Eagle Ford Shale output is driving Gulf Coast petrochemical expansions
Dec 5, 2013, 6:00am CST
The Eagle Ford Shale’s cheap and plentiful supply of natural gas liquids is driving a Texas petrochemical boom, according to new research from the Federal Reserve Bank of Dallas.
Petrochemical producers use ethylene, a chemical that can be separated from NGLs, as a basic building block to make products from plastic pipes to cell phone parts.
As a result of the Eagle Ford’s rich liquids output, the industry — largely concentrated on the Gulf Coast — has announced new projects that would boost their overall capacity by 33 percent by 2017, according to Fed research.
“This is an industry that was on the opposite trajectory prior to the shale revolution,” Dallas Fed economist Jesse Thompson says. “We’re now seeing them bringing production back to the United States after shifting it overseas.”
Indeed, industry heavyweights, including Dow Chemical, Formosa Plastics and Enterprise Products, all have announced major projects in the Lone Star State since the start of the shale boom.
And San Antonio-based refiner Valero Energy Corp., for its part, will spend up to $700 million to upgrade its St. Charles, La., refinery so it can produce petrochemicals.
While such plants tend to be highly automated and employ small staffs, they represent major construction projects that will create thousands of high-paying jobs, Thompson says.
Last year, construction workers with specialized skills building Gulf Coast petrochemical plants earned as much as $40 an hour, according to the Dallas Fed.
And those wages are likely to increase, Thompson says, as more projects get underway.
“For a lot of these projects, we simply don’t have the workforce,” he says. “That means wages have to go up to attract workers.”
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