By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas
Despite a slowdown in America’s economic recovery, the outlook for the U.S. chemicals manufacturing industry is more encouraging.
According to the American Chemistry Council’s (ACC) 2011 Year-End Situation and Outlook published late last year, gradual improvement will occur in 2012, before a stronger recovery takes hold in 2013.
The key to the domestic chemical industry recovery is continued access to the vast, new supplies of natural gas from previously untapped shale deposits. After years of high and volatile natural gas prices, the new economics of shale gas are creating a competitive advantage for domestic manufacturers, leading to greater investment, job creation and industry growth. Texas is among several states reaping the benefits of abundant supplies.
ACC’s President and CEO Cal Dooley said, “Most major end-use markets for chemistry in the U.S. have recovered, though growth has slowed for overall U.S. manufacturing.”
Dooley also noted that while developed nations – constrained by debt and tighter fiscal policies – are likely to expand chemistry production only moderately, output from emerging markets will increase more rapidly.
“The shale gas production boom is moderating natural gas prices and creating more stable supplies, which has allowed U.S. chemical manufacturers to become more competitive with producers abroad,” Dooley added.
Historically, an oil-to-natural gas price ratio of 6:1 or higher increases the global competitiveness of Gulf Coast-based petrochemicals and derivatives like plastic resins. For the last few years this ratio has been above 7:1, but more recently the high ratio of oil-to-natural gas prices has been more than 25:1, helping to spur capital investment.
The boom in oil and gas is creating both demand-side (pipe mills, oilfield machinery) and supply-side (chemicals, fertilizers, direct iron reduction) opportunities and this is likely to continue. There is also strength in light vehicles and aircraft, a recovery in construction materials, and industries involved with business investment (iron and steel, foundries, computers) are still strong.
The outlook for chemicals points to modest growth over the next several years and depends on strengthening domestic demand and an improvement in exports abroad. Exports were up nearly 11% to $189 billion in 2011 and are expected to exceed $230 billion in 2014.
Another study by PricewaterhouseCoopers indicates that developing domestic shale gas reserves has the potential to save U.S. manufacturers billions of dollars in energy costs and employ one million more workers. The report also acts as a call to action, by urging manufacturers to become “active stakeholders in the shale gas industry.”
“We do believe there is the possibility of a renaissance in U.S. manufacturing,” said Bob McCutcheon, one of the co-authors of the study.
According to the report, companies can see significant cost saving if they have access to cheap natural gas, especially since manufacturing consumes one-third of the country’s energy output. This will especially benefit industries like metals, chemical and industrial manufacturing that have high energy costs based on manufacturing processes.
Additionally, the chemical industry can see savings in raw materials that are derived from natural gas, which is expected to lead to more U.S. investment.
And the shale-oil and natural-gas boom has cracked open another lucrative market: gas liquids used to make plastics. The same drilling technologies that have unlocked vast amounts of crude and natural gas from previously unproductive shale formations also are reaping large stores of ethane, propane and butane, known as natural-gas liquids.
Processing ethane into chemicals is 50% cheaper than using crude oil-derived naptha and its availability has made U.S. petrochemical companies the envy of overseas competitors.
An earlier ACC study projected domestic petrochemical investments of approximately $16 billion related to reasonable increases in ethane supplies. Looking at the broader chemical industry, capital investment is expected to exceed $25 billion, further fueling economic and job growth.
But Dooley appropriately notes: “To sustain the recovery’s momentum, we need sound economic, energy and environmental policies that will encourage the growth of America’s manufacturing sector.”
By Hector L. Rivero, President & CEO Texas Chemical Council and Association of Chemical Industry of Texas
If there were ever a year to remind Texans of our state’s water issues, 2011 was it. During months of drought and heat, our reservoirs and lakes dipped, cities restricted water usage and aging water mains burst. The persistent dry conditions paved the way for a record-breaking number of devastating wildfires across Texas.
