve at least a hearing.
Stephen Pryor, the president of ExxonMobil Chemical, has a fairly simple plan, though one that won’t be easy to execute: take advantage of the United States’ natural gas windfall and boost petrochemical and liquefied natural gas (LNG) exports. Doing so would allow the U.S. to exploit a "once-in-a-generation opportunity for industrial renewal, job creation and revitalization of the U.S. economy."
U.S. manufacturers can use natural gas to make ethylene, the world’s largest petrochemical building block, for less than half what it costs in Europe, Asia or Latin America, Pryor told the Shale Insight 2013 Conference in Philadelphia this week.
Shipments of U.S. chemical manufacturers hit an all-time high during the past two years, Pryor said, and chemicals have once again become the nation’s biggest export. Moreover, global demand for chemicals is expected to rise by 50% in the next decade.
Global demand for LNG offers a similar opportunity. In 2010, LNG exports from North America were negligible, but by 2040, Pryor reported, they could account for 15% of global supply. That would add more than $100 billion to U.S. GDP each year.
To take advantage of this good fortune, says Pryor, the U.S. needs to create an investment “superhighway.”
“The United States needs tens of billions of dollars of investments – not just in production, but in the infrastructure and processing facilities that can enable American-made gas and gas liquids to reach markets here and around the world,” Pryor says.
While the need to act is urgent, Pryor stresses, the U.S. is being held back by delays in permitting to develop shale resources and LNG exports. Pryor acknowledged the debate over taking cheap energy resources and exporting them rather than using this energy to power U.S. businesses and homes.
“Some continue to question whether LNG exports are in the national interest,” he said. “Yet, the Department of Energy’s own study and many others concluded months ago that the more this country exports, the more the economy stands to benefit.”
Pryor said the permitting picture for petrochemicals was more encouraging, with the first ethane cracker having been permitted by Texas and EPA within a year. He said that should be the target period for action on the other six ethane crackers announced, including ExxonMobil’s own multi-billion-dollar Baytown project.
Efforts to limit LNG exports could have a chilling effect on chemical exports, Pryor warned.
“Restricting LNG exports would be an affront to America’s trading partners and undermine the efforts underway to strengthen our trading ties,” he said, adding, “For example, why should the EU drop tariffs on U.S. chemicals and other goods made from advantaged natural gas if the U.S. blocks exports of that gas in liquefied form?”
Pryor summed up ExxonMobil’s position this way: “The United States must seize the opportunity created by shale energy. We need regulatory and trade policies now that enable industry to safely create millions of new jobs and a new era of prosperity.”