Shale Magic: SABIC, ExxonMobil break ground on US Gulf Coast petrochemical project

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SABIC, ExxonMobil break ground on US Gulf Coast petrochemical project

 

 

A joint venture of Saudi Arabian Basic Industries Corp. and ExxonMobil Corp. has started construction of the JV’s Gulf Coast Growth Ventures project, a 1.8 million-tonne/year ethane cracking complex in San Patricio County, Tex., near Corpus Christi.

 

 

A joint venture of Saudi Arabian Basic Industries Corp. (SABIC) and ExxonMobil Corp. has started construction of the JV’s Gulf Coast Growth Ventures (GCGV) project, a 1.8 million-tonne/year ethane cracking complex in San Patricio County, Tex., near Corpus Christi

A groundbreaking ceremony for the proposed project took place at the Texas construction site on Sept. 13, SABIC said on official Facebook account.

The ExxonMobil-SABIC JV received final environmental regulatory approval in June to proceed with construction of the GCGV project, which—alongside the ethane steam cracker and two polyethylene units—also will include a 1.1 million-tpy monoethylene glycol unit

Upon announcing regulatory approval, the JV also confirmed it has let engineering, procurement, and construction contracts for the GCGV project to John Wood Group PLC as well as a consortium of McDermott International Inc. and Turner Industries Group LLC (

Project approval follows ExxonMobil and SABIC’s 2018 formation of the 50-50 GCGV JV—under which ExxonMobil will act as site operator—and the April 2017 selection of the San Patricio County site, which will allow ExxonMobil and SABIC to take advantage of the region’s existing infrastructure to capture competitive pricing for US natural gas feedstock as well as access to rising demand for ethylene-based products in overseas export markets.

Alongside forming part of SABIC’s growth strategy to build petrochemical installations in key markets—including the Americas—to address industry demand and achieve the company’s 2025 strategy, the proposed multibillion GCGV project also is one of the developments included as part of ExxonMobil’s 10-year, $20-billion “Growing the Gulf” expansion initiative announced in early 2017.

 

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U.S. crude export demand surges after attack on Saudi facilities

 

 

https://finance.yahoo.com/news/u-crude-export-demand-surges-192816640.html

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In the last 12 months, a record volume of LNG projects reached final investment decision. These totaled more than 80 million tonnes/year of new production, or 25% of the current market, according to an outlook by McKinsey & Co.

According to the report, “Global Gas & LNG Outlook to 2035: H1 2019,” more than half of global natural gas supply growth until 2035 will be sourced from the US: 380 billion cu m (bcm) out of 635 bcm.

McKinsey’s report, released in September as part of its Energy Insights series, went on to note that China, South Asia, and Southeast Asia will account for 95% of global LNG demand growth through at least 2035. More than 100 LNG liquefaction projects totaling 1,100 million tpy are competing to fill a 125 million-tpy supply shortfall projected over that period. Only 1 in 10 of these will be competitive enough to reach FID, the consultancy said.

“We see abundance of supply, going forward,” McKinsey partner Dumitru Dediu told Oil & Gas Journal at Gastech 2019 in Houston. “We also see Qatar making progress towards FID. Demand continues to grow, but supply is likely to grow even faster. This creates a very difficult situation for suppliers trying to secure demand [in advance of FID].”

Dediu continued, “We don’t see the becoming easier, especially for single-source suppliers. The ones who will actually benefit most will be portfolio players, who can absorb the volumes while taking on and managing the risk.” LNG producers “can only find certainty in projects which can deliver into Asia at below $7/MMbtu,” he said.

Dediu divides LNG importing countries with potential interest in floating regasification into two categories: those replacing or supplementing their own production with LNG (Thailand, Pakistan) and therefore already having the support infrastructure in place and those where grid and other development is still needed. In the latter case, many opt for a direct gas-to-power option with the power then delivered through the electrical grid. Others, such as Brazil, position regasification near an already active industrial site and use the gas there. Either of these options requires engaging a broader spectrum of stakeholders than do new sales into more established LNG buyers.

On the liquefaction side, Dediu expects the modularization of processes undertaken for the Prelude floating LNG project offshore Australia to continue being adapted for both floating and land-based developments, citing nearshore gravity-based Arctic LNG 2 and Coral LNG prime examples. “Going forward, many of the pure floating solutions will be relatively expensive” leading to a mix of floating, nearshore, and gravity-based approaches made possible by the increased modularization.