The drought was estimated to have caused at least $5.2 billion in losses, and the fires cost billions more in damage. The past summer was the hottest on record and climatologists predict the state has finished the second year of a nine-year drought.
According to a recent draft of Texas’ state water plan, without improvements to our current system, by 2060, more than 80 percent of Texas’ population could lack enough water during a drought. To deal with a population that’s expected to double by then, Texas’ water infrastructure needs $231 billion in upgrades.
Some of those water, sewer, flood-control and conservation projects will be more easily financed because voters approved Proposition 2 back in November.
Smaller government entities that build and maintain our water system (towns, cities, and municipal utility districts) can’t borrow money as cheaply as the mighty state of Texas can. So to help out, the Texas Water Development Board (TWDB) will set up a fund to lend the little entities money at lower rates of interest than they would be able to get on their own.
The cost to Texas taxpayers is virtually nothing because the loan fund – up to $6 billion at any given time – will be financed through state bonds. Those bonds are paid off via loan payments from the smaller water entities, which in turn get their money from local taxes and bill payments.
This also helps cities by creating a revolving fund because they need access to capital without having to ask voters to replenish it every few elections. By keeping the fund under $6 billion, the TWDB won’t need to get it reauthorized at the polls. That certainly helps cities to plan ahead, just like the state has helped veterans gain access to a revolving fund for mortgages and land purchases.
Because Prop 2 passed, Texans will spend more on infrastructure and less on interest. No state tax dollars will be needed, and the local savings will show up in lower water bills.
Since state lawmakers won’t reconvene until January 2013, Lt. Gov. David Dewhurst and House Speaker Joe Straus have assigned “interim charges” to examine important issues this year.
Various committees in the Texas Legislature have begun studying the impact of the drought’s effect on power generation, agriculture and the economy.
Our industry has been asked about how the drought has affected business, and what water conservation initiatives industry employs in their operations that might be considered by Legislature in developing its future water policy.
While the chemical industry uses large volumes of water, most plants return well over 95 percent of the water used to downstream sources; and that water is returned cleaner than when it was captured. Many facilities are located along the Texas coast, so they are often at the end of rivers that provide them with water for their operations. As droughts dry up our state’s rivers, lakes and reservoirs, this impacts the supply of water for cities, agriculture and manufacturers all along a river basin and can often create dire shortages for industrial facilities located downstream.
Without an adequate supply of water, manufacturers would be unable to operate, resulting in significant loss of investment and jobs in many communities.
Another issue with wide-reaching implications to the chemical industry is the future of “fracking” (or hydraulic fracturing) for natural gas drilling. Key lawmakers are encouraging drilling operators to invoke recycling technologies in their fracking operations.
The chemical industry in Texas is poised for new investment and job growth as a result of abundant new supply of natural gas from previously untapped shale deposits. Further development of shale gas and ethane can promote even greater expansion for our industry, provided sound science is used in any new regulations on gas producers.
Water will be one of the most important public policy issues for decades. It is important that all of us do our part to support conservation, recycling technologies, and sound public policy that will ensure a supply of water for our cities, our agricultural producers, and manufacturing for generations to come.
By Hector L. Rivero, President & CEO, Texas Chemical Council and Association of Chemical Industry of Texas
At issue is the Cross-State Air Pollution Rule (CSAPR), a revised federal regulation aimed at reducing emissions from power plants in 27 states, including Texas.
Under the new rule, Texas utilities must cut sulfur dioxide emissions by 47% from 2010 levels and nitrogen oxide by 8% by January 2012. Officials at the Texas Public Utility Commission (PUC) say those rules could lead to rolling blackouts.
The EPA argues that the rule, issued in July 2011, aims to reduce tens of thousands of premature deaths due to asthma attacks and other respiratory ailments by reducing coal plant sulfur dioxide emissions that drift from state to state.
But the state’s power grid would lose significant generation, as electric generating units in the state scale back coal-fired production, which currently accounts for about 40% of electricity production in Texas.
