Petrochemical Industry in the USethylene, but the ethane-based US petrochemicals industry is now...

Petrochemical Industry in the US Abundant Feedstock Supply from the Shale Reserves to Revive the US Petrochemical Industry

GDCH008TR / Published December 2012

GDCH008TR / Published DEC 2012 Page 2 Petrochemical Industry in the US - Abundant Feedstock Supply from the

Shale Reserves to Revive the US Petrochemical Industry © GlobalData. This report is a licensed product and is not to be copied, reproduced, shared or resold in any form

Shale Gas has Emerged as a Major Source of Natural Gas in the US

Advances in drilling technologies have made shale reserves a major source of natural gas in the US. They were previously considered uneconomic and unrecoverable but new drilling and fracturing technologies have created a revolution in the energy industry and reversed these preconceptions. Although shale reserves have been known about for many years, commercial gas production only became a reality in the 1990s during the development of Barnett shale. These technologies were perfected in the early 2000s and subsequently employed on a larger scale in various shale plays across the country, leading to the recovery of the domestic natural gas industry.

Increase in Natural Gas Production from Shale Plays has Transformed the US Energy Industry

The shale revolution had such a profound impact that it transformed the US from a major importer of natural gas to a self-sufficient producer. Due to early initiatives by Mitchell Energy (later acquired by Devon Energy) and the Department of Energy, the US became the first and to date the only country to produce shale gas on a large scale. According to early estimates, the US has the second largest shale gas reserves in the world (EIA, 2011a).

In the initial stages of the US natural gas industry, production from conventional reserves was sufficient to meet domestic demand. However, demand increased in the 1960s due to rapid industrialization and by the 1970s the country was experiencing a severe natural gas supply shortage, which remained in place for the rest of the century. In the last decade, major players in the US natural gas industry have started to embrace modern drilling and fracturing technologies, allowing them to develop shale reserves. As a result, natural gas production increased significantly between 2005 and 2011 and imports declined. Production from shale gas is expected to increase further in the future as the US shale gas reserves have the potential to fulfill its energy demand for the next 100 years.

US Petrochemicals Industry’s Feedstock Supply Improved as Drillers Focused on Liquid-rich Shale Areas

One of the major beneficiaries of the shale revolution is the US petrochemicals industry, which was losing its competitiveness in the wake of increasing feedstock prices and waning domestic demand. As natural gas production revived in the later part of the last decade, the production of Natural Gas Liquids (NGLs), a mixture of heavier hydrocarbons such as ethane, propane, butane and isobutane found in the natural gas, also increased significantly. Two major components of NGL, ethane and propane, are used as petrochemical feedstocks. While ethane is almost exclusively used in the petrochemical production, propane is mostly used as a fuel for home heating appliances and is sometimes used in petrochemical production.

This increase in natural gas production caused natural gas prices to decline, which made the extraction of dry gas (natural gas with negligible or zero NGL content) unfavorable. To counter this problem, drillers started focusing on NGL-rich shale plays to provide an additional stream of more valuable products. The major liquid-rich shale plays in the US are Barnett shale, Eagle Ford shale, Marcellus shale and Bakken shale.

US Ethylene Producers are Enjoying Healthy Profit Margins due to Abundant Ethane Supplies

Ethane supplies in the US are witnessing a similar trend to natural gas. Prices have plummeted in the last year because production has risen above demand, which has come as good news to petrochemicals producers as their profits have increased. The US petrochemicals industry is dominated by ethane feedstock, and so profit margins have also increased substantially due to the lower cost of production. Ethane prices are expected to remain low as drillers continue to focus on the liquid-rich shale plays. The following figure depicts the substantial increase in ethane production between 2008 and 2012.

Ethane Industry, US, Production (MMbbl), 2000-2012

2000 2004 2008 2012

Etha

ne p

rodu

ctio

n (M

Mbb

l)

Source: GlobalData; EIA, 2012a MMbbl: Million barrels

Declining ethane prices have rendered the US petrochemicals industry more competitive than in previous years. Five years ago it was one of the most expensive places to produce ethylene, but the ethane-based US petrochemicals industry is now better placed than the naphtha-based petrochemicals industry in Europe and Asia-Pacific. Furthermore, the US has become the most economic ethylene-producing region in the world after the Middle East.