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Motiva considers $3B petrochemical unit near Houston 

 

https://www.bizjournals.com/houston/news/2019/09/23/motiva-considers-3b-petrochemical-unit-near.html?ana=smartbrief

 

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Gulf Coast Express pipeline starts gas flow

The Gulf Coast Express (GCX) pipeline project has started full commercial operation on Sept. 25, says Kinder Morgan Inc. (KMI), the natural gas system’s builder and operator.

Sep 25th, 2019

The Gulf Coast Express (GCX) pipeline project has started full commercial operation on Sept. 25, says Kinder Morgan Inc. (KMI), the natural gas system’s builder and operator. Construction on the line began in early 2018 (OGJ Online, Jan. 3, 2018).

The pipeline will deliver gas from the Waha Hub near Coyanosa, Tex., in the Permian basin to Agua Dulce, Tex. The $1.7-billion project was originally expected to be online in October.

The GCX project mainline portion consists of 82 miles of 36-in. pipe and 365 miles of 42-in. pipe. The system’s 2-bcfd capacity is fully subscribed under long-term contracts, KMI said.

 

KMI subsidiary Kinder Morgan Texas Pipeline LLC holds 34% in the project. Equity holders include Altus Midstream Co., DCP Midstream LLC, and an affiliate of Targa Resources Corp.

 

 

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Enterprise Products Partners L.P. reported Thursday that it will build a second propane dehydrogenation (PDH) plant at its complex in Mont Belvieu, Texas.

The decision to build the “PDH 2” plant stems from recently executed long-term polymer grade propane (PGP) supply contracts between Enterprise and LyondellBasell Industries N.V.

“As we aim to meet the growing demand for our products, ensuring a long-term supply of feedstock is critical,” LyondellBasell CEO Bob Patel said in a written statement. “These agreements allow us to leverage Enterprise’s construction expertise, operating experience and robust network as we continue to deliver an outstanding value proposition for our customers.”

According to Enterprise, PDH 2 will consume up to 35,000 barrels per day (bpd) of propane to product up to 1.65 billion pounds per year of PGP. The company added that it has licensed Honeywell’s UOP Oleflex propane process to produce PGP.

“PGP is a primary petrochemical that can be converted into hundreds of products that improve the daily lives of people around the world,” stated A.J. “Jim” Teague, CEO of Enterprise’s general partner. “Demand growth for these propylene-based products is strong and PDH 2 will provide cost-advantaged supply assurance to our customers, enabling expansion of their downstream businesses to satisfy this global market.”

Enterprise also reported that it has negotiated terms with S&B Engineers and Constructors, Ltd. for a fixed-cost engineering, procurement and construction (EPC) contract to build PDH 2.

“With the combination of LyondellBasell as an anchor customer, our use of UOP’s Oleflex technology and S&B providing engineering and construction services, I am highly confident of a successful project that will grow Enterprise’s cash flow per unit and enhance the value of our partnership,” concluded Teague.

Enterprise expects PDH 2 to begin service during the first half of 2023.

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US shale and a glut of crude will prevent Saudi oil shock

Texas’ thriving oil production could be to thank for the world avoiding an economically crippling, triple-digit spike in crude prices following attacks on facilities in Saudi Arabia less than two weeks ago.

Fears of soaring prices and panic buying at petrol pumps failed to materialize, despite the temporary loss of 6% of the world’s supply from Saudi oil wells. Instead of an oil shock spiraling out of control after prices initially surged by a record 20%, crude was trading on Friday only fractionally higher than its $64/b year-to-date moving average.

 

Saudi Aramco can claim some of the credit for steadying the ship. The kingdom’s national oil company has pledged to restore its capacity to 11 million b/d by the end of the month, after losing half of its output following the attacks. Meanwhile, it will honor all of its contracts to supply customers with crude from existing stockpiles, while engineers try to rebuild bombed out facilities at Abqaiq and Khurais.

 

 

 

 

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Small-scale LNG

making market

inroads

Overshadowed by their bigger, more eye-catching counterparts,

small-scale LNG projects in fact make up the majority of US LNG

facilities.