“If those reductions had been in place this year, rolling blackouts would have been a certainty during the summer,” said Trip Doggett, CEO of the Electric Reliability Council of Texas (ERCOT), which operates the power grid.
There is also a very good chance that Texans will have to pay more for electricity. Providers will have to buy cleaner-burning coal, make system upgrades and trade for emission credits. Some plants will switch to more expensive natural gas generation.
Retrofitting and rebuilding power plants for tighter air pollution standards normally takes three to five years. That’s been compressed into an impossible time frame, state and company officials have repeatedly said.
Steven Miller, CEO of the American Coalition for Clean Coal Electricity, warns of job losses nationwide totaling 1.4 million over the next eight years and a 23% jump in electricity rates in states dependent on coal-fired generation.
Texas Targeted?
In writing the CSAPR rules, EPA officials claimed that Texas was treated no differently from any other state, saying that Texas had the same opportunity to provide comments on the rule proposed as other states.
But the facts tell a different story: Texas was included in two significant portions of the final rule without the required legal notification. For those two portions of the rule, every other state was provided an emission budget and a detailed rationale for its inclusion – Texas was not.
And the EPA has given members of Congress and the news media the impression that Texas is being a bad neighbor, causing many areas of the country to experience poor air quality.
Again, the facts are not on their side: EPA’s justification for including Texas in this rule lies with linkages to monitors in Granite City, Illinois (more than 500 miles away), Baton Rouge, Louisiana and Allegan, Michigan. All of those out-of-state monitors that EPA claims are suffering from detrimental impacts due to Texas emissions are in attainment with the pollutants EPA is regulating under CSAPR.
Texas Commission on Environmental Quality (TCEQ) Chairman Bryan W. Shaw recently wrote “these regulations have vast economic effects, not limited to the direct energy generation costs that will be felt by every energy consumer, but also through the indirect effects of higher costs associated with the cost of manufacturing goods, and regrettably, the potential for lost jobs, as all sectors struggle to absorb these costs."
Shaw continued: “Under average conditions, the potential generation loss in Texas caused by this rule will have real impacts to real people. Should Texas face another sweltering summer like this past one, there is every reason to worry about loss of life.”
On behalf of the State of Texas, Attorney General Greg Abbott has asked an appeals court in Washington D.C. to halt implementation of the proposed rule. But unless stopped by pending litigation or presidential order, the new CSAPR regulation threatens Texas and its citizens with rolling blackouts and higher electricity prices.
An adequate supply of clean, affordable water
is absolutely essential to the success of the state’s chemical industry,
manufacturing, oil and gas, and other major economic sectors, making water a
crucial component of job creation and economic development. Texas suffered
through several severe droughts recently, which heightened awareness among
state legislative leaders that something must be done to ensure an adequate
water supply for future generations.
On Nov. 8, Texas voters will have the opportunity to vote for Proposition 2 — a constitutional amendment to help local communities grow and maintain their essential water supplies. The Texas Chemical Council (TCC) and Association of Chemical Industry of Texas (ACIT) strongly support this constitutional amendment, and I urge you to vote for Proposition 2.
Proposition 2 resulted from the near unanimous passage of Senate Joint Resolution 4 by the 82nd Texas Legislature. Proposition 2 will not cost state taxpayers any money, and the bonds used through this measure will save local taxpayers millions when building and financing water projects.
The bonding authority granted by Proposition 2 is designed to be self-supporting. The bonds issued are repaid by the debt service of the borrowers and don’t count against the state’s constitutional debt limit. The Texas Water Development Board’s (TWDB) current bonding authority will be exhausted in 2013, and without this reauthorization, water programs administered by the TWDB will be crippled.
