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Hurricane Harvey – One Year Later – Why We Are So Important

    September/October 2018 / Vol. 8 Issue 6

Hurricane Harvey – One Year Later – Why Are We So Important
By: Greg Kozera, Shale Crescent USA

As a high school soccer coach for over 20 years, one of the things we teach ourbplayers is to pass the ball not to where their players are but to the space where they want them to be. We usually have one of our Captains playing at midfield who is a master at this and almost always will lead our Team in assists. The same is true in football. When a quarterback throws a pass, he leads the receiver and throws the ball so the receiver can catch it on the run making it easier to score. In both cases the people on the end of the passes score a lot of points if their leader is skillful, unselfish and focused on the success of the Team..

Companies like Apple, Amazon and Disney are creating the future with amazing customer experiences from new products and ideas that most of us have never even considered. They don’t just do what their customers want, they anticipate future needs their customers didn’t even think possible. Sometimes we take it for granted. My iPhone is smaller and more powerful than my two-year old PC. At Walt Disney World, the new Avatar ride is like “Soaring on steroids”. It isn’t just a ride it immerses the rider in an experience. Typical wait time is over two hours. This is more than customers asked for because they didn’t know it was possible. Amazon has taken purchasing products online to a new and unanticipated level. You can buy almost anything and have it in a day or two. When Shale Crescent USA went to Japan in January I paid my wife, Lynnda’s, travel expenses so she could come and be part of the experience. She became our photographer during the trip. One of our surprises in Japan was their heated toilet seats. We had one in our hotel room. We were surprised that even public toilets had heated seats. Lynnda loved them. Shortly after we returned from our trip, on a Saturday evening at about 10 PM, Lynnda decided she wanted one and went straight to Amazon. She found one made by Toto at a cost of $375 and ordered it. The seat arrived on Monday and my buddy and I installed it. My buddy’s plumbing expertise was important because it does more than just heat. The point is, who would have thought such an unusual product could be ordered and delivered so quickly! Amazon, Apple and Disney are leaders. We can do the same in our businesses and for our Region.

It has been a year since Hurricane Harvey devastated the US Gulf Coast. Recovery is continuing. On my last trip to Houston the rebuilding efforts were evident. Winds of 135 mph tore through Houston. Over three feet of rain fell in the Houston area. Some parts of Texas had over 4 feet of rain. That is a lot of water.

The Gulf Coast is home to about 90% of the nation’s plastic producing capacity. The crackers on the Gulf Coast produce the pellets that are turned into everyday household products, pharmaceuticals, industrial products and even military equipment, weapons systems and uniforms. Most of the companies that turn these pellets into products are in the Shale Crescent USA Region. A 2018 IHSMarkit Study showed “the Shale Crescent USA Region is in close proximity to over two-thirds of US polyethylene consumption.”

Following Harvey, roughly 60% of U.S. ethylene and propylene capacity went offline. Because of high water finished product couldn’t be shipped. Manufacturers in our Region couldn’t get the raw materials they needed to continue making their products. My son is the manager for a plumbing and heating distributor. They could not fill building contractor orders for plastic pipe because the local company that made the pipe couldn’t get resin. Those that could get polyethylene and polypropylene resin pellets found the price up 25%. One company in the Ohio Valley had a railroad car full of their resin in Texas underwater. The resin pellets were destroyed. The shortages and increased resin prices lasted into 2018.

With such a large part of our petrochemical industry on Gulf Coast a Hurricane like Harvey has serious economic and even national security implications for our country. The petrochemical industry continues to make improvements to protect facilities but it is hard to run a facility in a major hurricane. Trains and trucks can’t operate in 4 feet of rain. We can’t prevent hurricanes. The question isn’t if another hurricane will come but when. We can do our best to prepare. It makes sense for our Country’s economy and national security to have an alternative to Gulf Coast. We now have one called, The Shale Crescent USA. Our organization has known this for the last two years.

