Oil Boom Spurs New Investment

Surging energy production in North America is prompting billions of dollars of investment next year on pipelines and other infrastructure projects to move oil and gas around the continent.

The U.S. shale-gas revolution, which has revitalized chemicals companies and prompted talk of domestic energy self-sufficiency, is attracting a wave of investment that may revive profits in the steel industry.

Hydraulic fracturing of shale rock formations from Texas to West Virginia has boosted supplies of gas and sent prices plunging by as much as half in the past two years. Gas futures reached a decade low of $1.91 per million British thermal units in April in New York trading.

“The shale revolution is triggering an avalanche of industrial expansion plans,” Barclays’ Pehlivanova and Wang said.

There’s been a reversal of fortune for U.S. chemical producers after years of decline. Shares of LyondellBasell Industries NV have more than doubled since it emerged from bankruptcy in 2010. The company is now among chemical producers planning billions of dollars of plants around theGulf of Mexico to capitalize on cheaper gas. Fertilizer companies including CF Industries Holdings Inc. also are planning to construct gas- fueled plants.

At the same time, there’s no guarantee that steel demand in the U.S. will improve. Domesticsteel-industry capacity utilization is at 74 percent, according to data from the American Iron and Steel Institute. Utilization was 91 percent in August 2008, the month before the bankruptcy of Lehman Brothers Holdings Inc.

http://www.bloomberg.com/news/2012-12-31/shale-gas-revolution-spurs-wave-of-new-u-s-steel-plants-energy.html