1. American Fuel & Petrochemical Manufacturers
International Petrochemical
Conference 2014
Conference Daily Published by
HYDROCARBON PROCESSING®
DAY TWO
Tuesday | April 1, 2014
The success of the U.S. shale revolution is un-
likely to serve as a template for shale development
around the world because of unique services and in-
frastructure in the country, a speaker said on Mon-
day at the International Petrochemical Conference.
Dr. Kenneth B. Medlock III, the James A. Baker
III and Susan G. Baker Fellow in Energy and Re-
source Economics at Rice University, said the main
risk to global shale development is economics and
whether projects would be profitable.
“When you look at how developed the upstream
energy industry is in the U.S., in terms of services
at the well site, you have to compare it to other parts
of the world which are nowhere near as developed,”
said Medlock, who spoke in Monday’s panel session
on global shale development. “That raises costs.”
In a hypothetical comparison, Medlock said a
well in the Haynesville Shale in Louisiana would
cost 2.5 to 3 times more to drill in Poland.
“Access to things that make it possible to drill
wells is not the same,” Medlock said. “There’s
much less developed infrastructure. That will limit
the pace of entry in those places, so you get a much
slower development.”
Medlock noted that among all global rig activity
in the upstream, 80% is currently found in the U.S.
and Canada.
“What we have here is a very richly developed
upstream services industry to provide services
for rig activity,” he said. “This is a really impor-
tant point.”
Another huge selling point for U.S. shale de-
velopment is resource access.
“The U.S. is unique,” said Medlock. “Here,
producers can negotiate directly with land owners
for mineral rights and acreage acquisition. That’s
big. They get something. Outside the U.S., min-
eral rights are mostly owned by the state, so there
is much less incentive to work together.”
One exception to that rule is Australia, where
land owners are compensated for their coopera-
tion, he explained.
“There’s not a large population, but they do
have plenty of resources,” said Medlock. “The
trouble is they still don’t have well-developed in-
frastructure. There are only two wells capable of
horizontal drilling in Australia. That’s a problem.”
Even with that drawback, Medlock lists Aus-
tralia as tied with Argentina for the highest shale
potential (outside of the U.S.) over the short term.
Positive factors for Australia are that resource
developers can pay land owners for access along
with the ability to trade capacity rights. However,
the nation’s onshore service industry is underde-
veloped, Medlock warned, and costs are expected
to be 2 to 3 times higher than in the U.S.
In Argentina, the service industry is better devel-
oped than in Australia, and the shale resource po-
tential is similarly very large. However, costs are
still estimated to be approximately twice as high as
in the U.S., and the political risk is projected as very
high, Medlock said.
U.S. shale wave seen as unique phenomenon
The American Fuel and Petro-
chemical Manufacturers (AFPM) are
stepping up their efforts on several
fronts to lobby for pro-industry poli-
cies in the U.S. and around the world.
Speaking at a press conference this
week at the 39th annual International
Petrochemical Conference, AFPM
President Charlie T. Drevna cited sev-
eral new initiatives and strategies that
his group is using to try to improve
conditions for the domestic and global
petrochemical industry.
“With the development in shale
plays in oil and NGLs, increased drill-
ing activities across the U.S., propos-
als to build several new crackers—add
all that up, and the possibilities for the
industry are immense,” Drevna said.
“Nothing is limited or boundless, but
this is pretty doggone close.
“It could lead to a significant global
industry expansion while serving as a
major contributor to creating econom-
ic stability in many parts of the world,
not just the U.S.,” he added. “But we
can’t afford to wait until geopolitical
tensions rise, as they have recently, to
wake up and smell the coffee—or, in
this case, the ethane.”
Drevna noted that challenges faced
by the industry were relevant to all
citizens, thereby imploring potential
voters to support pro-energy policies
and candidates.
“It’s about energy and national se-
curity, as well as economic strength
and development,” he said. “It’s about
creating jobs. It’s more than global
competitiveness; we can be a global
leader in all of those things.”
Melissa Hockstad, AFPM’s new
vice president of petrochemicals, spoke
alongside Drevna at the press confer-
ence and addressed specific initiatives
that AFPM is undertaking. A lead-
ing issue is the new American Shale
& Manufacturing Partnership, which
comprises 14 charter member associa-
tions from various industries, universi-
ties and consumer organizations.
