The prize is downstream

April 2013

Our blog on the Shell ethylene complex got us some interesting comments. Supporters for the ethylene complex in Ohio and West Virginia have not given up. They feel Shell may have issues with the location or that a second ethylene cracker could be built in their states. All of this is possible, we don’t know as we are not privy to Shell’s internal discussions and decision making.

We also believe that the real prize in investments, jobs and taxes is downstream. Sure the ethylene complex is sexy in terms of investment, jobs and taxes. The potential investment in hundreds or even thousands of new facilities consuming the ethylene derivatives is far more sexy. As we have seen in the chemical industry wave and the PwC white paper, ethylene and derivative prices will plunge following the decline of natural gas prices once sufficient capacity is installed. Take the case of Polyethylene the largest plastic by volume and value, the 4.2x reduction in natural gas cost results in a possible 2.4x reduction in Polyethylene prices. More importantly an almost four fold price advantage versus Asian Polyethylene producers. 

That large of price reduction – advantage will encourage Polyethylene plastics processors to invest in new facilities in the U.S. We call this tsunami wave the U.S. manufacturing revival. We have already touched on the key elements in Game Changing Scenarios, but in summary the processors will compete with:

Complete substitution: replace not-in-kind materials in entire product sectors. This includes ubiquitous items such as the metal paint can, glass containers, wood decking and fencing – the list is almost endless.

Partial substitution: a typical automobile or refrigerator already has 20% chemical content. That will increase as more parts are engineered for these low cost chemicals.

Oil versus natural gas: certain chemicals, such as nylon, can only be technically produced via oil as a feedstock. Oil prices in the U.S. follow global oil prices and have not declined like natural gas. This creates a cost inventive to replace oil based chemicals with natural gas based chemicals. Nylon, a plastics competes with other plastics on the basis of performance and cost. As the cost side of the equation is turned on its head, nylon will be under replacement pressure by natural gas based plastics.

Import – Export: Over the last several decades, a number of manufactured products have shifted in large part or even entirely overseas. These include high volume, everyday items such as toothpaste tubes, ball point pens, and medical consumables. Products with a high chemical content are potential candidates to return to the U.S. for manufacturing aided by the lowered chemical prices and the avoidance of trans-ocean logistics.

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Events and News

Oil and Gas Investors Summit


We will be presenting at the Oil and Gas Investors Summit in London June 16-19th 




We will be preseting on April 10th in Atlantic City at Globalcon join us 


Marcellus to Manufacturing


We will be presenting at the 3rd Annual Marcellus to Manufacturing conference on March 26th-27th in Charleston WV



The State Journal


Quotes from our presentation at InformEx 2014 download


InformEx 2014


TopLine Analytics presention at the Speciality and Fine Chemicals conference Informex 2014 in Miami: download


Canton Repository Article


Quotes from the Utica 2014 Manufacturing Summit: download


Utica 2104 Manufacturing Summit


TopLine Analytics presented Shale gas revolution to Chemical Renaissance to Manufacturing renewal on October 23 in Canton Ohio: download 


Brazilian Cracker in Marcellus


In a Environment and Energy article our views on a Brazilian ethane cracker located in the Marcellus: dowload


Business Journal Interview


In a cover story Aug 2013 article A chemical revolution that will shock the world interviewed TopLine Analytics download


White Paper with PricewaterhouseCoopers

TopLine Analytics is contributing author to the Shale gas: Reshaping the US chemicals industry. The paper has been carried or quoted in over 2 dozen publications: contact


Shale Petrochemical Manufacturing Summit


TopLine Analytics participated in a panel discussion and presented  Innovations in Shale Gas Demand at the November 7-9th Conference in Philadelphia PA: download


White Paper on Shale gas tsunami


What is the shale gas tsunami, how does it impact US manufacturing and what are manufacturing leaders doing to prepare: download