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Global oil and gas giants are hedging agains EVs and renewable energy by growing their petrochemicals business, but other corporate giants can thwart them.

Clean Transport

EVs Or Not, We’ll Always Have Petrochemicals — Or Not!

Global oil and gas giants are hedging agains EVs and renewable energy by growing their petrochemicals business, but other corporate giants can thwart them.

Electric vehicles are set to go mainstream within the next few years, and renewable energy is beginning to edge natural gas out of the power generation sector. That’s great, but it won’t necessarily put a stop to the oil and gas drilling. Global energy companies are already laying plans to cope with a squeeze on demand for fossil fuels by pumping more petrochemicals into the global economy.

This sure sounds like a solid long-term strategy, considering the growing demand for plastics in less-developed countries with huge potential for growth. However, the storm clouds are already beginning to gather along the horizon.

Saudi Aramco Eyeballs Another Move Into Petrochemicals

One major development occurred earlier this month, when the Houston Chronicle reported that a subsidiary of Saudi Arabia’s national oil company is laying plans for a $6 billion new petrochemical facility in Texas or Louisiana (probably Texas, but we’ll see — also follow the link and support local journalists).

The subsidiary is Motiva Enterprises LLC, which is under the Saudi Aramco umbrella.

The main feature of the expansion would be a new $4.7 billion ethylene cracker. A $1.9 billion facility for producing benzene and paraxylene is also in the works.

That sounds pretty big, right? Well, it is.

Ethylene is a building block for plastics and other petrochemicals, and new ethelyne crackers are beginning to pop up all over the place like mushrooms after a rain.

Just a couple of years ago, for example, ExxonMobil partnered with another Saudi-based company, Saudi Basic Industries Corp., on a new ethylene cracker for its Baytown, Texas facility.

The Baytown expansion was just one part of Exxon’s “Growing the Gulf” strategy for the continued expansion of its oil and gas portfolio in the US, including more petrochemical facilities.

It sure looks like Exxon is well on its way toward hedging against a looming decline in demand for oil and gas in the transportation and power generation markets.

Chronicle reporter Marissa Luck notes that a similar strategy is under way at Motiva:

…The projects would come at time several new petrochemical projects are underway on the Gulf Coast as refineries look to diversify their businesses to make up for flattening demand for motor fuels in the next couple decades.

Then there’s this observation:

In June, Motiva said it was no longer considering a massive expansion of oil refinery and would instead focus on expanding its petrochemical business and potentially purchasing another oil refinery or complex.

Petrochemicals, Meet The Ocean Plastic Pollution Problem

Returning to our question at the top of the page, are petrochemicals really going to save global oil and gas giants from the dustbin of history?

The short answer is probably, at least for the short term.

The problem for oil and gas giants is that emerging markets may not be strong enough keep demand for petrochemical products from falling into the same downward spiral that is beginning to impact the transportation and power generation sectors.

The growing popularity of bio-based household products is one red flag. Major petrochemical consumers like the US Department of Defense have also been steadily ramping up interest in the green chemistry movement, so that’s another.

Flags, schmags. A veritable global fire alarm has been pulled against the petrochemical industry in the form of the ocean plastic pollution problem.

Conservationists have already begun to ally themselves with powerful consumer brands and entire nations to reduce the use of plastic in consumer packaging.

Judging by the corporate firepower assembled behind last September’s G7 meeting on oceans, the global plastic reduction campaign will be a force to be reckoned with.

The list of companies signing the new Ocean Plastics Charter includes Unilever, Walmart, Nestle Canada, IKEA, Dow Chemicals, The Coca-Cola Company, and BASF Canada among others.

Volvo is one of those others, citing its increased use of recycled plastics along with the elimination of single-use plastics from its corporate offices and facilities.

Ford has also been a leader in using and researching biobased materials (dandelion tires, anyone?), and recycled materials in its cars, and Hyundai is promoting the use of non-plastic material in its new Nexo fuel cell vehicle.

On the consumer education side, Starbucks and global brewery giant AB Inbev have embarked on high profile campaigns to build public awareness about single-use plastics. Getting rid of plastic straws and plastic six-pack rings may seem like small potatoes, but they touch millions of beverage drinkers with a daily message about daily life without plastic.

More Bad News For Petrochemicals

In another significant development, New York City’s styrofoam ban survived a legal challenge in 2018 and will go into effect in 2019.

Rather than attempting a direct environmental argument, New York successfully made the case that Styrofoam cups, containers, and other items were gumming up its recycling plans. Styrofoam packing peanuts are also included in the ban.

Plastic bag bans are already gathering steam in other countries, and New York’s success with Styrofoam sets the stage for other US jurisdictions to ban single-use petrochemical products.

Speaking of packing peanuts, the end of petrochemicals can also be seen in something called the Closed Loop Fund. Closed Loop aims at fostering innovations that reduce petrochemicals and open up new recycling opportunities, and they just got a $10 million infusion from Amazon.

Other Closed Loop partners include the now-familiar names of Unilever, Walmart, and Coca-Cola, as well as 3M, Johnson & Johnson, and Colgate – Palmolive, among others.

CleanTechnica is reaching out to Closed Loop to see what kinds of interesting innovations are on the horizon, so stay tuned for more on that score.

Follow me on Twitter.

Image: Don’t use plastic bags by Marco Verch via, creative commons license.

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Tina specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.


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