 

 

 

https://plattsinfo.spglobal.com/rs/325-KYL-599/images/PL-APPEC_Insight_Small-scale-LNG-making-market-inroads.pdf?mkt_tok=eyJpIjoiTVdGa00yTTFNakkzTXpnMiIsInQiOiJodnI1YXNtelBrM3RubFhOTUY5U0RaNkkrRzdEeDViRlZWWjlCMGhsanFFa1NOQXZTZiswU3J0MndIaHhHclJ6YXI0V0VJeUtMZ2VTRFdmczVUc0UrNUdNS2hEdFFzSFwvNUJCYTlRVE5pZmQ0Nkcyekk3WGh5ZHNqV0x5QWxqVFcifQ%3D%3D

 

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Polyethylene investment still surging in North America

Posted on Oct 2, 2019

 

 

The investment in North American polyethylene (PE) has already resulted in the addition of over 4.5 million tonnes/year of new capacity since 2017. At least 30% of that new capacity is marked for export.

 

 

 

Sasol Lake Charles Chemicals Complex

Sasol’s 1.5 million tonne/year cracker in Lake Charles, Louisiana, began startup operations in July, but the company's new associated 420,000 tonne/year low density polyethylene (LDPE) plant was delayed.

The project will roughly triple the company's chemical production capacity in the U.S. but has experienced multiple cost and schedule overruns.

The estimate for the Lake Charles Chemicals Project (LCCP) is now $12.6-12.9 billion, including a contingency of $300 million, Sasol said in a stock exchange announcement in August 2019. Costs at the site have climbed from an initial projection of $9 billion. The challenges are a result of weather, engineering and staffing difficulties, Sasol said.

In February, the company announced that the cracker and derivative units would start up several months later than planned because of incomplete engineering work, inclement weather and worker absenteeism, after the cracker and a 470,000 tonne/year linear low density polyethylene (LLDPE) plant had been slated to start up by December 2018.

The LLDPE plant came online in February, followed by a 380,000 tonne/year ethylene oxide/monoethylene glycol unit in June.

Sasol in 2016 revised the project cost to $$11.1 billion from $9 billion because of issues with labor retention and other costs. Then in February pushed costs to $11.6 billion to $11.8 billion because of incomplete engineering work, bad weather and worker absenteeism. In May, overall costs climbed again.

The first of seven units started production earlier in 2019, and by second quarter 2019, Sasol said the complex was 96% complete. However, issues with a heat exchanger and the acetylene reactor system interrupted the planned start-up for some of the units.

The project will, once complete, boost the part of chemicals in Sasol’s sales mix to 70%. It’s one of two massive plants that it had planned in the U.S., but the second – a gas-to-liquids (GTL) operation –was abandoned during the oil-price crash.

LCCP was approved in 2014. Mechanical, electrical and instrumentation work began in 2016.

In 2015, Sasol announced its local contractors. Cajun Constructors Inc. and James Industrial Constructors were hired to do site work, including site preparation, piling and foundations. ISC Constructors LLC and MMR Constructors Inc. were contracted to perform electrical and instrumentation work. Turner Industries was hired to conduct mechanical, structural steel and piping work.

Fluor Technip Integrated of Texas was contracted as the primary engineering, procurement and construction (EPC) management contractor.

ExxonMobil – Beaumont, Texas

ExxonMobil announced in July it started production on a new PE line at its Beaumont plant.

The new high-performance line is part of an expansion that increases the PE plant's production capacity by 65% or 650,000 tons annually.

The capacity for the facility is now 1.7 million tonnes/year. The project supported 2,000 temporary jobs and will add 40 permanent jobs to the facility.

The expansion makes Texas the company's largest PE producer.

Zachry Group was originally hired to manage the project in 2016. Details of Zachry’s responsibilities include providing constructability and execution planning, electrical and instrumentation design, and direct-hire responsibilities for in-plant

LyondellBasell – La Porte

LyondellBasell is constructing its 500,000 tonne/year Hyperzone high density polyethylene (HDPE) project in La Porte, Texas. The project is slated for start-up by the end of 2019.

The La Porte Complex is one of LyondellBasell's largest manufacturing facilities spanning approximately 550 acres. The complex has two docks on the Houston Ship Channel and truck and rail transportation capabilities.

Once the Hyperzone PE plant is complete, the La Porte Complex will more than double its annual PE capacity to 2 billion pounds (900,000 tonnes).