1 Table of Contents 1 Table of Contents ............................................................................................................................ 4

1.1 List of Tables............................................................................................................................. 6 1.2 List of Figures............................................................................................................................ 7

2 Introduction ..................................................................................................................................... 8 2.1 Overview................................................................................................................................... 8 2.2 GlobalData Report Guidance ..................................................................................................... 9

3 Shale Gas - A Vital Source of Energy Made Available Through Continuous Technological Evolution 10 3.1 What is Shale Gas?................................................................................................................. 10

3.1.1 Shale Gas is extracted through Horizontal Drilling and Hydraulic Fracturing...................... 10 3.1.2 Natural Gas Liquids Fractionated from the Shale Gas are Used in Petrochemical Production

...................................................................................................................................... 11 3.1.3 The US has the Second Largest Shale Gas Reserves in the World .................................. 11

3.2 Increasing Shale Gas Production has Increased Natural Gas Liquid Supply .............................. 12 3.2.1 Barnett Shale Play is the Oldest and the Largest Natural Gas Liquid-producing Shale in the

US ................................................................................................................................. 12 3.2.2 Eagle Ford is One of the Most Liquid-rich Shale Plays and has the Necessary Associated

Infrastructure .................................................................................................................. 14 3.2.3 Marcellus Shale Play will Supply Huge Quantities of Ethane after the Completion of Planned

Pipelines and Planned Projects....................................................................................... 15 3.2.4 Bakken Shale is Primarily an Oil Play with a High Natural Gas Liquid Content .................. 17

4 The US Natural Gas Industry Witnessed a Turnaround after Shale Gas Significantly Enhanced Production..................................................................................................................................... 19

4.1 Historic US Natural Gas Production and Consumption, 1970-2000............................................ 19 4.2 Natural Gas Imports Continued to Increase until Advanced Drilling Technologies Made Production

from Shale Plays Viable........................................................................................................... 20 4.2.1 Natural Gas Supply Shortage until 2005 .......................................................................... 20 4.2.2 Breakthrough in Drilling Technology Improved Natural Gas Production............................. 20 4.2.3 Shale Plays have created a Plentiful Supply of Natural Gas Production for the Rest of the

Decade .......................................................................................................................... 22 4.3 Natural Gas Prices Fell as a Result of Excess Production......................................................... 23 4.4 Lower Natural Gas Prices have Forced Producers to Seek Liquid-rich Shale Plays.................... 24

5 Turnaround in the Natural Gas Industry to Enhance Ethane Supply for the US Petrochemicals Industry..................................................................................................................................................... 25

5.1 The US Petrochemicals Industry Became Less Competitive with the Emergence of the Middle East as the Most Economic Production Center ......................................................................... 25

5.2 The US has been Overtaken by China as the Leader of the Global Petrochemicals Industry...... 25 5.2.1 China has Emerged as the Leader of the Global Petrochemicals Industry in the Last Decade

...................................................................................................................................... 25 5.2.2 Slower US Petrochemicals Demand Growth due to Mature Domestic Market.................... 26 5.2.3 Chinese Production Increased at an Unprecedented Pace to Fulfill Domestic Demand ..... 28

5.3 US Poised to Regain Strength as Shale Reserves will Provide Abundant Supply of Ethane Feedstock ............................................................................................................................... 30

5.4 Lower Cost of Ethane has Driven Ethylene Margins in the US................................................... 32 5.5 More Ethane Crackers are Being Planned in the US to Benefit from the Advantageous Feedstock

Scenario ................................................................................................................................. 34 5.6 Increase in Natural Gas Liquid Production has Boosted Fractionation Capacity ......................... 35 5.7 Increasing Investment will Increase Ethylene Capacity Substantially by 2017 ............................ 36

6 Government Regulation and Inadequate Pipeline Infrastructure May Hamper the Ethane Supply in the US ................................................................................................................................................ 38