AFPM is one of the charter mem-
bers, along with other groups such
as the U.S. Chamber of Commerce’s
Institute for 21st Century Energy, the
National Association of Manufactur-
ers, the Society of Chemical Manu-
facturers and Associates (SOCMA),
the International Association of
Bridge, Structural, Ornamental and
Reinforcing Iron Workers, and Carn-
egie Mellon University’s College of
Engineering.
“What we’ve done is bring togeth-
er a range of stakeholders to try and
make sure the right policies are made
in regards to shale development,” said
Hockstad, attending her first IPC on
behalf of AFPM.
“We found we needed to broaden
the organizations participating in our
efforts,” she added. “This partnership
represents a broader value chain from
upstream to downstream, the supply
chain, academics and more.”
The five primary tracks the group
is focusing on are federal and state
policies, the creation of infrastructure,
workforce development, research and
innovation, and environmental issues.
“It’s been great,” Hockstad said.
“The bottom line is that companies
have a need for certainty and predict-
ability from a regulatory standpoint.”
The partnership is aiming to re-
lease a policy playbook in the com-
ing months.
As far as domestic regulations,
Drevna was sharply critical of the en-
ergy policy of U.S. President Barack
Obama. He accused the president of
“waging war on the hydrocarbon mol-
ecule” alongside an energy strategy
that “continues to focus on things that
simply don’t make sense in 2014, ei-
ther economically or technologically.”
“Let’s stop frittering around and
playing politics,” said Drevna. “That’s
my plea to the administration. Accept
the bounty of natural resources we
have here due to advances in shale de-
velopment, accept fact that fossil fuels
will drive economy, and let’s work to-
gether to create that opportunity.”
To accomplish those goals, AFPM
is looking for support from consumers
and potential voters, led by broader
initiatives such as the new partnership.
“What we hope is to change the
mindset,” said Drevna. “It’s not just
AFPM ramps up industry lobbying efforts
See SHALE, page 7
See AFPM, page 7
AFPM President CHARLIE T. DREVNA, right, took questions from media members
alongside MELISSA HOCKSTAD, AFPM’s vice president of petrochemicals.
DR. KENNETH B. MEDLOCK III, Rice University
2. 10 Tuesday, April 1, 2014 American Fuel Petrochemical Manufacturers | International Petrochemical Conference
SCENES FROM IPC 2014
IPC delegates enjoyed quick banter with bartenders while waiting on their drinks.
Unique delicacies such as chicken fried
oysters proved to be popular cuisine
choices.
KAI WENDT and XANIC CORTEZ, Sasol North America, at the opening reception.
TIM CAMPBELL, Eurecat, met with BRIAN VANDERWHIP
and ANDY GOSSE from CRI.
THOMAS HURST and
RASHEL PROCHNOW, Perstop,
enjoyed the country band.
ROBIN CHESSHIER, RTi, joined GUUSTI TACKE-WILLEMSEN,
CHET CROSS and CHRISTOPHER SCHAPER from Chemtura for refreshments
by the River Walk .
DONNA TODD, PetroChemWire, along with MR. and MRS. MARK WOODS,
had complimentary remarks about the event’s catering.
CHRIS DIBERNARDI and HELIO COELHO, BDP International, have expertise
to share in the realm of global logistics.
STEPHEN BURNS and GEORGE
MARTIN of ICIS used the opening
reception to catch up with sources as well
as colleagues from other bureaus.
Local chefs were happy to slice meats for
delegates at Sunday’s opening reception.
3. BE A PART OF THESE IMPORTANT INDUSTRY EVENTS.
MEET OTHERS.
EXCHANGE IDEAS.
ATTEND 2014
AFPM MEETINGS.
Security Conference
San Antonio, TX
April 14 – 16
National Occupational
Process Safety
Conference
San Antonio, TX
May 14 – 15
Reliability
Maintenance
Conference and
Exhibition
San Antonio, TX
May 20 – 23
Labor Relations/
Human Resources
Conference
San Antonio, TX
May 21 – 22
Cat Cracker Seminar
Houston, TX
August 19 – 20
Board of Directors
Meeting
Rancho Palos
Verdes, CA
September 7 – 9
QA and
Technology Forum
Denver, CO
October 6 – 8
Register at www.afpm.org
Environmental
Conference
San Antonio, TX
October 19 – 21
International
Lubricants and
Waxes Conference
Houston, TX
November 13 – 14