Formosa – Point Comfort

Formosa Plastics is in the middle of a major production capacity expansion, which will add a third olefins unit, a propane dehydrogenation (PDH) unit, a LDPE resin plant, another HDPE resin plant and an additional polypropylene (PP) line.

The company said it intends to achieve steady state commercial operations at its two new PE plants in Point Comfort, Texas during the second half of 2019.

Its third olefins plant at Point Comfort is under construction, and gas feed is expected also in the second half of 2019. The cracker will have a capacity of 1.25 million tonnes/year.

For the PE plants, one will have a capacity of 400,000 tonnes/year of low-density PE (LDPE). The other will be able to produce both high density PE (HDPE) and linear low-density PE (LLDPE), with a combined capacity of 400,000 tonnes/year.

Total Borealis Nova – Bayport

Bayport Polymers (Baystar) - a 50/50 joint venture owned by Total and Novealis, itself a joint venture of Borealis AG and NOVA Chemicals announced the final investment decision to build a 625,000 tonne/year polyethylene unit at its production site in Bayport, Texas.

The JV started construction of the Borstar Bay3 project earlier this year. The unit is scheduled for start up in 2021.

The contract for the engineering, procurement and construction was awarded to McDermott and is expected to employ 1,750 staff during peak activity.

The $1.7-billion ethane steam cracker—which will supply feedstock both for Baystar’s existing 400,000-tonne/year PE unit as well as the new Borstar unit—remains on schedule for commissioning in late 2020.

Nova Chemicals -Canada

Nova Chemicals, the Calgary-headquartered company, owned by the Emirate of Abu Dhabi, is also busy advancing work in its new Rokeby Site, in Sarnia-Lambton, Ontario, located with access not just to Canada’s markets but also to the north-central U.S. The project is within 65 miles of Detroit.

Piling work began in the fall. Work in the past year has included new roadways and parking lot construction. Nova bought in 1988 the Corunna petrochemical facilities, located next to the Rokeby construction site.

The project involves adding capacity of approximately one billion pounds of PE per year by the end of 2021. Work includes a cracker expansion to increase the existing unit’s current ethylene capacity by more than 50 percent.

Shell Pennsylvania

Shell Chemical has installed most of the major components of its new plant in Beaver County, Pennsylvania. Roughly 5,000 workers are on site building the plant now, and up to 6,000 are expected to be on site by year end. Work is expected to take another 18 months to complete, an executive told the local television station WKBN 27.

The Shell cracker is the first major U.S. major petrochemical complex outside of the U.S. Gulf in more than 30 years.

The plant sits on more than 300 acres bounded by I-376 and the Ohio River, where barge traffic can be seen bringing equipment for the plant that was too large to get there any other way.

The plant’s supply chain has access to highway, rail lines and the river.

The plant also sits near the center of the Marcellus Shale natural gas play for its upstream resources, as well as a big chunk of Shell’s potential customer base.

The plant will eventually hire about 600 operators, engineers and safety and environmental workers. Bechtel is the project manager for the Shell Chemicals plant.

 

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The big change that's about to happen at the Shell construction site

 

 

https://www.bizjournals.com/pittsburgh/news/2019/10/01/the-big-change-thats-about-to-happen-at-the-shell.html?ana=smartbrief

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Which company is doing the Engineering/Procurement/Construction on this project? 

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On 10/8/2019 at 9:07 AM, Bobby P said:

Which company is doing the Engineering/Procurement/Construction on this project? 

https://www.shell.com/about-us/major-projects/pennsylvania-petrochemicals-complex.html

 

 

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On 10/8/2019 at 9:07 AM, Bobby P said:

Which company is doing the Engineering/Procurement/Construction on this project? 

https://www.pabusinesscentral.com/articles/shell-cracker-plant-is-now-one-year-into-its-main-works-construction-phase/

https://www.bizjournals.com/pittsburgh/news/2019/06/20/bechtel-wins-contract-for-ptt-global-cracker.html

 

https://www.bechtel.com/projects/pennsylvania-chemicals/

 

https://brayman.com/projects/shell-cracker-plant/

 

 

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Sur de Texas flows reach record high, shifting US, Mexico gas balance

 

Mexico deliveries from pipeline hit 750 MMcf/d Friday

US supply displaces domestic gas, activates latent demand

 

 

Transmission volumes on the Sur de Texas-Tuxpan Pipeline climbed to a record high late last week as the cross-border route continues to move more South Texas gas supply into central Mexico.

