[August 10, 2012]

Nexant Analyzes Impact of Future Shale Gas Production on Global Ethylene Markets

Nexant, Inc. today announced the release of a special report forecasting North American shale gas output and its effects on natural gas pricing and natural gas liquids production. This new Nexant report-North American Shale Gas: Opportunity or Threat for Global Ethylene Producers -examines the fall in natural gas prices and increase in gas liquids production that have been driven by dramatic increases in North American shale gas production over the past five years.

This increased production has been the primary driver for renewed profitability and growth in the North American petrochemical industry. Companies are now considering major capacity additions in the United States for the first time in decades. This is in response to rising margins and enhanced U.S. competitiveness due to attractively priced ethane relative to the cost of naphtha, the principal steam cracker feedstock in other major markets. Specifically, multiple brownfield capacity additions are being considered as well as several greenfield projects in the U.S. Gulf Coast and U.S. Northeast near the Marcellus shale gas resource.

These major capacity additions are being developed even though growth in North American demand for ethylee derivatives over the next five to ten years is not expected to be able to absorb more than minor increases in regional production.

Although the remarkable turnaround in the competitive position of the North American (NA) olefins industry has improved its prospects, its future remains subject to many new uncertainties. These include:

• Will currently low natural gas prices negatively impact future growth in NA shale gas production
• Will environmental concerns lead to new regulations that will limit NA shale gas production increases
• How will different NA shale gas production scenarios impact the availability of ethane as a petrochemical feedstock
• Which export markets will be able to absorb increased NA production of ethylene derivatives and which regions supplying these markets will be most impacted

In addressing these issues, the report builds on Nexant's extensive expertise in the area of shale gas production, North American NGL supply, petrochemical market dynamics, and regional competitiveness of ethylene production.

North American Shale Gas: Opportunity or Threat for Global Ethylene Producers is available immediately. For more information on this and other Nexant reports, please visit: http://www.chemsystems.com or contact John Boepple at [email protected].

ABOUT NEXANT

Nexant specializes in a broad range of advisory services to the global energy and chemicals sectors, including feasibility studies, mergers and acquisitions, and strategic planning. Nexant offers a comprehensive suite of best-in-class energy enterprise software designed to transform utility business processes and implement smart grid and energy conservation initiatives. Over the last decade, it has developed and commercialized technology solutions-such as iEnergy^TM, GRID360^TM, iHEDGE®, and RevenueManager®-enabling utilities, power producers, and retailers to operate and deploy new technologies and applications in the emerging grid. Operating from 32 offices in the U.S., Europe, the Middle East, Asia, and Africa, the company's team of industry professionals has completed more than 3,000 client assignments in over 100 countries, and its software operates in over 120 control centers at utilities worldwide. Its clients include major utilities, transmission and distribution system operators, chemical and petroleum majors, financial institutions, government agencies and Fortune 500 companies.

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