How fracking helps America beat German industry | Reuters

The organization estimates which a new large, modern petrochemical plant in the united States is
$125 million cheaper to perform for each year compared to within Europe. German Chancellor
Angela Merkel's energy?policies - built to sharply raise the discuss regarding renewables inside
Germany's energy mix, tackle climate alter and cut Germany's dependency upon foreign gas and oil ?are a rising source or worry for that country's industry, especially energy-intensive companies such
as Wacker. That's made it more appealing to make use of within electricity generation. Currently
roughly any third of U.S. Power Info Administration data.
Founded one hundred years ago, the plant has become one of Germany's greatest industrial hubs,
employing with regards to 10,000 staff?across?an area equal to?some?460 soccer fields.
The company, however, remains your exception, and the burden regarding Germany's industrial
base are particular to get bigger as escalating numbers of and much more renewables come online.
And as power prices rise, the group is actually eager for you to slash costs for you to soften the blow.
(Edited through Simon Robinson, Noah Barkin as well as Sara Ledwith)
At Port Neches, Texas, Huntsman is actually investing $125 million on an expansion that, when
finished throughout 2015, will make it the particular world's second-largest producer of ethylene
oxide, a new chemical crucial inside the output of carpet, clothing, soap along with scores of
additional consumer goods.
The electricity in order to create almost all in which - adequate energy pertaining to greater than
700,000 households annually - is now much more expensive at Wacker's major factory in
Burghausen. Economy Minister Sigmar Gabriel warned inside January?that?the energy cost
imbalance could cause a new "dramatic de-industrialization"?in your country. Yet Wacker's plant
inside Burghausen, in Germany's border along with Austria,?shows what's from stake.
For Wacker, it's an ironic twist regarding fate.?It was a tiny hydro-plant that assisted it expand
production throughout Burghausen?after world War One. The lava-like glow emanates from your
small windows. While not too long ago as 2011, politicians in Washington were openly discussing
how to copy Germany's success.
ECONOMIC LAWS
Generally speaking, power expenses tend to be much less essential than labor within industry.
"Germany faces a new double whammy involving rising energy costs in Germany along with falling
energy costs inside the United?States," he said.
Wacker, which had sales associated with 4.5 billion euros last year, will be among the actual German
firms creating the particular shift stateside. state involving Louisiana. That has been blamed
throughout areas of the particular Usa for water contamination, earthquakes as well as methane
leaks, even though immediate correlations are already difficult to establish. "It isn't sudden but any
creeping process along with new investment likely more regularly to the united States along along
with other areas abroad, where energy expenses less difficult lower."

Natural fuel helps as well plants power themselves via a method known as cogeneration, the
employment regarding excess heat to become able to produce power.
"Germany is actually going to begin to determine the (negative) effect regarding its energy policy
3 to five years along the road," Huntsman said, explaining that will
companies will gradually start to move operations out thanks in order to higher energy prices. "You
won't observe this hurt the work marketplace proper away."
by Christoph Steitz along with Ernest Scheyder
| BURGHAUSEN, Germany/GEISMAR, Louisiana
Each day, regarding 250 trucks along with 100 train wagons transport items in order to and from
the plant, exactly where workers?turn?methanol, silicon, ethylene as well as rock salt directly into a
lot much more than 3,000 distinct products.
Now things are heading one other way. "But at a few point the steps to improve efficiency are
generally receiving smaller although your serious amounts of effort to take these gets bigger."
"We require to become similar to Germany,"?General Electric Chief Executive Jeffrey Immelt?said in
an interview that 12 months together with Reuters.
In?March, BMW, the particular world's largest luxury carmaker, said it might make investments $1
billion to expand its plant inside Spartanburg, South Carolina,?making it your German group's
greatest production facility through 2016. Your organization is investing?up for you to $2.4 billion?in
a brand new polysilicon plant?in the particular U.S. Officials inside his ministry decline issue worries
him greater than Germany's creeping loss of competitiveness.
The?accident at?Japan's Fukushima nuclear plant inside 2011 emboldened?Berlin throughout its
goals, leading Chancellor Merkel?to accelerate a new phase-out?of?nuclear power. With times
Huntsman was operating the Geismar plant way beneath its capacity because?of the actual expense.
Natural gas can in addition be an integral ingredient employed to create chemicals, akin for you to
flour in a bakery. When the upgrade is actually finished early next year, Geismar will possibly be the
largest MDI plant inside North America.
"This facility could export item about the planet for the backyard of our own competitors and still the
product will be cheaper, even with shipping," stated Huntsman.
It's any various story over the Atlantic inside the U.S. Automobile tires, for instance, are produced
using styrene, the chemical which can easily be derived via natural gas.
This?transformation, dubbed the actual "Energiewende" as well as power shift, has created Germany
amongst one with the most pricey places inside the globe to buy electricity.?The enormous rise isn't
simply due to the payments created for solar power, nevertheless most other renewable power
sources, the majority of notably offshore as well as onshore wind parks, biogas as well as geothermal
plants. government statistics.?When you factor in the price associated with shipping goods coming
from Asia, it's small wonder in which America provides re-emerged as among one in the most
competitive places to construct stuff.
Fracking continues for you to be controversial about the entire world because of for the blend of

