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Shale Insight 2013 Steve Pryor Remarks

Shale Insight 2013 Steve Pryor Remarks

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Published by PennLive
Shale Insight 2013 Steve Pryor Remarks
Shale Insight 2013 Steve Pryor Remarks

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Published by: PennLive on Sep 26, 2013
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10/05/2013

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Stephen D. Pryor President, ExxonMobil ChemicalShale Insight 2013 ConferencePhiladelphia, Pa.Sept. 25, 2013
Thank you. It is a pleasure to be back in Pennsylvania – and not just because I went to collegehere so many years ago. This region of the country played a pioneering role in America’senergy history. And the men and women of the Marcellus Shale Coalition continue that legacytoday.Over the past 40 years, I’ve seen many advances in energy technology reshape our industry,both here and abroad. But I've never seen anything as powerful as shale energy.In fact, shale development is emerging as the biggest energy breakthrough in this country sincethe dawning of the age of oil, some 150 years ago right here in Pennsylvania.The milestones are striking.U.S. natural gas production is at its highest level ever, up by more than 30 percent in the lastseven years.U.S. oil production rose by 1 million barrels a day last year. This is the largest annual increasein U.S. history.In the downstream, the United States has become the world's largest exporter of refinedproducts, with shipments of gasoline and other fuels doubling over the last five years. In fact,North America is on the road to becoming a net energy exporter by the middle of the nextdecade. And from the consumers’ standpoint, American households are seeing the benefit, saving anaverage of 1,200 dollars in energy costs last year, at a time when average household incomeremains below 2007 levels.
 
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It's a remarkable turn of events, considering that just 10 years ago, in 2003, an article in
Time
magazine declared that the United States was "running out of energy."Clearly, shale and other unconventional resources have transformed America’s energylandscape. They also have the potential to transform the entire U.S. economy and help lift thiscountry out of its persistent pattern of weak growth and high unemployment.IHS Global Insight projects that by 2025 shale energy could create an additional 1.8 million jobsand contribute more than half-a-trillion dollars to annual GDP.
Petrochemicals, LNG are key to growth
 As producers, you understand this. But what many don’t understand, is that in order to take fulladvantage of this historic opportunity, we must act now. The United States must encourageinvestment in downstream industries that drive demand for natural gas.While the largest domestic market of natural gas is, of course, power generation, two keymarkets farther downstream are petrochemicals and liquefied natural gas, which are what Iwould like to talk to you about today.Petrochemicals and LNG are American-made products that add value to our country's naturalgas resources. Demand for these products is strong.Globally, demand for ethylene, a key petrochemical, is growing more than 50 percent faster than natural gas. The market for LNG is growing even faster. And, since most of this demand growth is outside the United States, this presents anoutstanding opportunity to boost America's exports.If you as producers, and the nation as a whole, are to make the most of shale resources,investments in petrochemicals and LNG must be allowed to move ahead.
The U.S. chemicals renaissance
 
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Let me begin with chemicals, one of this country’s largest users of natural gas. The chemicalindustry together with other industrial sectors account for nearly 30 percent of U.S. natural gasdemand.Shale development has given U.S. petrochemical producers a double benefit.In addition to using natural gas as an energy source, they also use the ethane and other liquidsfrom natural gas as a key raw material to make plastics and other essential products.This is in contrast to most of the rest of the world, where petrochemicals are made from oil-based naphtha feedstocks, which today are far more expensive. A good example is ethylene, the world's largest-volume petrochemical building block. Today,manufacturers can make ethylene in the United States for less than half of what it costs inEurope, Asia and Latin America.This cost advantage has reversed the fortunes of the U.S. chemical industry.The total value of shipments from U.S. chemical manufacturers hit an all-time high during thepast two years. And, over the last five years, capital spending by the American chemicalindustry has risen by more than 40 percent. Major capacity additions have been announced for the first time in more than a decade. And exports have been revived. Just five years ago, the U.S. was losing ground in the exportmarket. In fact, the country was on the verge of becoming a net importer of chemicals. Buttoday, chemicals are once again America’s single biggest export – larger than agriculture,automobiles and aerospace. And this is just the beginning. Global demand for chemicals is expected to rise by 50 percentover the next decade. Most of that growth will happen in Asia Pacific and other developingregions.

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