 

Deliveries Friday from the new pipeline climbed to their highest yet at 750 MMcf/d.

Since entering commercial service September 17, supply delivered to Mexico on Sur de Texas has averaged about 580 MMcf/d. Deliveries from the pipeline Tuesday were estimated at roughly 640 MMcf/d, the most recently available S&P Global Platts Analytics data showed.

Now the largest cross-border pipeline in operation, the 2.6 Bcf/d Sur de Texas route has already begun affecting supply-demand dynamics, both inside Mexico and in the South Texas gas market.

 

According to Platts Analytics, that additional supply in central Mexico has actually activated latent demand from industry and power generators, which has grown about 200 MMcf/d since Sur de Texas entered service. In southern Mexico, demand has grown about 100 MMcf/d over the same period.

SOUTH TEXAS

In South Texas, the near-simultaneous startup of Kinder Morgan's 2 Bcf/d Gulf Coast Express -- an intrastate pipeline not required to report flow volumes publicly -- has largely obfuscated the market impact of Sur de Texas exports.

One clear result of the pipeline's startup, though, has been the displacement of export volumes on other pipelines -- most notably NET Mexico.

 

 

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Shale-fueled US plastics boom puts spotlight on sustainability

Virgin plastic production is thriving in the US, fueled by the North American shale boom. But the reversal of fortune for the US chemical industry has highlighted a bigger challenge amid widespread concern about plastic waste and sustainability.

The growth of shale activity across the US unearthed ethane feedstock so cheap that a region that had been facing naphtha-fed plant shutdowns and petrochemical imports saw the cost advantage of home-fracked gas shaping its future as a global petrochemical supplier.

 

As such, the focus has overwhelmingly been on ethane-fed crackers and derivative polyethylene (PE), the resin used to make the most-used plastics in the world, and less on how to deal with the plastics they produce after use.

Companies are stepping up their efforts in recycled plastics, most notably with the Alliance to End Plastic Waste, to which dozens of companies have committed more than $1 billion to find solutions to the plastic waste problem.

While petrochemical giants like Dow, BASF, LyondellBasell, Sabic, Braskem, Sinopec, Sasol and Reliance Industries are among the alliance’s members, most efforts in the US focus on research and funding.

Production is still mainly virgin plastics, with inclusion of recycled resin in new plastic products being pushed by resin buyers.  And resin producers face the same key challenge as their counterparts in other regions, of sourcing enough high-quality plastic waste as a feedstock.

New ethylene, PE capacity

Fourteen new ethane crackers that are operational, under construction or planned from 2017 beyond 2020 will add nearly 18.5 million mt/year, or 52%, more US ethylene capacity, while 28 new PE plants starting up or planned in the same span will increase capacity by nearly 60%, or 13.67 million mt/year.

Other derivatives are accompanying some of the new crackers, such as monoethylene glycol or alcohols units, and a new polypropylene plant under construction. The companies that went all in on these projects include the biggest global names in petrochemicals: Dow, ExxonMobil, Chevron Phillips Chemical, LyondellBasell, Formosa Plastics USA, Sasol and Ineos.

US PET imports

The US is a net importer of PET, having received more than 2.2 million mt overall in 2018. Mexico was by far the top source, followed by Canada and Thailand.

 

Yet despite the growth in virgin plastic production, Indorama, one of the New Plastics Economy signatories, has been progressing in making recycling a key part of its future business model.

Indorama largely bypassed the cracker/polyethylene rush, except for refurbishing a long-mothballed Louisiana cracker to feed its own operations.

The world’s largest polyethylene terephthalate (PET) company instead doubled down on its forte, increasing its reach with the 100% recyclable and most-recycled plastic in the world used to make beverage bottles, polyester fibers and increasingly other plastics.

“All our customers are in touch with us and demanding that we improve and increase the recycling content in our PET. We’re allocating a budget of $1 billion to recycling so that by 2025, when the brand owners want 25% content in the packaging, [Indorama Ventures] would be able to deliver them,” said CEO Aloke Lohia, during an August conference call with investors.

The company has been actively making deals and forging partnerships aimed at increasing its own integrated recycling capabilities to provide recycled PET to customers who use it to make bottles, fibers and other products.

Those include its acquisition of Wellman International in 2011, which had two bottle washing facilities and a fiber plant that used recycled bottles flake as its primary feedstock.