6.1 Tightening Fracking Regulations to Make Drilling More Difficult................................................. 38 6.2 Pipeline Infrastructure Must be Improved to Bring Ethane to Petrochemical Markets.................. 40

7 Major Companies Utilizing Shale Resources for Expanding Petrochemicals Business...................... 41 7.1 The Dow Chemical Company................................................................................................... 41

7.1.1 Business Overview ......................................................................................................... 41 7.1.2 Dow’s Ethylene Capacity by Country ............................................................................... 42 7.1.3 Dow’s Active Olefins Capacity in the US.......................................................................... 43 7.1.4 Dow’s Shale Gas-based Investments in the US ............................................................... 44

7.2 Chevron Phillips Chemical Company LLC ................................................................................ 45 7.2.1 Business Overview ......................................................................................................... 45



7.2.2 CPC’s Ethylene Capacity by Country............................................................................... 45 7.2.3 CPC’s Active Olefins Capacity in the US.......................................................................... 46 7.2.4 CPC’s Shale Gas-based Investments in the US............................................................... 46

7.3 ExxonMobil Corporation........................................................................................................... 47 7.3.1 Business Overview ......................................................................................................... 47 7.3.2 ExxonMobil’s Ethylene Capacity by Country .................................................................... 48 7.3.3 ExxonMobil’s Active Olefin Capacity in the US................................................................. 49 7.3.4 ExxonMobil’s Shale Gas-based Investments in the US..................................................... 49

7.4 The Royal Dutch Shell ............................................................................................................. 50 7.4.1 Business Overview ......................................................................................................... 50 7.4.2 Shell’s Ethylene Capacity by Country .............................................................................. 51 7.4.3 Shell’s Active Olefins Capacity in the US ......................................................................... 52 7.4.4 Shell’s Shale Gas-based Investments in the US............................................................... 52

7.5 Sasol Limited .......................................................................................................................... 53 7.5.1 Business Overview ......................................................................................................... 53 7.5.2 Sasol’s Ethylene Capacity by Country ............................................................................. 53 7.5.3 Sasol’s Active Olefin Capacity in the US.......................................................................... 54 7.5.4 Sasol’s Shale Gas-based Investments in the US.............................................................. 54

8 Latest Trends in the US Petrochemicals Industry Triggered by Shale Gas Developments ................ 55 8.1 Improved Ethane Supplies will Drive the Use of On-Purpose Technologies in the Future ........... 55 8.2 Ethane from Marcellus Shale will Fulfill Demand from Overseas Markets .................................. 56 8.3 Utica Shale May Emerge as Another Source of Ethane ............................................................ 57

9 The US Petrochemicals Industry has a Bright Future as the Advantaged Feedstock Supply will Remain in the Long Term............................................................................................................... 58

10 Appendix....................................................................................................................................... 59 10.1 Abbreviations .......................................................................................................................... 59 10.2 Definitions............................................................................................................................... 59

10.2.1 Installed Capacity ........................................................................................................... 59 10.2.2 Process.......................................................................................................................... 59 10.2.3 Technology..................................................................................................................... 59

10.3 Bibliography ............................................................................................................................ 59 10.4 GlobalData’s Research Methodology ....................................................................................... 61

10.4.1 Coverage ....................................................................................................................... 61 10.4.2 Secondary Research ...................................................................................................... 61 10.4.3 Primary Research........................................................................................................... 62 10.4.4 Expert Panel Validation................................................................................................... 62

10.5 Contact Us .............................................................................................................................. 62 10.6 Disclaimer ............................................................................................................................... 62



1.1 List of Tables Table 1: Natural Gas Industry, Global, Technically Recoverable Shale Gas Resources (tcf), 2011...... 12 Table 2: Natural Gas Industry, US, Geological and Economic Characteristics of Barnett Shale Play ... 13 Table 3: Natural Gas Industry, US, Geological and Economic Characteristics of Eagle Ford Shale Play

