The Shale Crescent’s Time Has Come

Midwest shale formations are rewriting the time-honored economics in the petrochemical industry.

For 75 years, the Gulf Coast has been the obvious place for petrochemical companies to invest in North America. But that distinction has changed.

The massive energy finds in the Marcellus and Utica shale formations, which together lie underneath areas of Ohio, West Virginia and Pennsylvania that we call Shale Crescent USA, have disrupted the industry’s time-honored economics.

Now, for many companies with established and expandable footprints on the Gulf Coast, it likely doesn’t make sense to invest in a region that is a growing petrochemical hub. But for those considering new site investments, the economics are clear. An IHS Markit study evaluated hypothetical returns for major petrochemical and plastics investments made in the Gulf and Shale Crescent USA. The bottom line: the same plant constructed and operated in Shale Crescent USA instead of the Gulf Coast could offer a pre-tax cash flow advantage of $3.6 billion over a 20-year time span and a net present value four times higher.

So, as executives plan for what many have dubbed a second wave of US petrochemical investment, it’s time to get smart about what’s happening in Shale Crescent USA.

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