takes hold in the Northern Hemisphere, demand for energy in
various forms increases. In looking back over the past 90
years, energy demand and pricing cycle through high and low
points. In 2008, many economists commented that the global
slowdown reflected the same conditions as the early 1980s.
However, the waves of change continue to roll
through due to numerous interconnected events. In this
months HPInsight, economic downturns appear to
follow a 10-year cycle, judging from the headlines. Closure of
refining and petrochemical capacity is not a new
development. Headlines regarding plant shutdowns or
mothballing occurred more often than we typically
recall. Remembering and learning from the past will support
better decision-making going forward.
Headlines from Hydrocarbon Processing, August
Central Asia emerging as a potential global energy
supplier. This regions energy resources are
concentrated in countries surrounding the Caspian Sea.
Kazakhstan and Azerbaijan together account for 92% of the
regions total oil reserves. Although Central Asia
accounts for only 2% of the worlds proven resources, this
region has a great potential for natural
gas reserves. It will be some time before long-distance
pipelines will bring Central Asias gas exports to China.
Accordingly, Central Asias nearest target for energy
exports will be Eastern Europe and Russia.
EU chemical industry fighting back. The
European Unions (EUs) chemical industry is
experiencing a slow recovery following a difficult year in
2001. The regional industry sees a mixed picture. Japan shows
no sign of economic recovery. In the US, the chemical industry
should increase in 2003. For the EU, the chemical industry
should increase 2% in 2002 and 3% in 2003. The polyolefins
industry will have a better year as compared to other
Oil industry and IT: Lessons learned. The
US stock market has been hit by a triple whammy. The first
shock was the abrupt and shocking meltdown in the technology sector. The second is the
global recession, followed by the third blow, financial
finagling at many firmsall reducing investor confidence
in the markets. According to analysts, the tech
boom is remarkably similar to the oil boom
and bust from the 1970s and 1980s. Over the past two
decades, enormous resourcestime, money and
manpowerhave been absorbed by technology and
financial engineering segments of the global
economy. Fluctuating oil prices have created waves due to
highly volatile business conditions. In the end, it will be a
battle of business designs (or models), and there will be three
major survivorsvertically integrated full-service
providers, low-cost producers and specialty firms that feed the
Headlines from Hydrocarbon Processing, August
European energy outlook. Nominal crude oil
prices will probably reach $32.20/bbl by 2000 and $62.70/bbl in
2010 in a report by DRI, London, UK. This report also forecasts
that gasoline demand will expand slightly. DRI notes that
diesel demand by freight transport and the expanding population
of diesel-powered automobiles will also increase over the next
Clunker trade-in program aims to cut air
pollution. The US Office of Technology Assessment (OTA) has
reviewed a new program offered by the Environmental Protection
Agency (EPA) to reduce air pollution and gasoline consumption.
The new method focuses on paying owners of 1971 and earlier
cars to scrap the autos for cash. A pilot program
operated by Unocal in the Los Angeles, California, area was
successful in removing older vehicles. However, OTA concedes
that such a program should be treated as an experimental option
and carefully monitored.
Olefin demand to increase. Higher olefin
demand will grow 5.8%/yr from 19902000 according to a new
report by Chem Systems. On a global basis, about 41% of the
alphaolefins are consumed by polymers, largely for
linear-low-density polyethylene production and detergents.
Global consumption of alphaolefins was 1.5 million metric tons
Headlines from Hydrocarbon Processing, August
Refinery mothballing may
have peaked. HP editors believe no more
significant refining capacity in the US or Europe will be
shutdown. Even with the shutdowns, US distillation capacity increased 2.5%
in 1982, with 20 refinery projects adding 455,000 bpd to the
distillation capacity of 18.3 million bpd, according to the
API. Meanwhile, existing capacity is operating at 70%
Long-term outlook by economist. According
to Merrill Lynch Economics Inc.s 1982 to 1992 forecast,
change is expected:
- The large overhang of excess OPEC capacity, combined with
non-OPEC production, will limit crude oil prices. Over the
next 10 years, oil prices should only increase about 6% to
- Natural gas prices are expected to be decontrolled by
1985. Wellhead prices should increase about 25% to
- Free-world petroleum demand is projected to increase 1%/yr, with
US demand growing 0.5%/yr.
