Chemical Industry Rides Crest Of Natural Gas Wave

Florian Martin

Akzo Nobel Chemical Plant in La Porte.
Ten years ago, domestic chemical manufacturing looked bound for extinction. But the revolution in natural gas production has given the industry a new lease on life, bringing thousands of new jobs to Greater Houston.

Welcome to Cedar Bayou — a 3D maze of silver pipes and round towers in Baytown. For the first time in over a decade, this Chevron Phillips complex is growing.  Just ask Perry Cessna.

“With my hiring group, we had over 20 individuals. This last hiring group they just hired, it was over 20 individuals as well. It’s been a lot of growth in a short period of time.”

Perry grew up in the petrochemical industry. His grandfather worked for Exxon. His father worked for a smaller company in his hometown of Hardin. And since June of last year, the twenty-eight-year-old has been a plant worker at Cedar Bayou.

Chevron Phillips is upgrading its chemical manufacturing facilities — both here and down the coast in Old Ocean — at a cost of $5 billion. It’s a huge turnaround from when Perry was a teenager. Peter Cella is CEO of Chevron Phillips Chemical.

“For most of the last 20 years, the best places for growth capital have been in the Middle East.”

Cella says the main factor in deciding where to build a chemical plant is the affordability of raw materials — chiefly, natural gas liquids. To attract investment, countries like Saudi Arabia provided subsidies to keep these feed stocks cheap. When natural gas prices started climbing in the 1990s, U.S. companies stopped investing in plants at home.

Stephen Arbogast was treasurer of Exxon Mobil Chemical from 1999 to 2004. He now teaches at the University of Houston’s Bauer College of Business.

“I remember seeing strategy studies that essentially said the U.S. chemical industry was going to be like Europe. Nothing new was ever going to get built.”

That was a concern for Earl Shipp of Dow Chemical. To stay with the company, Shipp had to leave Dow’s Freeport facility and move to Dubai for five years. He’s now back in Freeport, running all of Dow’s Texas operations. He says what brought him home, and what triggered the multibillion-dollar building boom, is the availability of cheap natural gas liquids.

“We have low cost, affordable feed stocks again in North America. It’s the start of what some of us in the industry call a renewal of our industry in the United States.”

Dow and Chevron Phillips plan to hire well over a thousand workers to staff the new plants, and that’s just the start. Again, Chevron Phillips’ CEO Peter Cella.

“For every one direct chemical job in one of our plants, there are six additional indirect or induced jobs to serve that job.”

The industry’s rebirth is making the region a magnet for manufacturing workers from all over the country. And it means locals like Perry Cessna can carry on a family tradition. That’s all the more important, because Perry’s family is growing too. He just became a father for the first time.

 

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...