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Cheap Natural Gas Powers Boom in U.S. Chemicals Industry

By Bloomberg Business Week

July 31, 2013

Methanex, the Canadian company that’s the world’s largest producer of methanol, is spending $1.1bn to disassemble two of its Chilean factories and rebuild them in Geismar, La. The first plant is scheduled to open next year. A second will be relocated by early 2016.

Scores of other companies including ExxonMobil, Chevron and Sasol plan to spend about $100bn to build or expand chemical plants in the U.S., according to a tally kept by Dow Chemical, the biggest U.S. chemical maker by sales. Dow is spending $4bn to build factories in Freeport, Tex., and reopen a plant in Hahnville, La., creating 500 manufacturing and 5,000 construction jobs. Five years ago the company was closing U.S. plants and moving production to the Middle East to gain access to cheaper raw materials and be closer to Asian markets.

The resurgence of the U.S. chemical industry can be explained in two words: natural gas. The shale boom has made the U.S. the lowest-cost chemical producer outside the Middle East.