The Declining Significance of the Petrochemical Industry in Louisiana 2

Table of Contents

• Figures 3
• Tables 3
• Key Findings 4
• Executive Summary 5
• Background 7
• Figure 1: Map of Louisiana Parishes 8
• Table 1: Selected Companies, Investments in and Tax Exemptions for Petrochemical Projects (2010-2024)18F 11
• Table 2: Type and Value of Chemicals Investments in Louisiana since 201019F 13
• Louisiana Needs to Build a Stronger Economy 14
• Household Income in Louisiana 14
• Figure 2: Personal Income Composition 15
• Louisiana Demographics: Race and Health 15
• Figure 3: Louisiana Racial Demographics, 2023 15
• Table 3: Ethylene Crackers in Louisiana 16
• The Oil, Gas and Petrochemical Industry is Not the Top Economic-Growth Driver in Louisiana That It Once Was 17
• Figure 4: Share of Louisiana GDP from Oil and Gas Extraction and Fossil Fuel Manufacturing31F 18
• Figure 5: Louisiana Economy as a Percentage of United States GDP 35F 18
• Figure 6: Louisiana Gross Domestic Product Composition43F 19
• Figure 7: Mining, Quarrying and Oil and Gas as a Percentage of Total Louisiana State GDP44F 20
• Figure 8: Louisiana Oil Production45F 21
• Figure 9: Louisiana State Budget and Mineral Revenues46F 22
• Source: Mineral Revenues in Louisiana. LSU Center for Energy Studies. 22
• The Louisiana Energy Sector, Once a Long-Standing Employment Engine, Now Faces Job Losses 23
• Figure 10: Energy Employment in Louisiana, 1970-2018 23
• Figure 11: Mining, Quarrying & Oil/Gas Extraction Jobs as Percentage of Employment in Louisiana (1997-21)53F 24
• Louisiana Cannot Rely on the Petrochemical and Oil-and-Gas Sector for Robust Growth: The Sector is Fraught with Increasing Risk 25
• Risks in Louisiana’s Ethylene and Methanol Markets 31
• Ethylene’s Central Role in the U.S. Petrochemical Industry Makes It a Useful Bellwether for the State of the Industry—and the Warnings for Louisiana Should Be Heeded 31
• Globally and nationally, the capacity growth rate for ethylene is slowing, generating uncertainty for local proposed projects 33
• Table 4: Ethylene Actual and Projected Capacity: United States, China and Rest of World (2010 to 2050)97F 33
• Louisiana Ethylene Capacity Faces Under-Utilization 34
• Figure 12: Global Installed Capacity and Operating Utilization Rates102F 35
• Producing Methanol From Fossil Fuels in Louisiana is Not a Good Bet 38
• Figure 13: Methanol Uses, 2020112F 39
• Existing uses of methanol are facing challenges 39
• Table 5: Principal Current Uses of Methanol, Percentage of Market Share and Emerging Alternatives 40
• The role of renewable methanol is uncertain 40
• Methanol by the Numbers: Global, United States and Louisiana 42
• Table 6: Methanol Capacity Trends 2014-2029 with Growth Rates for 2014-2023 and 2023-2029125F 42
• Table 7: Speculative Industry Capacity Additions to Louisiana Methanol Market through 2030127F 43
• Louisiana Methanol Analysis 44
• Figure 14: NAM Cash Costs vs. NEA Spot Prices132F 45
• Petrochemical Policy Priorities in a Time of Shrinking Markets: Federal/State Incentives Are Not Well-Designed to Promote Clean Industry or Local Fiscal Health136F 46
• State and Local Tax Breaks 47
• Federal Tax Breaks 47
• Planning for a Just Energy Alternative 49
• Conclusion 51
• Appendix I: 2020 Existing Capacity, Plus 2030 Louisiana Expansion and 2030 Industry Projection without Louisiana Expansion 52
• Appendix II: Background on the Petrochemical Industry 53
• Appendix III: Ten-Year Tax Relief Calculation 55
• About IEEFA 57
• About the Authors 57
• Tom Sanzillo 57
• Suzanne Mattei 57
• Abhishek Sinha 57