.......................................................................................................................................... 14 Table 4: Natural Gas Industry, US, Geological and Economic Characteristics of Marcellus Shale Play 15 Table 5: Natural Gas Industry, US, Geological and Economic Characteristics of Bakken Shale Play ... 17 Table 6: Natural Gas Industry, US, Production and Consumption (tcf), 1970-2000.............................. 20 Table 7: Natural Gas Industry, US, Share of Shale Gas in Total Natural Gas Production (%), 2000-2035

.......................................................................................................................................... 21 Table 8: Natural Gas Industry, US, Production and Consumption (tcf), 2001-2011.............................. 22 Table 9: Natural Gas Industry, US, Average Quarterly Natural Gas Price ($/MMbtu), 2000-2012 ........ 24 Table 10: Petrochemical Industry, US and China, Basic Petrochemicals Demand (MMtpa), 2000-2016 27 Table 11: Petrochemical Industry, US and China, Basic Petrochemicals Production (MMtpa), 2000-2016

.......................................................................................................................................... 29 Table 12: Petrochemical Industry, US, Ethane Production (MMbbl), 2000-2012 ................................... 31 Table 13: Royal Dutch Shell and ConocoPhillips, US, Ethylene Margins ($/Ton), January 2010-April 2012

.......................................................................................................................................... 32 Table 14: Ethylene Industry, Global, Cost of Production ($/Ton), 2005 and 2011.................................. 33 Table 15: Petrochemicals Industry, US, Shale Gas-based Ethylene Capacity Expansion Details, 2012-

2017................................................................................................................................... 34 Table 16: Natural Gas Industry, US, NGL Production (MMbbl), 2000-2011........................................... 36 Table 17: Ethylene Industry, US, Inactive Plants, 2009........................................................................ 36 Table 18: Ethylene Industry, US, Capacity (MMtpa), 2000-2017 .......................................................... 37 Table 19: Natural Gas Industry, US, Number of Pending Bills Related to Hydraulic Fracturing, by State,

As of May 30, 2012............................................................................................................. 39 Table 20: The Dow Chemical Company, Key Facts............................................................................. 41 Table 21: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011 ............................... 42 Table 22: The Dow Chemical Company, US, Active Olefins Plants, 2011............................................. 43 Table 23: The Dow Chemical Company, US, Shale Gas-based Planned Projects, 2012-2018 .............. 44 Table 24: Chevron Phillips Chemical Company LLC, Key Facts........................................................... 45 Table 25: Chevron Phillips Chemical Company LLC, Ethylene Capacity by Country (%), 2011 ............. 46 Table 26: Chevron Phillips Chemical Company LLC, US, Active Olefins Plants, 2011........................... 46 Table 27: Chevron Phillips Chemical Company LLC, US, Shale Gas-based Planned Projects, 2013-2018

.......................................................................................................................................... 47 Table 28: ExxonMobil Chemical Company, Key Facts......................................................................... 47 Table 29: ExxonMobil Chemical Company, Ethylene Capacity by Country (%), 2011 ........................... 48 Table 30: ExxonMobil Chemical Company, US, Active Olefins Plants, 2011......................................... 49 Table 31: ExxonMobil Chemical Company, Shale Gas-based Planned Projects Details in the US, 2013-

2016................................................................................................................................... 49 Table 32: Royal Dutch Shell plc, Key Facts......................................................................................... 50 Table 33: Shell Chemical LP, Ethylene Capacity by Country (%), 2011................................................ 51 Table 34: Shell Chemical LP, US, Active Olefins Plants, 2011 ............................................................. 52 Table 35: Sasol Limited, Key Facts..................................................................................................... 53 Table 36: Sasol Limited, Ethylene Capacity by Country (%), 2011 ....................................................... 54 Table 37: Sasol Limited, US, Active Olefins Plants, 2011..................................................................... 54 Table 38: Cracker Yield by Feedstock (%) .......................................................................................... 55 Table 39: Propylene Industry, US, Planned Plant Details, 2012 ........................................................... 56



