Development of bioplastics in the United States may be affected by the shale gas boom under way. Many bioplastics, such as starch polymers, polylactic acid (PLA) or polyhydroxyalkanoates (PHAs) compete in basic plastic applications with polyethylene or polypropylene, which are typically produced from natural gas feedstocks. Prices of natural gas are being driven down by the rapid development of new supplies obtained through a process commonly called hydraulic fracturing, or fracking. Futures prices are running at about $3.20 per million British thermal units, down from a high of about $15 a few years ago.
American ethylene crackers are typically located in the Gulf Coast area, close to supplies. Production has been migrating to low cost production areas, such as Saudi Arabia, since the late 1980s, where natural gas had been flared. Braskem and Dow both are committing huge sums to build ethylene crackers based on sugar cane feedstock in Brazil.
But the situation is changing.
Shale gas now represents one-third of all natural gas supplies produced in the United States. Now comes news that Royal Dutch Shell wants to build an ethylene cracker in Appalachia to take advantage of low natural gas costs due to fracking. West Virginia, Ohio and Pennsylvania are vying for the plant. Houston-based PetroLogistics wants to build a plant to convert ethane from shale gas and turn it into ethylene, according to the Oil & Gas Financial Journal.
Dow, the largest U.S. chemical maker, is building its first ethylene production plant in the country since 1995 because of shale gas economics. It will be built on the Gulf Coast to take advantage of considerable infrastructure in place and start output in 2017. A cracker in Louisiana that was closed is reopening. More plants are expected. Sasol Ltd. is adding an ethane cracker and ethylene-derivative project to its facility in Louisiana. Braskem may also build an ethylene cracker in the U.S.
All of this is bad news for bioplastics, which have been backed in the belief that petroleum feedstock costs would continue to rise. Prices for bioplastics are typically 20 to 30% higher than competing oil-based plastics. In some cases, such as PHAs, they are two to three times as expensive. Because of cheap shale gas, the pricing differential is expected to widen. And many bioplastics have inferior properties.
Of course, there are other arguments for bioplastics, such as biodegradability and climate change. But relatively comparable economics are a must.