chemicals as well as sand injected deep in the earth. natural fuel designed a $2.08 trillion
contribution towards the U.S. in the past eighteen months it has spent $100 million for you to
close?several plants?and cut more than 600 jobs?in Europe.
Wacker Chemie's bigger rival BASF?has discovered an alternative solution method to protect itself
from rising power prices.?BASF SE, the actual world's largest chemical company, generates a lot
involving its power within Germany by method of cogeneration, but it will get your natural gas
needed for the plants through its very own propane division?in the North Sea.?That provides it a
price advantage.
ENERGY SHIFT
At Burghausen, Wacker tends to end up being able to make polysilicon, one of?its most significant
goods then one whose manufacturing procedure is particularly energy-intensive. expansions among
2008 along with 2012, according towards the most?recent?Bundesbank statistics.?Germany's
Chamber associated with Commerce and also Market reckons that will investments could reach 200
billion euros in 2014, an all-time high.
The tale regarding individuals quantities underlines the profound shift underway in two in the
world's greatest industrial powers. Which sum includes cheaper power, waste disposal and also
myriad some other factors, along with Huntsman stated your contrast can be similar for Asian
plants.
Power isn't the sole cause the particular Usa is turning into consequently attractive to producers
again. With?650 employees and?capacity involving at least 20,000 tonnes?a?year, the guarana plant
will boost Wacker's capacity to create the information simply by practically 40 percent.?While the
company remains tight-lipped regarding its exact energy expenses in Germany, analysts estimate
that it will pay a new third much less regarding electricity inside Tennessee as compared to in its
principal plant throughout Burghausen.
That's the dramatic alter coming from just several many years ago, when Germany ended up being
delayed as a model associated with manufacturing prowess. This features played a big component in
pushing up your firm's total energy bill by 70 % more than the final five years, in order to practically
half a billion euros.
In Germany, "we're?cutting corners wherever possible," mentioned Christian Essers, in cost of?the
firm's?energy purchases. Temperatures regarding more than 1,000 degrees Celsius (1,832 degrees
Fahrenheit) are essential over long periods involving time and also energy to create polysilicon
hyper-pure, as customers need for solar cells.
"We're putting a huge bet about
https://www.energystar.gov/index.cfm?c=heat_cool.pr_contractors_10tips the table, and in my
estimation natural gas service technician this company offers but to adopt total good thing about the
particular North American shale story," Huntsman informed employees with its Geismar website
within a town hall?meeting throughout April.
Huntsman plans to close the Belgian plant this coming year that produces chemicals utilized in
detergents as well as soaps, blaming weak profits.
Cheap propane has changed just about all that.

"It's regulations of a totally free economy to commence out curbing production where costs are
higher," Essers said.
Peter Huntsman, chief executive of?the?family?firm, calls?the United States Involving America the
new global normal regarding low-cost manufacturing.?Huntsman will be shelling out countless
countless bucks to grow in the United States, along with rapidly closing plants inside Europe.
According to Germany's Chamber associated with Commerce as well as Industry, 1 / 2 of the
country's industrial companies think their global competitiveness can be threatened by Germany's
energy policy,?and a?quarter of them are generally possibly shifting production abroad as well as
considering?doing so. most new European plants, by simply contrast, don't use cogeneration
because of in order to regulations plus a lack of cheap propane for you to power generators, analysts
say.
"There is excellent confidence in which Germany will become the bulwark of your sick Europe, yet
now its industry is worried concerning maintaining in which strength," stated Daniel Yergin, vice
chairman involving consultancy IHS?and author regarding an influential?history in the oil industry.
Huntsman pays concerning 80 percent much more for electricity within Germany than about the
U.S. This first became popular within the United States of America six in a prolonged time past and
it has produced any glut associated with propane inside the country, pushing down domestic rates
for that gasoline simply by about 61 percent because timeframe. Provided these concerns, it's
received a cool reception throughout Europe.
That's?a far cry from five-years ago, when Geismar ended up being one of the most pricey MDI plant
within Huntsman's portfolio, higher priced as compared to peers in the Netherlands and China. The
Actual procedure involves injecting sand, water and chemicals from higher pressures deep
underground to destroy apart shale rock, permitting oil and also gas in order to escape. Thanks
throughout big portion to end up being able to Germany's selection to end up being able to cycle out
nuclear power along with push into green energy, companies there now pay a few regarding the
highest rates within the world regarding power. presidential candidate Jon, mentioned inside an
interview. at among your plant's high-security production sites, numerous cylinder-shaped ovens
quietly hum. state of Tennessee. The Particular united States can be amongst the very best
destinations.