The chemical industry and other
industries use large volumes of water in their operations. However, most chemical
plants return well over 95 percent of the water used to downstream sources, cleaner
than when it was captured. Many of these facilities are located along the Texas
coast, so they are often at the end of rivers and tributaries that provide them
with water for their operations. As droughts dry up our state’s rivers, lakes
and reservoirs, this impacts the supply of water for cities, agriculture and
manufacturers all along a river basin and can often create dire shortages for
industrial facilities located down river near the Gulf Coast. Without adequate
supplies of water, manufacturers would be unable to operate, which would result
in significant loss of jobs and investments in many communities across the
state.
Our state’s population is growing faster than our ability to provide adequate supplies of water, which causes increasing strain on our existing water supplies and water bills to increase. Proposition 2 is needed to provide local communities the tools they need to plan for, and meet, their future water needs at reasonable rates.
Proposition 2 would ensure the TWDB could continue to administer its assistance programs, provide cost-effective financing for the Texas State Water Plan (SWP) and continue to help with local and regional efforts to address the state’s water and wastewater needs.
If SWP is not fully implemented, 83 percent of Texans will not have an adequate supply of water during times of drought. Failure to meet the state’s water needs in drought conditions could cost Texas businesses and workers approximately $11.9 billion in lost income today and up to $115.7 billion in 2060.
The use of bond money authorized by the passage of Proposition 2 is limited to financial assistance to political subdivisions for water, wastewater and flood control projects. The additional bond authority cannot be used for TWDB administrative expenses or grants.
The Bond Review Board would continue to review any proposed bond debt issuance under the constitutional authority granted by passage of Proposition 2. The TWDB has an excellent financial history with zero defaults resulting from loans issued by the agency.
For most Texas businesses, even
temporary interruptions of our state’s water supply could be devastating.
Remember, Proposition 2 will not cost state taxpayers any money, and the bonds used through this measure will save local taxpayers money when building and financing water projects. Failure to implement the SWP by passing Proposition 2 could impact the bottom line of every business, and sooner than you think. Can any of our businesses afford that kind of trouble?
For more information, visit TCC or ACIT at www.txchemcouncil.org or www.acit.org, or call (512) 646-6400.
More than 150 chemical industry executives, site leaders, and environmental, health and safety personnel attended the TCC/ACIT Chemicals Day at the Texas Capitol on March 9th.
“Chemicals Day gives industry representatives the opportunity to meet with elected officials to discuss the importance of the chemical industry in Texas,” said TCC President Hector Rivero. “It’s a great opportunity to promote how our industry enhances the daily lives of Texans.”
Attendees were briefed on key industry issues, and heard from Senate Natural Resources Committee Chairman Troy Fraser (R-Horseshoe Bay) and House Environmental Regulation Committee Chairman Wayne Smith (R-Baytown). The group also heard from Governor Rick Perry’s Legislative Director Ken Armbrister and House Speaker Joe Straus’ General Counsel Jesse Ancira.
One way we educate the legislative offices about our industry is by delivering a reusable plastic shopping bag containing a consumer products made from materials at our member Texas facilities. Some of those products include a bottle of water, soap, salt and pepper, aluminum foil and post-it notes just to name a few. The TCC Outreach Committee delivered over 275 bags to legislative offices.
We thank all our Chemicals Day 2011 sponsors including:
Platinum Sponsors – Dow Chemical; LyondellBasell
Gold Sponsors – BP; Shell Chemical; Turner Industries Group, LLC
Silver Sponsors – Air Liquide; AMCHEM, Inc.; BASF; Bayer MaterialScience; Providence Critical Infrastructure Protection; The Infinity Group; The Lubrizol Corporation; TPC Group
Corporate – Bay Area Economic Partnership
Breakfast Sponsors – East Harris County Manufacturers Association and Economic Alliance -Houston Port Region
A special thanks to The Mundy Companies who hosted a legislative dinner for all legislators and industry representatives. “Mundy has hosted this event in conjunction with Chemicals Day for the last three sessions,” stated TCC President & CEO Hector Rivero. “We thank Mundy for their unsurpassed support for TCC and ACIT.” The legislative dinner was attended by more than 70 state legislators and provided our Chemicals Day attendees an excellent venue to network and meet with their state elected officials.