- Demand for electricity will increase 2.7%/yr through
1992. Coal and nuclear energy will be used to meet future
Headlines from Hydrocarbon Processing, August
Dont use natural gas to produce
electricity is the advice from the Gas Appliance
Manufacturers Association. About 16% to 28% of the electricity
generated in the US is provided by natural-gas fired steam boilers. With a gas shortage, the
association recommends directing natural
gas to higher-form applications.
Coal-gas plant involves 11 HPI companies.
Cities Services Gas, Peabody Coal, and Transcontinental Gas
Pipe Line are among the 11 companies to participate with the
Conoco Methanation Co. in constructing the worlds first
commercial-scale methanation of the coal-gas
process. Conoco will design and construct the facilities. The methanation plant
will be built at the Scottish Gas Boards Westfield coal
field, and it is estimated to be operational by the summer of
imports will reach 250 billion cubic feet (cf) per
year by 1975, according to the Institute of Gas Technology. By 1980, LNG
imports are forecast to increase to 1 trillion cf (tcf) and 1.6
tcf by 1985.
production operations will begin at Enjays
butadiene facility in Baton Rouge, Louisiana.
Headlines from Hydrocarbon Processing and
Petroleum Refiner, August 1962
Eugene Houdry dies in Pennsylvania
hospital, leaving Carbon P. Dubbs, 81, as the sole survivor of
the Refining Hall of Fame (HP/PR, January
Report on US refineries. On January 1,
1962, there were 311 refineries in the US, with 24 refineries
shut down. Total US refining capacity, according to the Bureau
of Mines, is 10 million bpd; only 9.4 million bpd of distillation capacity is in
German refining capacity okay.
The German refining industry is being carefully watched by top
coal, oil and government representatives. The group is studying
future expansions of Germanys
refining industry. At present, Germanys refining capacity is not excessive.
Germany imported more than 8 million tons of refined products
in 1961. Oils share of total energy consumption in
Germany is not excessive compared to other industrialized
nations. Coal accounts for 70% of heavy and light heating,
while oil is only 6% of the heating market.
Mobile computers gain interest.
Trailer-mounted computers are the center of attention with
Phillips Petroleum. The company has leased another unit from a
prominent computer manufacturer. Phillips has been using its
own company-built mobile computer unit for several years. The
newly commissioned unit is housed in a 40-ft instrument trailer
and uses digital-control computers to handle special
measurements, data logging, analysis, etc., for several
Shortage of engineering manpower. If more
young people do not enter engineering programs over the next 10
years, there will be a shortage of engineers. A new study on
the hiring plans of companies and government agencies indicated
that demand for trained engineers will increase about 20%. By
1971, demand for engineers will increase 45% from present
General view of the operator control panel and
typewriter output station on the IBM computer
control system for the Standard Oil Co. of
Californias FCC unit at its El Segundo
refinery. Hydrocarbon Processing and
Petroleum Refiner 1964.
Headlines from Petroleum Refiner, August
Anglo-Iranians Antwerp refinery officially
opens. The Prime Minister of Belgium, M. Van Houtte,
officially opened the new 440,000-bpd refinery built at Antwerp
by Compagnie Financiere Belge des Petroles S.A. (Petrofina) and
the Anglo-Iranian Oil Co. Costs for the new refinery are about $28 million.
US oil nearly $40 billion industry. By the
end of 1952, the US petroleum industry will have a gross
investment of $40 billion. The estimate includes heavy capital
expenditures scheduled for this year. By the end of 1951,
capital investment for the US oil industry was $36 billion. The
postwar investments will almost double the capital investment
in just seven years.
Dow Chemical announces new ethylene plant.
The Dow Chemical Co., which recently completed a $3.48 million
butadiene facility, is planning to construct a $6.7 million
ethylene plant at its Freeport, Texas, complex. The two Dow projects are part of a $175 million
expansion earlier. Construction of the ethylene unit
should be complete by 1954.
