Impact of natural gas and natural gas liquids on chemical manufacturing in the United States

Natural gas and natural gas liquids production in the United States has increased dramatically since 2005, due primarily to recent advancements in horizontal drilling and hydraulic fracturing. As raw materials for chemical production, the increased availability, at low cost, of these materials has the potential to change the structure of the United States chemical manufacturing industry. Industry-wide modeling, coupled with region-specific analysis, was used to map potential changes in chemical manufacturing as natural gas liquids continue to expand their influence in the chemical manufacturing industry. A network model was used to analyze technology development and to evaluate trends in the industry based on material flows throughout supply chains. Agent-based modeling and simulation was used for analysis of individual chemical markets and to determine the viability of emerging markets. The network model was used to quantify how downstream chemical supply chains respond to changes in natural gas and natural gas liquid prices. The model was also used to identify new reaction pathways that may become viable as the industry evolves and how those new pathways will impact costs and utility consumption in the system of chemical manufacturing technologies. Using the Four Corners region as a case study, an analytic process was developed and implemented to evaluate greenfield manufacturing based on regional feedstock availability and global chemical markets. Conceptual development of a comprehensive model of the natural gas liquids industry was also completed to map the challenges in developing chemical manufacturing system models that will include the impacts of exports, midstream infrastructure, supply, and new chemical demand.