Behind the Markets by HARRY
STENERSON
Costs for n a t u r a l gas are h i g h e r a n d c h e m i c a l users m a y h a v e to c o m p e t e i n o p e n m a r k e t for s u p p l i e s . . . R e s e r v e s h a v e b e e n i n c r e a s e d to 160 t r i l l i o n c u . f e e l . . . M a r k e t s a g a i n r e f l e c t p r o d u c t i o n c o s t s TΗΕ new projects for making gasoline oxygenated chemicals from natural gas through Fischer-Tropsch modifica tions m a y have to enter the m a r k e t and compete with other consumers for their raw material. As a raw material, natural gas is low in cost, b u t not as low as it was during t h e war. T h e price range is approximately 3.5 to 9 cents per 1,000 cu.feet, depending upon t y p e of gas, location, t e r m of contract, a n d competitive conditions a t time of purchase. T h e contracts are long term, often r u n from two to five years. T h e supplier m a y be a large natural gas com pany, a small well operator, or a petroleum company whose properties provide a surplus of gas for sale in t h e open market. Largest users of t h e material (Table I), upon which a new and i m p o r t a n t chemical industry may be based in the future, are domestic (homes), commercial (business establishments), field (for aiding oil re covery), petroleum refineries (as fuel), carbon black, utility plants, natural gasoline and cycle plants, portland cement, various industrial, and mixed gas (with manufactured). M a n y of these consumers buy their gas on the basis of its B.t.u. content. T h e carbon black manufacturers would seek gas t h a t is high in propane. T h e idea t h a t sour gas (high in sulfur) is sought for carbon black production is not correct. When i t has t o be t a k e n , in t h e absence of better gas, t h e sulfur is removed. Sour gas has been available for this purpose f o r a s little as 3 cents and less per 1,000 cu. feet. The synthetic gasoline and chemical establishments in general m a y expect to p a y a price for gas t h a t is somewhere within the range now reported paid b y carbon black companies—3.5 to 7 cents—provided t h e r e is no additional rise in the m e a n t i m e a n d assuming t h a t t h e present scarcity does n o t become worse. Pipeline companies are usually in there bidding actively for supplies, a n d t h e gas t h e y ordinarily show no in terest in, low pressure o u t p u t which has to be p u m p e d , no longer has to look for buyers. For t h e synthine (or synthol) processes a natural gas should be "hydrocarbon as m u c h as possible," high in methane and low in such things as sulfur a n d helium. Sour gas will be taken, should it be neces sary, a n d t h e sulfur removed. N a t u r a l gas for fuel a n d chemical manufacture must b e a cheap source for hydrogen in V O L U M E
2 5,
NO.
35
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these processes, and t h e second raw m a terial, oxygen, must also b e low in cost. While high purity oxygen (99.5%) costs $3 to $20 per 1,000 cu. feet according t o quantity, the new i n d u s t r y can use a product which is under 9 5 % in purity and which will cost 4.8 to 5.0 cents per 1,000 cu. feet to produce at their own oxygen units. Despite wasteful practices in t h e use of and in t h e recovery of oil a n d gas t h e last report of the American Gas Association shows t h a t natural gas reserves in proved areas are now greater t h a n ever. At the s t a r t of 1946, recognized reserves were 148 trillion cu. feet, a n d during t h e 3rear 17 trillion were added through ex tensions, revisions, a n d new discoveries. Production of natural gas from known reserves was 5 trillion cu. feet, making t h e net gain for the year 12 trillion and the total reserves a t year-end, 160 trillion cu. feet. Rising
Sales
Volume
Sales of chemicals during t h e first half of 1947 showed an increase of 2 8 % over t h e same period last year, the Commerce D e p a r t m e n t revealed in reporting manufac turer sales. T h e chemical gain was some what less than for the nondurable class as a whole, which amounted t o 3 1 % . Notwithstan dingy chemical sales probably established new high records in m a n y categories, even exceeding the wartime peaks. Durable goods sales increased 6 6 % dur ing the first six months this year, and this
T a b l e T,
Natural Gas Consumption0
Millions of Consumer Class Cu. F t . Domestic 582,000 Commercial 224,000 industrial Field 860,000 Carbon black plants 370,000 280,000 Petroleum refineries 35.888 Portland cement plants 1,414,619 Other industrial Total consumption 3.706,207 Number of consumers Domestic 10,600 850 Commercial 42 Industrial Number of producing gas wells& 57,200 Value of gas produced (at wells) 3204,133,000 Average per M cubic feet in 5.4 eents c a Data taken from Minerals Yearbook, 1944, of the Bureau of Mines, U. S. Department of the Interior. b For 1943. Number of producing weLls in 1940 was 53,880. c Average per 1,000 r*u feet in 1940 was 4.5 cents.
SEPTEMBER
1,
1947
g r o u p contains s o me very large chemical consumers sucli SLS automobiles, metals, materials of construction, e t c . There a r e no indications o f any material setback either in chemicals or in industry generally for t h e rest of the ;year, a n d t h e r e probably will be none while s o many consumer need? remain unsatisfied. T o p p r o d u c t i o n rates for inorganic chemicals were reached during May, fol lowed by letdowns in June, J u l y , and prob ably August, due· l.-o vacations, materials, and transportation difficulties. Of" 35 major inorganic chemicals in t h e Census Bureau's J u n e report, 2 4 were produced in smaller volume t t i a n in M a y . September and the three m o n t h s following should witness s h a r p upturns in production. Alkali and Chlorine Up Rising production costs have forced a new advance in pr-icesfor caustic soda, soda ash, and c h l o r i n e , effective Oct. 1. New schedules issued fc>y the Solvay Sales Corp. showed t h a t caustic h a d been increased 25 to 30 cents p ^ r 10O l b . ; soda ash, 10 cents, and chlorine 25 c e n t s per 100 lb. As the costs problem is a general one for the industry, otîier alkali manufacturers 5 were expected t o take similar action following a study o f the costs-price situation. One producer indicated h e would issue a revised price schedule a b o u t Sept. 15. T h e new Solvay list now quotes 7 6 % solid caustic s o d a in d r u m s , carloads, at S2.85 per 100 l b . ; s o d a ash, 5 5 % light, carloads, bulk, $1.10; a n d liquid chlorine, single unit tank cars, a t $2.25 p e r 100 lb. Another manufacturer, American Cyanamid Co., mov-ed u p i t s quotation for phthalic anhydiride 3 c e n t s to 17.5 cents per lb. P h t h a l i c had previously been advanced b y Morxsanto Chemical. A long list o f vegetable a n d fish oils engaged i n a series of new price declines at mid-August. Included were linseed oil futures, cottonseed, coconut, p e a n u t , and soybean oils, a l s o menhaden and sardine oils. C o r n s i r u p advanced 4 0 cents per 100 lb., while silver m e t a l rose 3 cents per ounce. Other corn products naturally were higher, rerlectio.g sky-high prices for the grain. A n u p t u r n of 45 cents per 100 lb. took place in dextrin a n d starch, while tanner's corn sugar rose 4 0 cents. Export demands reaching principals in the New York "trade c o n t i n u e active, some of the m o r e urgent inquiries seeking alkalies, dyestuifs, solvents, t i t a n i u m dioxide, zinc oxides, ancl other pigments. Interest in dyes i s particularly keen, with orders emanating from many consuming countries which in formex years h a d been dependent upon G e r m a n y 2531