1.2 List of Figures Figure 1: Natural Gas Industry, US, Shale Gas Production Process .................................................... 10 Figure 2: Natural Gas Industry, Global, Technically Recoverable Shale Gas Resources (tcf), 2011...... 11 Figure 3: Natural Gas Industry, US, Barnett Shale Area...................................................................... 13 Figure 4: Natural Gas Industry, US, Eagle Ford Shale Area ................................................................ 15 Figure 5: Natural Gas Industry, US, Marcellus Shale Area .................................................................. 16 Figure 6: Natural Gas Industry, US, Bakken Shale Area ..................................................................... 18 Figure 7: Natural Gas Industry, US, Production and Consumption (tcf), 1970-2000.............................. 19 Figure 8: Natural Gas Industry, US, Share of Shale Gas in Total Natural Gas Production (%), 2000-2035

.......................................................................................................................................... 21 Figure 9: Natural Gas Industry, US, Production and Consumption (tcf), 2001-2011.............................. 22 Figure 10: Natural Gas Industry, US, Average Quarterly Natural Gas Price ($/MMbtu), 2000-2012 ........ 23 Figure 11: Petrochemical Industry, US and China, Basic Petrochemicals Demand (MMtpa), 2000-2016 26 Figure 12: Petrochemical Industry, US and China, Basic Petrochemicals Production (MMtpa), 2000-2016

.......................................................................................................................................... 28 Figure 13: Petrochemical Industry, US, Ethane Production (MMbbl), 2000-2012 ................................... 30 Figure 14: Royal Dutch Shell and ConocoPhillips, US, Ethylene Margins ($/Ton), January 2010-April 2012

.......................................................................................................................................... 32 Figure 15: Ethylene Industry, Global, Cost of Production ($/Ton), 2005 and 2011.................................. 33 Figure 16: Natural Gas Industry, US, NGL Production (MMbbl), 2000-2011........................................... 35 Figure 17: Ethylene Industry, US, Capacity (MMtpa), 2000-2017 .......................................................... 37 Figure 18: Natural Gas Industry, US, States with Hydraulic Fracturing Disclosure Requirements, As of

May 30, 2012...................................................................................................................... 38 Figure 19: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011 ............................... 42 Figure 20: Chevron Phillips Chemical Company LLC, Ethylene Capacity by Country (%), 2011 ............. 45 Figure 21: ExxonMobil Chemical Company, Ethylene Capacity by Country (%), 2011 ........................... 48 Figure 22: Shell Chemical LP, Ethylene Capacity by Country (%), 2011................................................ 51 Figure 23: Sasol Limited, Ethylene Capacity by Country (%), 2011 ....................................................... 53 Figure 24: Utica Shale Area, 2012 ....................................................................................................... 57



2 Introduction

2.1 Overview The US shale gas discoveries, which have changed the face of the country’s energy industry, are set to yield benefits for the petrochemical industry. Technological development has made natural gas production from shale rock so economic that it now finds numerous applications in the common household. The boost in shale gas production has now started to benefit the US petrochemicals industry, which previously suffered weak demand and uncompetitive production. Once a formidable petrochemical hub and driver of demand, the US saw sluggish domestic demand for the most part of the previous decade, worsened by the economic slowdown when petrochemical prices declined drastically, causing huge losses for producers. Weak demand was not the only problem faced by producers, as supplies of ethane, a natural gas fraction and the dominant petrochemicals feedstock in the US, started to decline as natural gas production dwindled at the turn of the century, thus resulting in a higher cost of production for petrochemical producers.

In contrast to the US, ethane prices in the Middle East were extremely low due to government subsidies. This brought the Middle East to the forefront of the global petrochemical industry and made it the most economic petrochemical production hub globally. It also reduced the competitiveness of the US petrochemical industry and US producers started losing their export markets to Middle-East counterparts.

The operating environment remained hostile for US petrochemical producers until an alternative supply of natural gas was found from the shale rocks. Natural gas consists of hydrocarbon gases such as methane, ethane, propane and butane. Methane gas is extracted from wet natural gas and is used for fuel applications, while other hydrocarbon mixtures, collectively known as Natural Gas Liquids (NGLs), produce petrochemical feedstock (ethane and propane) after fractionation. With the evolution of new technologies which make shale gas production more economic, the petrochemical industry is also expecting an enhanced feedstock supply. Ethane produced from natural gas has recently become so cheap that the US can compete with the Middle East.