Finally, thanks to our member companies who donated consumer products containing materials made at their Texas facilities. These products were distributed to every legislative office by members of the TCC Outreach Committee:
On June 10th, the Texas Chemical Council (TCC) and the Association of Chemical Industry of Texas (ACIT) hosted its annual Awards Banquet to recognize member facilities who have demonstrated outstanding performance in safety, community awareness, emergency response & overall dedication to the chemical industry during 2009.
The TCC Outreach Committee recognizes member facilities for their performance in community awareness, emergency response, security and pollution prevention in the Caring for Texas Award Program featuring the Excellence and Sustained Excellence in Caring for Texas Awards.
The TCC Occupational Safety Committee recognizes member facilities for demonstrated commitment and exemplary results toward safe operations throughout the year with its safety award program. Awards in this category recognize Distinguished Service, Zero Incident Rate, Zero Contractor Incident Rate and the Best in Texas. 
ACIT presented several Regional Member of the Year awards. This award identifies and recognizes one outstanding ACIT supplier of goods or services in each ACIT Region who has made an important contribution to the chemical industry in Texas and has demonstrated outstanding leadership within ACIT.
The Gerald R. Ehrman Award for Leadership in Safety Management was presented to Steve Skarke of Kaneka Texas Corporation (Pasadena site).
The Safety Professional of the Year Award was presented to Bob Brennecke of the BASF Corporation (Pasadena site).
To see all the award winners, click here: Award Winners
April 29, 2010
Since its inception, the TCC/ACIT Environmental, Health & Safety (EHS) Seminar has provided practical information, industry best practices and lessons learned while offering continuing education credits to thousands of people who work in and for the chemical manufacturing industry. Each year, the seminar is organized by a committee of dedicated volunteers who work for TCC and ACIT member companies, government regulatory agencies, universities, safety councils, and other organizations and “friends” of the chemical industry.
The roots of today’s seminar date back to the 1970’s when TCC-sponsored sessions began to appear as a part of Texas Safety Association meetings. “Seminar-like” meetings were held periodically into the mid 1980’s. A.D. Cyphers of DuPont was the chairman of the TCC Occupational Safety Committee in those days, and he challenged the committee membership to create a seminar that would be a “world class event.” The committee accepted the challenge, rolled up their sleeves, and organized a one-day “Safety” seminar on June 9, 1988 at the San Luis Hotel in Galveston, Texas. The seminar expanded to a two-day event in Galveston in June of 1989. From 1990 through 1996, the seminar was a four-day event with a format that slowly evolved into today’s seminar. From 1997 through 1999, the seminar was held at the Woodlands Executive Conference Center before moving back to Galveston. In 2000, the seminar moved to its current location at the Moody Gardens Hotel.
The 2001 seminar was visited (unexpectedly) by Tropical Storm Allison on June 5. Fortunately, Moody Gardens was spared and the seminar stayed more or less on schedule.
Also in 2001, the “Safety Seminar” was officially changed to the “EHS Seminar.” The usual offering of occupational safety, industrial hygiene, process safety, emergency management and other H&S topics was expanded to include environmental air, water, and waste management topics as well as chemical plant security-related topics. Since then, energy management and sustainability presentations have been added.
Over the years, seminar attendees have been entertained and inspired by keynote speakers including Fred Haise (Apollo 13) and other NASA astronauts; government officials; educators; local personalities such as Jim “Mattress Mack” McInvale; a National Safety Council president; Oscar Newton and other motivational speakers; local media personalities such as Doug Johnson, Ron Stone, Steve Smith, Giff Neilsen, and Jan Carson; Houston Comets head coach Van Chancellor; Richard Alderman (the Peoples Lawyer); humorists; former Houston Oilers head coach Bum Phillips and quarterback Dan Pastorini; and many others.
In keeping with the spirit of continual improvement, the exhibitor show was introduced in 2006 giving seminar attendees a chance to visit with industry suppliers and learn more about the latest EHS products and services.