Workers are putting finishing touches to the
new fluid catalytic cracking (FCC) unit and gas
recovery facility at Gulf Oil Corp.s Port
Texas, refinery. The M. W. Kellogg Co.
designed and constructed the 70,000-bpd
FCC unit. Petroleum Refiner 1951.
Workers are ready to ignite a tank containing
100,000 gallons of kerosine as part of tests
conducted at the Olean Refinery of Socony-
Vacuum Oil Co., Inc. Petroleum Refiner
Row of high-pressure compressors used at
Carbide and Carbon Chemicals Co.s South
Charleston, West Virginia polyethylene plant.
Petroleum Refiner, March 1955.
Construction continues for the fractionating
tower, crude-oil furnaces and control room at
Vacuum Oil Co. Pty. Ltd.s 1,200-bpd
at Altona, near Melbourne, Australia.
Petroleum Refiner 1956.
Headlines from Petroleum Refiner, August 1942
Controversy swirls on best method to produce
butadiene. Controversy and confusion continue within
the synthetic rubber (SR) program. At the heart of the issue is
selecting the best method to increase butadiene supplies.
Claims by rival processes have injected new concerns.
Supporters of the Houdry catalytic process are publicly
advertising a more cost-efficient method to produce butadiene
by charging butane to the catalytic unit. The Houdry method
eliminates the dehydrogenation step required by the Standard
Oil of New Jersey catalytic process. Several companies have
requested waivers to use the Houdry process for butadiene
production but have been refused allocation of materials by the
Petroleum Coordinator for War Office.
Gasoline stocks in short supply. High
gasoline stocks that menaced the market a few months earlier
are quickly being dissipated as the petroleum industry moves to
meet new conditions from the war.
Name change. Entering its 21st year,
The Refiner and Natural Gasoline Manufacturer has
changed its name to Petroleum Refiner. The new name,
made in the interest of brevity, involves no change in
editorial policy. More important, new developments on
petrochemistry will be included as part of the coverage of
production of gasoline, lubricants and fuel oils
Headlines from The Refiner and Natural Gasoline
Manufacturer, August 1932:
Technical progress. Editors of The
Refiner and Natural Gasoline Manufacturer believe that
hydrogenation will influence all refining
processesdistillation, cracking, lubrication oil
manufacturing, wax and fuel oil. New hydrogenation processes
are being developed. Approximately 25% to 40% of the
now-operating refineries have obsolete distillation and
cracking units. Such facilities are out of balance in the
production of refined products. Cracking equipment five years
of age is considered obsolete and is combatting corrosion and
wear. A number of new methods, such as distillation in modern
tube stills and vacuum distillation, are being developed to
improve the cracking facilities of refineries.
Merger. Standard Oil Company of New Jersey,
Standard Oil Company of California, Standard Oil Company of
Ohio and Standard Oil Company of Kentucky, according to reports
in New York financial circles, are working on a merger plan, to
involve the New Jersey concern taking over the Ohio and
Kentucky companies before merging with the Standard Oil Co. of
Headlines from The Refiner and Natural
Gasoline Manufacturer, March 1923:
Fleming unit attracting interest. The
Fleming process for manufacturing light hydrocarbons from
heavier molecular weight is gaining interest among refiners.
The first unit was installed at the Shell Co.s Martinez,
California, site, and it began operations in May 1920. The
Fleming system is a liquid-phase shell-type cracking process
and is designed to overcome past cracking operations issues.
The cracking reactions depend on two factorstemperature
and time. The once-through process has a 40% yield
New plants planned for England.
Construction of a 15,000-bbl refinery at the mouth of the
Thames River is underway. This refinery will process crude oil from
Persia, Trinidad and Texas. It will be a skimming type process
with a cracking unit.
Phillips building three gasoline plants in
Texas. The Phillips Petroleum Co. has begun
construction on three absorption gasoline manufacturing plants
in Young County, Texas. Construction should be complete in 45
days at a total construction cost of $700,000. The
three gasoline plants will have a combined capacity of 190,000
Panhandle installing two Dubbs units. The
Panhandle Refining Co. is constructing two
Dubbs cracking processes in connection with its 4,500-bpd
skimming plant. The charging capacity for the two Dubbs units
is 1,000 bpd, and the units will yield cracked distillates and
fuel oil. HP