However, the industry has lot to do before it can utilize the shale gas as petrochemical feedstock. The first and foremost challenge is to create adequate midstream infrastructure to facilitate the supply of NGL and ethane from shale. Another challenge will be to manage the stricter regulatory environment which may make the fracking process difficult to carry out in the future. The addition of fracking to the Safe Drinking Water Act may severely damage the utility of the process. The industry should continue to self-regulate and at the same time make the fracking process transparent and safe in order to increase confidence among environmentalists and the general public.



2.2 GlobalData Report Guidance The report starts with an executive summary capturing the key points of the US natural gas and

petrochemicals industry and the factors driving growth in the recent past.

Chapter three provides basic information about shale gas and its importance for the petrochemicals industry in the US. It explains how the shale gas production creates feedstock supply for the domestic petrochemicals industry and lists the shale plays most important from the petrochemicals industry’s perspective.

Chapter four explains the natural gas supply scenario, spanning early development to the present day. It highlights the impact of shale gas discoveries on the natural gas supply in the last decade and how additional production from shale plays has affected prices.

Chapter five explains how shale gas production has resulted in a turnaround in the US petrochemicals industry. It compares historic demand and production of basic petrochemicals in China and the US and explains how the increasing ethane production in the US has increased existing ethylene producers’ profit margins and has attracted them to set up more ethane crackers.

Chapter six highlights the major challenges which can affect shale plays’ feedstock supply.

Chapter seven discusses major companies which are planning new shale gas-based investments in the US petrochemicals industry.

Chapter eight highlights the latest developments in the US petrochemical industry as a result of the shale gas phenomena.

Chapter nine concludes that the US petrochemicals industry has a bright future as the advantaged feedstock supply will remain in the long term.



7.1.2 Dow’s Ethylene Capacity by Country Its decision to invest in the US is an extension of its strategy to invest in cost advantage regions. The company was previously looking to the Middle East as a new investment destination but as feedstock supply dynamics changed it decided to invest in US ethylene and propylene plants. Its active ethane-based ethylene business in the US witnessed a turnaround in 2011 due to increased supply and lower prices of ethane. This resulted in even higher margins for the downstream businesses. In 2011, it announced that it would increase its US ethylene capacity by XX% in the next two to three years. Some XX% of its ethylene assets are currently located in cost-advantaged regions such as Canada, the US, Kuwait and Argentina. The following figure depicts its ethylene capacity by country in 2011.

Figure 19: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011

Canada

USNetherlands

Kuwait

Thailand

Argentina

SpainGermany

Source: GlobalData, Petrochemicals eTrack [accessed September 29, 2012]

Table 21: The Dow Chemical Company, Ethylene Capacity by Country (%), 2011

Country Capacity Share (%)

Canada

US

Netherlands

Kuwait

Thailand

Argentina

Spain

Germany

Source: GlobalData, Petrochemicals eTrack [accessed September 29, 2012]



10 Appendix

10.1 Abbreviations ATEX: Appalachia to Texas

bcf: billion cubic feet

bcfe: billion cubic feet equivalent

EIA: Energy Information Administration

EPA: Environmental Protection Agency

GPM: Gallon Per Million Cubic Feet

INGAA: Interstate Natural Gas Association of America

Mcf: Million cubic feet

MMbbl: Million Barrels

MMtpa: Million Metric tons per annum

Mbbl/d: Thousand barrels per day

NCSL: National Conferences of State Legislature

NGL: Natural Gas Liquid

RRC: Rail Road Commission of Texas

tcf: trillion cubic feet

USGS: United States Geological Survey

10.2 Definitions 10.2.1 Installed Capacity Installed capacity refers to the maximum rated output of a plant under specific conditions designated by the manufacturer, usually indicated in tons on a nameplate affixed to the plant.

10.2.2 Process A process is a combination of unit operations used in the manufacture of petrochemicals to change chemicals’ composition.

10.2.3 Technology Technology refers to a technical process used in the petrochemical industry, developed by a specific business entity.