The company has more recently added greenfield bottle washing capacities in Thailand and Mexico and acquired two other PET recycling companies: in 2018, Sorepla in France, and this year Custom Polymers in Alabama.

The Alabama facility processes post-consumer and post-industrial PET by grinding, washing and turning the plastic into pellets so it can be used as a feedstock for food-grade packaging and other end uses.

Closing the loop

Indorama also last year announced a joint venture with Canada’s Loop Industries to manufacture and commercialize sustainable polyester resin for beverage and consumer packaged goods companies.

The venture aims to “perpetually recycle” increasing amounts of PET plastic and polyester fiber, using Loop’s technology, with commercial production of 100% sustainably produced PET resin and polyester fiber targeted for the first quarter of 2020.

Lohia said during the August call that Indorama’s customers want PET to remain their main packaging choice, and the company sees more plastic packaging diverting to PET from other resins because PET is easier to recycle. For example, PET is being used to package more orange juice and make other non-beverage containers, like shampoo bottles, which would traditionally be made with polyethylene.

“That is good news for us. We just have to ensure we can deliver 25% recycled content,” he said.

For all these efforts, however, the US faces the same issue as Europe: collection rates.

Edmund Ingle, CEO of Indorama’s recycling segment, said that about 20 million mt of PET resin is sold into global packaging markets, and about 55% to 57% of that is recycled. In the US, the collection rate is much lower, about 28% to 30%, he said.

Ingle also said that in the next two to three years there will be a shortage of recycled PET due to a lack of extrusion and solid state polycondensation (SSP) capacity to turn PET flakes, which have been sorted, washed and ground from waste bottles, into recycled PET resin suitable for direct contact with food. Extrusion involves melting raw plastic, and SSP of PET flakes increases the weight of and purifies recycled PET so it can be used to make packaging for food and beverages.

Drinks bottles are commonly made from PET, but Indorama sees the plastic being used for more and more types of packaging due to ease of recycling.

Alpek, which owns US PET producer DAK Americas, is also working to increase its recycling capacity, under similar customer pressure to increase recycled PET content in its products. In the first quarter of 2019 Alpek acquired a 45,000 mt/year PET recycling plant in Indiana, adding to its fiber PET recycling operation in North Carolina and a food-grade PET recycling facility in Argentina.

However, Alpek CEO Jose de Jesus Valdez said during the company’s quarterly earnings call in July that the key for a circular economy is to improve the collection rate and ability to sell recycled PET at a price similar to that of virgin PET, which currently is significantly cheaper.

“A lot of bottles are not recovered, particularly in North America… Improving collection is going to be important so that we can increase our offer of recycled products,” he said.

Indorama has such technologies and is working to grow them. Ingle also noted that the cost of recycling remains a challenge, particularly with the poor quality of inputs from curbside collections. When that material is collected, it goes to a material recovery facility (MRF) to be sorted into different commodities, including PET, then baled and sold.

Some items cannot be recycled, such as small plastics like straws and packaging for mascara or toothbrushes that can get caught up in recycling machinery.

Plastic grocery bags can be recycled, as long as they are collected in bulk – a few tossed in a curbside bin can, like smaller plastics, get caught up in recycling equipment. Even PET bales made up of bottles that came from curbside bins can be of poor quality, Ingle said.

“However, the technology has advanced rapidly in the recent years, and allows companies with the latest equipment to sort more PET out of a bale, and thus improve yields and margins,” he said.

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ExxonMobil scouting for potential cracker site in Beaver County

 

ExxonMobil Corp. has been quietly scouting Beaver County for a suitable location to build a petrochemical plant that could pursue the same kinds of plastics manufacturing as Royal Dutch Shell's ethane cracker now under construction, multiple sources have told the Pittsburgh Business Times.

ExxonMobil (NYSE: XOM), one of the world's largest companies, is well-known as an oil producer, but it, like Royal Dutch Shell (NYSE: RDS.A) and other multinational oil and gas companies, also has a petrochemical division to convert fossil fuel byproducts like ethane and propane to plastics. Sources said that ExxonMobil has been looking at Appalachia for a potential petrochemical plant for the past three or four years, spurred by Shell's construction in Beaver County as well as other potential crackers by PTT Global Chemical in Belmont County, Ohio, and Braskem near Parkersburg, West Virginia.

