Bloomberg News

Shale Spurs U.S. States to Vie for Chemical Projects, WSJ Says

December 27, 2011

Dec. 27 (Bloomberg) -- A surge in U.S. natural-gas production from shale rock is spurring states to compete for companies to produce chemicals from the fuel, the Wall Street Journal reported.

Pennsylvania, Ohio and West Virginia are vying to attract a plant that will turn gas into ethylene proposed by Royal Dutch Shell Plc, the Journal reported today. Shell intends to announce a site early next year, the newspaper said. Ethylene is a building block of plastics and other materials used to make pipes, paint and antifreeze.

Plentiful domestic gas supplies have depressed prices, attracting chemical, fertilizer and steel manufacturers to construct new U.S. plants and reopen shuttered mills in what was a high-priced market a few years ago, the newspaper said.

West Virginia’s legislature passed a bill this month establishing regulations for drilling into shale formations, a process known as hydraulic fracturing that involves pumping high-pressure water, sand and chemicals into the ground to shatter rocks and allow gas to flow, the Journal said, citing Keith Burdette, the state’s commerce secretary. The legislation should dispel any uncertainty about West Virginia’s ability to provide a “reliable supply” of gas, the paper quoted Burdette as saying.

Nucor Corp. is spending $750 million to build a steel mill in Louisiana, an investment that wouldn’t have been feasible without the plunge in gas prices, the newspaper said, citing Nucor Chief Executive Officer Dan DiMicco.

CF Industries Holdings Inc., which makes fertilizer from gas-derived ingredients, plans to spend $1 billion to $1.5 billion over several years to expand its North American plants, the newspaper said. Low gas prices also have reduced electricity costs in some regions where generators burn gas, prompting Brazil’s Santana Textiles to build a $180 million denim plant in Edinburg, Texas, the Journal said.

--Editors: Jasmina Kelemen, Will Wade

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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