Like Amazon, Apple and Disney, we know what our prospects need. We spent the last 2 years letting them know the Shale Crescent USA has it. The IHS study, released at this year’s World Petrochemical Conference (WPC) in Houston, Texas, Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast, told the World what we already knew. IHSMarkit is highly respected global organization. It they say something, it is true.

In April following the release of the Study at WPC, Yahoo Finance, Yahoo Finance Canada, Oilprice.com and several other websites ran an article about Shale Crescent USA with the title, Shale Boom Creates New Petrochemical Hub. They said what we already knew but our prospects will believe them.

Recently, I was back in Washington DC with Bob Miller, President of the Marshall County Commission. We met with high level people in the Department of Transportation, Department of Energy and the Department of Commerce. These meetings were a result of our White House meeting in July. Bob’s goal was to move an I-68 expansion from Morgantown to the Ohio Valley and on to I-77 forward. Shale Crescent USA’s role was to provide data to justify that expansion. All of the agencies were incredibly attentive, helpful and supportive, just like our White House meeting. Mr. Miller now has a guide of what needs to be done so that he can hopefully inspire the State and Local leaders of Ohio and West Virginia into action. Shale Crescent USA’s role in DC was also to inform. We told the story of our cheap, abundant natural gas and natural gas liquids (NGLs). We showed them our transportation/ location advantage. We gave them the Executive Summary of the IHS study that said the Shale Crescent USA is now the most profitable place in the world to build a petrochemical plant. The Shale Crescent USA has 32% lower ethane costs than the Gulf Coast because the ethane is here. 60% of the cost of ethane on the Gulf Coast is the transportation to get it there. Plants in the Shale Crescent USA can avoid this cost. These savings result in a 4 times higher cash flow advantage for the Shale Crescent USA and savings in the billions of dollars for large ethane crackers.

The agencies knew we had a lot of natural gas. They did not know that the Shale Crescent USA was 30% of the US natural gas supply. They did not know that if Shale Crescent USA was a country, only the rest of the USA and Russia produce more natural gas. No one had put together Regional data. We wanted to give them the information they needed to make good decisions for our country and our region. The agencies got it! They told us about the national security, geopolitical and economic importance of what we told them.

We know we have abundant, economical natural gas and natural gas liquids that are literally right under the plants in our region. The Shale Crescent Region is responsible for all of the growth in US gas supply. New gas production in the rest of the USA is only replacing the decline from existing wells.

We know that we are close to almost 70% of the companies that turn pellets into products we use every day. We are close to 50% of the US population that uses these products. We know that we also have abundant water resources and an experienced workforce. This combination of advantages does not exist anywhere else in the World.

The main advantage the Gulf Coast currently has is existing infrastructure which includes the storage of ethane, propane, butane and other molecules. Producers can sell products into the storage hub at market rates. Plants can buy ethane and other products from the storage hub at market price. This is not that different than agriculture. Farmers sell grain into a market and the grain is stored. Companies that use grain like Kellogg’s or General Mills buy the grain from the market and make our breakfast foods. We are working on the Storage Hub and other infrastructure needs. Progress is being made on this storage hub and other infrastructure. We can’t wait for infrastructure to be built. The marketing of the Shale Crescent USA Region has already started. For national security reasons and economic reasons our country needs a second petrochemical hub. Companies around the world are looking for places to economically grow and expand. We have the solution to both problems and we are letting them know.

We have a Region that needs high wage career type jobs. We have producers that need higher margins on their gas. The best way to achieve this is increased demand here close to the wellhead. Every E&P company in the basin knows what their margin will be if they can avoid most of the pipeline charges. Increased local demand helps producers. Creating a 2nd petrochemical hub in the Shale Crescent USA solves these problems. Amazon, Apple and Disney have been able to create a delightful future for their customers who had no idea it was coming. We can do the same right here in the Shale Crescent USA. Thoughts to ponder.

 

 

Greg Kozera is the Director of Marketing for Shale Crescent USA www.shalecrescentusa.com . He has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles.

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