Sources told the Business Times that while ExxonMobil seemed to have cooled on the plans since then, recently plans started heating up again. Brokers representing the company were in Beaver County last week, talking about a potential petrochemical plant to serve its customers.

One source familiar with ExxonMobil's search, a major land owner in the Beaver County area, said a broker offered the basic parameters of its site requirements in the region. Another source told the Business Times that at least one site in Beaver County had been visited.

ExxonMobil, one source said, seeks in the range of 240 acres along the river — land that's flat or can be made flat, with river access, with the need for environmental remediation of a site acceptable. The source indicated that ExxonMobil was working to narrow its options down to three sites — it's unclear whether all three sites are in Beaver County — and that it hopes to secure a site in the region by the end of the year.

It's likely that ExxonMobil would be looking at building a petrochemical plant along the lines of the Shell polyethylene facility in Potter Township. But a source said ExxonMobil may not use ethane as feedstock for its plant. There's also no guarantee that western Pennsylvania is the only potential location for Exxon; there are other sites in West Virginia and Ohio that also could host a petrochemical facility, including the Parkersburg site that Braskem recently pulled out of in West Virginia.

 

 

 

ExxonMobil didn't respond to a direct question on whether it had been looking in Beaver County.

"ExxonMobile continuously evaluates its global portfolio of businesses, depending upon fit with its overall strategic business objectives," an ExxonMobil spokeswoman emailed. "We have a range of existing and new petrochemical investments along the U.S. Gulf Coast. These are covered by ExxonMobile's Growing the Gulf initiative."

ExxonMobil in 2018 opened a 1.5 million-ton-a-year ethane cracker in Baytown, Texas, that is similar in size and scope to the ethane cracker that Shell Chemical Co. is building in Potter Township, Beaver County. And in June 2019, ExxonMobil and Saudi petrochemical company SABIC announced plans to build an even bigger ethane cracker in San Patricio County, Texas.

There's no guarantee that ExxonMobil will eventually build a petrochemical plant in Beaver County or elsewhere in Appalachia. But a multinational company taking another look at building a cracker here would be a big shot in the arm to a burgeoning petrochemical industry that got a home run with Shell's decision but hasn't yet gotten the follow-on investment that had been expected in the wake of the first cracker.

Shell's decision in June 2016 to go ahead in Beaver County led industry and economic development officials to market Appalachia in general and southwestern Pennsylvania in particular as prime for investment in the chemical industry. Local and state development officials have spent a lot of time trying to market a sometimes-wary petrochemical industry at the benefits of following Shell's lead. A 2017 IHS Markit study, commissioned by the Wolf administration and the TeamPA Foundation, estimated there's enough natural gas liquids to source four more plastics manufacturing plants in the region.

   

 

And the Trump administration has supported such plans, including considering a loan application by Appalachian Development Group to put a large-scale natural gas liquids storage facility and trading hub in either West Virginia, Ohio or Pennsylvania. That storage hub would be crucial to plans to build any more crackers because, while the ethane and propane are available, there needs to be a place to put it before use. Shell is using a long pipeline system for just-in-time manufacturing, with only three days of supply on hand when its cracker gets up and running early next decade. But most other crackers would need a storage system for the vast amount of raw material needed to feed a petrochemical plant.

Energy Secretary Rick Perry told the Business Times in August that there should be a strong petrochemical industry in Appalachia not only for economic development, but also protection from natural disasters along the hurricane-prone Gulf Coast where the major petrochemical plants are built.

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North America to spend $27bn on refining projects

Posted on Oct 16, 2019

 

 

Diversification into new revenue streams such as petrochemicals and export markets as refiners seek additional profit margins is keeping the short-term outlook for refining project spending healthy, according to an analysis by Industrial Information Resources (Industrial Info).

 

 

The North America refining project outlook has been healthy for some time and this trend looks set to continue in the near term.

Current active capex project pipeline projects at planning and engineering stage are estimated at $35 billion in North America, Industrial Info said.

Looking ahead, there will be some softening, but growth overall continues. 

North America Refining Projects Outlook

Looking ahead, North America could have up to $27.7 billion in refining projects with a kickoff start date of 2021 to 2022, Industrial Info said in its Global Refining Project Outlook presentation.

