Shale gas causes US industrial building flurry

Unprecedented shale gas production in the US has sparked an industrial building boom in the state of Louisiana, as manufacturers rush to take advantage of cheaper energy and chemical feedstock.

Steel, ammonia and methanol makers are among the companies now building plants or scouring the state for sites.

In January, French contractor Technip was awarded a contract by fertiliser producer The Mosaic Company for front-end engineering and design work on a potential US$700m ammonia production plant at the company’s existing Faustina site in St. James Parish, Louisiana.

Announcing Mosaic’s plans, Louisiana Governor Bobby Jindal referred to a "renaissance" for the state’s chemical and energy industries.

"Mosaic said that favourable natural gas prices in Louisiana will allow them to bring back more ammonia production from overseas," he said. "Louisiana not only has these favourable natural gas prices right now, but energy forecasts show the wide split between the price of oil and natural gas continuing well into the future, which means there will be more and more companies who want to invest here and create jobs."

Governor Bobby Jindal

Professor Eric Smith, associate director of Tulane University Energy Institute in New Orleans, said that Louisiana’s new energy wealth was redrawing the global industrial map.

"You’ve got a lot of Europeans wringing their hands about the fact that people are moving energy intensive businesses back to the US, after they moved away 20 years ago," he told GCR. "We’re seeing companies bringing things like chlor-alkali plants and ammonia plants, which are very energy intensive. Even steel mills. And it’s all being driven by low-cost electricity."

Vancouver-based methanol manufacturer Methanex is shutting down its plant in Chile and building a new, one-million-tonne plant in Geismar, Louisiana, because of the abundance of natural gas there. In January the company said there wasn’t enough natural gas in Chile, and in the same month signed a 10-year gas supply contract with Chesapeake Energy Corporation for the new Louisiana plant. Methanex plans to be making methanol there by 2014.

Direct reduction technology

Nucor Corporation is now building a new direct-reduced iron (DRI) plant in St James Parish, Louisiana. The 2.5 million tonnes-per-year facility will use direct reduction technology to convert natural gas and iron ore pellets into direct-reduced iron used by Nucor’s steel mills. The DRI plant is the first phase of an intended $3.4bn facility.

Local press report that Ozkan Steel USA, the American company of Turkey’s Ozkan Demir Celik, is looking at sites across south Louisiana to build a $150m plant that will make steel for the shipbuilding industry.

Thanks to developments in horizontal drilling and hydraulic fracturing, known as "fracking", the US now sitting on vast reserves of recoverable natural gas. Shale gas rose from less than one per cent of domestic gas production in the US in 2000 to over 20% in 2010, and the US Energy Information Administration projects that it will account for 46% of US gas supply by 2035. Louisiana is just one state benefitting from large shale gas reserves.

"It’s part of the renaissance that chemical and energy industries are experiencing right now in Louisiana," said Gov. Jindal, "and we will continue to make sure we are fostering an environment where more companies want to invest and create jobs for our people."

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