10.3 Bibliography American Chemistry Council (2012). Shale Gas and Manufacturing. Available from:

http://www.ascouncil.org/news/past/presentations/m05-3.moore.pdf.

BBC News (2011). What is fracking and why is it controversial. Available from: http://www.bbc.co.uk/news/uk-14432401. [Accessed on September 27, 2012].

BP Statistical Review (2012). Natural Gas Production. Available from: http://www.bp.com/sectionbodycopy.do?categoryId=7500&contentId=7068481. [Accessed on September 27, 2012].

Braden Reddall (2012). “US natgas liquids glut to persist -CP Chemical CEO”. Chicago Tribune, May 17, 2012. Available from: http://articles.chicagotribune.com/2012-05-17/news/sns-rt-energy-summitchevronphillipschemicall1e8gh7s3-20120517_1_plants-cracker-demand. [Accessed on: September 27, 2012].



ConocoPhillips (2012). Consolidated Income Statement. Available from: http://www.conocophillips.com/EN/investor/financial_reports/earnings_reports/Documents/1Q12_Supplemental_Information.xls.

Energy Information Administration (2011a). World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the US. Available from: http://www.eia.gov/analysis/studies/worldshalegas/pdf/fullreport.pdf.

Energy Information Administration (2011b). Over one-third of natural gas produced in North Dakota is flared or otherwise not marketed. Available from: http://www.eia.gov/todayinenergy/detail.cfm?id=4030. [Accessed on September 27, 2012].

Energy Information Administration (2012a). Natural Gas Plant Field Production. Available from: http://www.eia.gov/dnav/pet/pet_pnp_gp_a_EPLLE_FPF_mbbl_a.htm. [Accessed on September 20, 2012].

Energy Information Administration (2012b). Principal shale gas plays: natural gas production and proved reserves, 2008-2010. Available from: http://www.eia.gov/naturalgas/crudeoilreserves/excel/table_3.xls.

Energy Information Administration (2012c). Natural Gas Overview, 1949-2011. Available from: http://www.eia.gov/totalenergy/data/annual/xls/stb0601.xls.

Energy Information Administration (2012d). What is shale gas and why is it important? Available from: http://www.eia.gov/energy_in_brief/about_shale_gas.cfm. [Accessed on October 1, 2012].

Energy Information Administration (2012e). Henry Hub Gulf Coast Natural Gas Spot Price (Dollars/Mil. BTUs). Available from: http://www.eia.gov/dnav/ng/hist/rngwhhdM.htm. [Accessed on October 1, 2012].

Energy Information Administration (2012f). U.S. Gas Plant Production of Natural Gas Liquids and Liquid Refinery Gases (Thousand Barrels). Available from: http://www.eia.gov/dnav/pet/hist_xls/MNGFPUS1a.xls.

Environmental Protection Agency (2011). Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources. Available from: http://yosemite.epa.gov/sab/sabproduct.nsf/0/D3483AB445AE61418525775900603E79/$File/Draft+Plan+to+Study+the+Potential+Impacts+of+Hydraulic+Fracturing+on+Drinking+Water+Resources-February+2011.pdf

Interstate Natural Gas Association of America (2011). North American Midstream Infrastructure Through 2035 - A Secure Energy Future. Available from: http://www.ingaa.org/File.aspx?id=14900.

National Conference of State Legislatures (2012). Natural Gas Development and Hydraulic Fracturing A Policymaker’s Guide. Available from: http://www.ncsl.org/documents/energy/frackingguide_060512.pdf.

Nebraska Energy Office (2012). Henry Hub Natural Gas Spot Prices 2012. Available from: http://www.neo.ne.gov/statshtml/124.htm. [Accessed on October 1, 2012].

Rail Road Commission of Texas (2012a). Newark, East (Barnett Shale) Gas Well Gas Production 1993 through July 2012. Available from: http://www.rrc.state.tx.us/barnettshale/NewarkEastField_1993-2012.pdf.

Rail Road Commission of Texas (2012b). Texas Eagle Ford Shale Gas Well Gas Production 2008 through July 2012. Available from: http://www.rrc.state.tx.us/eagleford/EagleFordGWGProduction.pdf.