While grassroots spending represents 46% of the total projected spend, the project probability for these types remains low, Chris Paschall, Vice President of Research, Global Oil and Gas and Petroleum Refining said.

Of these, there are eight grassroots projects totaling $12.7 billion. One of these has already started site prep but still looking to secure final funds, Paschall said.

Crude diet flexibility to reduce feedstock costs is driving plant expansion activity, he said.

While spending to meet the ultra-low sulphur mandate has slowed down, compliance with the IMO 2020 regulation is spurring investments in coker and cat project announcements. 

Some projects related to IMO 2020 continue to be in construction or are even in the planning stage.

Nearly $7.5 billion of the projected $27.7 billion total would be for unit additions. These are projects adding brand new crude and auxiliary units at existing plants.

$2.5 billion would be plant expansions. This includes projects expanding capacity at both crude and auxiliary unit, plus the balance of the plant.

Other in-plant capex projects not adding any new capacity will total $2.5 billion as well.

Maintenance and turnaround projects are expected to total around 381 projects and valued at $2.5 billion as well. The maintenance forecast increases in 2020 over one year ago levels.

Reasons for investment

North America will continue to upgrade and improve existing infrastructure as it has the highest number of refineries of any region.

Midwest refiners’ margins are the healthiest of other regions because of the light, sweet crude processed in the U.S. which is cheaper than other types of crude, as well as higher prices earned for refined products.

West Texas Intermediate (WTI) oil has continued to outpace margins in other regions. In addition, U.S. refining margins remain high supported by tight product markets as a result of extended turnaround activity and unplanned outages earlier this year.

Singapore margins have recovered as a result of outages in the region but remain the worst performing of the global hubs. European cracking margins remain firm due to lower activity in the region.

Meanwhile in the U.S., there continues to be support for additional projects because gasoline and diesel demand remains stable and the export market is strong where a lot of U.S. Gulf Coast refiners are shipping into Latin America and some into Europe, Paschall said.

Demand outlook

Looking out farther toward 2030 to 2040, Industrial Info still sees refined product growing but in different areas. Gasoline demand will continue to increase in the short term with more autos on the road globally, but it starts to slow down around 2035 much slower rate.

Diesel demand continues to rise. More diesel vehicles will be on the road making this refined product a growth engine for the next 20 years.

Residual fuel oil demand will start to reverse. This is largely attributed to power plants switching to run on natural gas instead of bunker oil because of cost.

For now, U.S. gasoline demand set a record in July 2019; at 9.928 million bbl/day, which was the highest since 1991, Paschall noted.

Meanwhile, the U.S. continues to produce a lot of oil and exports about 3 million bbl/day and about 5 million bbl/day day of refined products. Exports into Latin America are expected to remain healthy.

Global refining projects outlook

North America is ranked fourth in terms of projected refining project spending behind various areas of Asia and Africa.

Western Asia has the highest ranking spend outlook at $78.2 billion which is attributed to growth in the Middle East. South Asia has the second highest spend outlook with $76.2 billion and Africa is the third highest with $75.8 billion in projects.

Grassroots spending remains dominant in the spending outlook, but Industrial Info expects this will slow down as worldwide global growth forecast projection drops.

More efficient vehicle fleets will continue to have an impact on gasoline demand in the future but will be offset by growth in the petrochemical and diesel markets.

Globally there are currently 653 projects under construction with a total investment value of more than $100 billion. This is down from more than 700 last year as project realization declines have been seen in Asia and Russia.

Projects continue to be announced but probability of all going through is unlikely as the supply-demand situation is becoming unbalanced.

Crude oil stocks rose by 7.4 mb/day May to 1,141 mb/day, the highest level since November 2017.

Global refining rates decreased by 0.7 mb/day in the second quarter of 2019 compared with a year earlier, the largest annual decline in over 10 years.

“I think the market will have a tough time absorbing a lot of this capacity that comes onto the market so I think a lot of these announced projects may have lower probability especially as you look further into the future. Even if some get started, there may be problems securing funding for completing these multi-billion-dollar projects,” Paschall said.

“Trying to get banks or even finance themselves could be challenging in this market. At the end of the day, we don’t need it (excess supply). Demand will not be robust enough to absorb all this (announced capacity),” Paschall said.

Industrial Info estimates there are more than 3,000 active projects at the planning or engineering stage for a kickoff of 2020-2021. These projects are valued at $274 billion.