Increased, intense demand for natural gas could dampen the $90 billion “tsunami of investment” in new industrial plants or expansions expected in Louisiana, a chemical industry spokesman said Monday.
Five and a half years ago, the state’s chemical industry was in disarray, Dan Borné, president of the Louisiana Chemical Association, told members of the Baton Rouge Press Club. The industry lost 10,000 jobs from 1999 to 2009, as high natural gas prices threatened to undo a century of growth.
Then, hydraulic fracturing technology generated massive amounts of cheap shale gas.
U.S. chemical manufacturers’ feedstock prices were slashed, and the sector was reborn. No one knew any of that would happen in 2009.
“What happens 5½ years from now?” Borné asked.
A number of considerations could disrupt the enormous industrial projects proposed, including:
- Intense, increased demand for natural gas, which is just as important for the chemical industry as flour to a bakery, Borné said. Pressure on the fuel supply will come from Sasol’s multibillion-dollar gas-to-liquids plant in Westlake, from billions worth of ammonia plants, gas-fueled power plants nationwide, natural-gas vehicles and proposed exports of liquefied natural gas.
- Water issues in shale formations. A lack of supply in some areas and a growing “not-in-my-backyard” attitude toward fracking could also limit shale gas production.
- Infrastructure issues. Those range from a shortage of skilled labor to build the plants and operate them to a need for better roads, bridges and ports. Borné said the state should launch the most aggressive infrastructure improvement program imaginable to make those improvements. “Clearly it has to be addressed … and if it means paying a toll, I’m willing to do it,” he said.
- Competition from international shale plays. Europe is full of natural gas shales, Borné said. Eventually, European countries are going to realize it’s much cheaper to produce that gas themselves than to pay a much higher price to import natural gas.
Borné said Louisiana already is working to address many of the issues. For example, the state’s community colleges and technical schools and industry groups are working together to develop training programs. LSU and other colleges are making the investment in engineering programs needed to address the intellectual infrastructure needs.
If the state puts its collective will to the task, for the infrastructure improvements and other issues, Louisiana can achieve all it needs to, he said.