Huntsman's Port Neches plant, pertaining to instance, creates just about all involving its electricity
via cogeneration. on average, German industrial companies along with large power appetites paid
out with regards to 0.15?euros ($0.21) for each kilowatt hour (kWh) involving electricity final year,
based on Eurostat, the actual European Union's data agency.
Fracking has permitted the particular global power sector to access huge new power supplies. costs
may also be ballooning credited towards the country's power taxes, which usually account for 14
percent with the total.
"It's not a issue involving regardless involving whether various other countries are usually
competitive or even not," Huntsman, brother involving former U.S. Prior To Fukushima,
nuclear?supplied of a quarter associated with Germany's power;?by 2022 it's going to supply none.
Cheap, plentiful natural gas?has assisted boost manufacturing's contribution to be able to U.S.
"They're not."
Wacker nonetheless employs three quarters regarding its 16,800 workers inside Germany, yet the
vast majority of its capital investing features shifted outside the country. There,?chemicals
maker?Huntsman?Corp?pays 22 % much less pertaining to its energy laptop or computer did just
seven years ago.
Germany features certainly not tapped its shale gas reserves, deterred simply by its powerful
renewable energy lobby, which has warned of the environmental risks connected to fracking.
Germany's substantial power costs tend to be rooted throughout aggressive new energy
standards?which began?during the past decade?and are?designed for you to produce approximately
sixty percent with youtube.com/watch?v=F64MZomEQ4E the nation's electricity via wind turbines,
solar panels and other renewable resources through 2035, up from?27?percent now.

"In the particular energy-intensive sectors, for example chemicals, we're facing substantial
challenges that may prevail for any more time time," mentioned Carsten Rolle, head of one's and
also climate policy in the Federation involving German Industries (BDI). power plants employ it.
Some?politicians?have begun to fret concerning the increase. a hundred a prolonged time on, green
energy resources are usually forcing your team to check abroad if this thinks about the future.
A BIG BET
In the actual United States, electricity prices are falling thanks for you to natural gas derived
from?fracking - the actual hydraulic fracturing regarding rock.?Louisiana now boasts?industrial
electricity prices?of just?$0.055 for each kWh, in accordance with U.S. six a lengthy time ago, the
business expended 84 % associated with its investment budget?at home.?Last 12 months
that?dropped for you to 37 percent.. average labor costs inside China have a lot a lot more than
doubled since 2007 in order to about $2 for each hour, although they've risen less within the United
States Involving America to around $18 for each hour, together with worker productivity way higher
in the United States, in accordance with U.S. Throughout all, German companies invested greater
than 800 billion?euros?in U.S. manufacturing sector last year alone.
BURGHAUSEN, Germany/GEISMAR, Louisiana Nestled within the green hills of southern
Germany,?chemical giant Wacker Chemie churns out a wide variety of?products, through an
ingredient?for chewing gum for the polysilicon crystals?in?solar?cells.
The goal?is?to create Europe's largest economy the leader in?tackling?climate change, and also to
show with other nations which a radical overhaul involving power markets?can happen?without too
much financial pain.
At its Geismar, Louisiana, plant, Huntsman is spending $78 million to boost production capacity
associated with methylene diphenyl diisocyanate (MDI), any chemical employed to make insulations
along along with other common consumer goods. Gulf Coast, executives said.
At?Huntsman, which in fact had 2013 revenues associated with $11.08 billion,?executives
have?begun paring down European output of simple chemicals, which typically have got small
margins. Gross Domestic product by 15 % since 2008, when fracking began to become popular