Ren T, et al. (2006). Olefins from conventional and heavy feedstocks: Energy use in steam cracking and alternative processes. Energy; 31(4): 425-451

Royal Dutch Shell (2012). Price and Margin Information (period average). Available from: http://www-static.shell.com/static/investor/downloads/financial_information/quarterly_results/2012/q2/q2_2012_suppl_fin_and_op_disclosure.xls.

The Dow Chemical Company (2012). US Gulf Coast Investments. Available from: http://www.dow.com/investors/pdfs/presentations/USGC_101211.pdf.



University of Alabama (2012). States and Capitals of the U.S.A. Available from: http://alabamamaps.ua.edu/contemporarymaps/usa/basemaps/index.html. [Accessed on September 27, 2012].

USGS (2011). New Assessment of Gas Resources in the Marcellus Shale, Appalachian Basin. Available from: http://www.usgs.gov/newsroom/article.asp?ID=2893. [Accessed on October 3, 2012].

USGS (2012). First Assessment of Shale Gas Resources in the Utica Shale. Available from: http://www.usgs.gov/newsroom/article.asp?ID=3419&from=rss_home. [Accessed on October 3, 2012].

10.4 GlobalData’s Research Methodology GlobalData dedicated research and analysis teams consist of experienced professionals with a pedigree in marketing, market research and consulting backgrounds in the petrochemical industry and with advanced statistical expertise.

GlobalData adheres to the Codes of Practice of the Market Research Society (www.mrs.org.uk) and the Strategic and Competitive Intelligence Professionals (www.scip.org).

All GlobalData databases are continuously updated and revised. The following research methodology is followed for all databases and reports.

10.4.1 Coverage

The objective of updating GlobalData’s coverage is to ensure that it represents the most up-to-date vision of the industry possible.

Changes in the industry taxonomy are built on the basis of extensive research of company, association and competitor sources.

Company coverage is based on three key factors: market capitalization, revenues and media attention/innovation/market potential.

An exhaustive search of 56 member exchanges is conducted and companies are prioritized on the basis of their market capitalization.

The estimated revenues of all major companies, including private and governmental, are gathered and used to prioritize coverage.

Companies which are making the news, or which are of particular interest due to their innovative approach are prioritized.

GlobalData aims to cover all major news events and deals in the petrochemical industry, updated on a daily basis.

The coverage is further streamlined and strengthened with additional inputs from GlobalData’s expert panel (see below).

10.4.2 Secondary Research The research process begins with exhaustive secondary research on internal and external sources being carried out to source qualitative and quantitative information relating to each market. The secondary research sources that are typically referred to include, but are not limited to:

Company websites, annual reports, financial reports, broker reports, investor presentations and SEC filings

Industry trade journals and other literature

Internal and external proprietary databases

National government documents, statistical databases and market reports

News articles, press releases and web-casts specific to the companies operating in the market



10.4.3 Primary Research GlobalData conducts hundreds of primary interviews a year with industry participants and commentators in order to validate its data and analysis. A typical research interview fulfills the following functions:

It provides first-hand information on the market size, market trends, growth trends, competitive landscape, and future outlook

It helps in validating and strengthening the secondary research findings

It further develops the analysis team’s expertise and market understanding

Primary research involves e-mail correspondence and telephone interviews as well as face-to-face interviews for each market, category, segment and sub-segment across geographies.

The participants who typically take part in such a process include, but are not limited to:

Industry participants: CEOs, VPs, business development managers, market intelligence managers and national sales managers

Outside experts: investment bankers, valuation experts, research analysts and key opinion leaders specializing in the petrochemical industry

10.4.4 Expert Panel Validation GlobalData uses a panel of experts to cross verify research and forecast methodologies, and drive its analytical content.

The GlobalData expert panel comprises marketing managers, product specialists, international sales managers from petrochemical companies, academics from research universities, and consultants from professional services companies.

10.6 Disclaimer All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher, GlobalData.

Date post:	21-Feb-2021
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