The mission of the seminar committee is “to present an annual EHS seminar that provides knowledge to foster personal growth of the attendees and the performance of their organizations, while enhancing the image of the chemical industry.” Our hope is that our history will continue for years to come and we will be able to educate and influence thousands more.
The 2010 Seminar takes place June 7-10 at the Moody Gardens Hotel in Galveston. To register, visit: www.ehs-seminar.com
March 31, 2010
For over a decade, the Texas Chemical Council has recognized its members who have excelled in occupational safety and promote the improvement of safety performance among TCC member companies through the TCC Safety Award Program. The program provides recognition for TCC member facilities who, during the previous calendar year, have both achieved exemplary results and demonstrated commitment to safe operations through implementation of TCC supported safety-related programs.
“The TCC Safety Awards program provides an opportunity to spotlight those companies who make safety their highest priority and are true leaders in the industry,” said Hector Rivero, TCC President.
Applicants are judged not only on statistical safety data that is collected, but on safety programs that are implemented on site and participation in the TCC Occupational Safety Committee and its charge.
The award categories include:
·Distinguished Service - presented to those facilities that demonstrated improvement in their injury and illness incident rate for 2000 when compared to the previous 3 years, and had at least 50% attendance at TCC Occupational Safety Committee’s meetings.
·Zero Incident Rate – presented to companies with zero employee OSHA recordable injury or illness in the previous year
·Zero Contractor Incident Rate – presented to companies with zero contractor OSHA recordable injury or illness in the previous year
·Best In Texas - presented to the top facilities who have met the criteria for Distinguished Service and maintains a contractor safety program under TCC’s recommended guidelines for Contractor Safety.
On March 15th, applications for the TCC Safety Awards Recognition Program for 2009 Performance were sent out to eligible member companies. Applications are due on April 26th.
TCC Safety Awards will be presented at the TCC/ACIT Awards Banquet in Galveston on June 10th at Moody Gardens. If you have any questions or need additional information, please contact Mike McMullen at (512) 646-6404 or via email at mmcmullen@txchemcouncil.org.
January 7, 2010
On January 7th, U.S. Environmental Protection Agency (EPA) Administrator Lisa Jackson announced a proposal to lower the federal eight-hour ozone standard to between 60 and 70 parts per billion (ppb). This announcement comes only 18 months after EPA lowered the standard to 75 ppb in March 2008. With this new, stricter standard, more areas of the state such as Austin, San Antonio and Longview-Marshall could fall into nonattainment, and areas such as Houston and Dallas will have an even more difficult task reaching attainment. To view the full release, click on the following link: EPA News Release.
There will be a public hearing on the proposal in Houston on February 2, 2010. TCC will be actively engaged in both the hearing and submitting comments on this proposal. In the meantime, if you have any questions, please do not hesitate to contact Mike McMullen at (512) 646-6404 or mmcmullen@txchemcouncil.org.
November 5, 2009
On November 5th, President Obama and Environmental Protection Agency (EPA) Administrator Lisa Jackson announced the appointment of Dr. Alfredo “Al” Armendariz from Southern Methodist University as EPA Region 6 Administrator. This region encompasses Louisiana, Arkansas, New Mexico, Texas, Oklahoma and 66 Tribal Nations.
Regional Administrators are responsible for managing the Agency’s regional activities under the direction of the EPA Administrator.
Dr. Alfredo “Al” Armendariz is an Associate Professor at Southern Methodist University in Dallas, Texas, where he has taught environmental and civil engineering. For the past 15 years, Armendariz has worked in a variety of research and academic positions and has published several research papers. After college, he worked as a research assistant at the MIT Center for Global Change Science at their Atmospheric Chemistry Laboratory in Massachusetts. He later joined Radian Corporation in North Carolina as a chemical engineer and in 2002 he joined the faculty at Southern Methodist University and also spent a summer on special assignment to EPA’s Dallas office as an Environmental Scientist.