Throughout this year, Hydrocarbon Processing (HP)
has investigated the last 90 years of the hydrocarbon processing industry (HPI)
through its monthly editorial, Insight. The HPI has a
rich history; this industry is completely ingrained into our
daily lives. This month, we will publish the final
Insight editorial for this series. Before we leave
this project, there are a few final
observations that may provide value to HP readers over
the next 10 years as we prepare to celebrate HPs
centennial milestone in 2022.
Survival in the HPI requires flexibility
It may be considered a Darwinian idea, but longevity in the
HPI belongs not to the strongest or the most intellectual
organizations. Instead, survival hinges on flexibility and
long-term planning. Through the years, we have witnessed
numerous mega-companies defeated due to unintended consequences
stemming from behemoth organizational structures and protocols,
and the inability to quickly adapt to market and industrial
changes. Change is a constant for the energy industry.
Too often, the sources of these changes are beyond the control
of HPI organizations.
Politics of energy
The energy industry has always had a contentious
relationship with government at all levels. From the beginning,
the HPI has protested taxes levied on oil, natural gas and
refined products. In looking ahead, the politics of
hydrocarbons will continue and, in some cases, become a bitter
contest on sustaining jobs vs. environmental agendas. No nation is
immune from this debate; even developing nations must address
energy policies in constructing their emerging energy
infrastructure. Unfortunately for the HPI, elected politicians
operate on political time while the HPI functions
under energy time. Depending on the office and nation,
political time can be as little as a two-year office cycle.
Energy time is the service life of the HPI facility (60 to 80
years) and is much longer than political time.
Politics can disrupt the energy market. In several developed
nations, politics have villianized coal and crude oil as energy
resources. Coal is an excellent resource for power generation;
yet, permitting barriers are driving power companies to natural
gas to avoid the bureaucratic red tape on
coal-fired facilities. In addition, reactionary
politics nearly banned nuclear energy after the 2011 Fukushima
Far-left environmental groups continue to
impede drilling efforts and pipeline developments around the
world. Such politics ignore the well-paying jobs from drilling,
pipelines and, ultimately, the downstream business that are
made possible with the exploration and development of
all hydrocarbon resources. The pettiness of
politics regarding energy sources hobbles economic growth for
Same problems, different discomfort levels
Interruptions of crude oil sources or refined product
supplies pose both concerns and opportunities, depending on the
condition and position of the HPI facility. Transportation
costs have decreased for crude oil and its refined products.
Crude oil and clean transportation fuels are commodity
products. This condition will not change much over the next 10
How HPI companies view their business opportunities will
evolve. More HPI companies are leaving the refining and marketing/distribution
businesses. New independent, nonintegrated refiners own and
operate a greater share of refineries. Many of the new owners
are financial groups; this is a major change for the refining industry.
These new entrepreneurs must handle the same problems as the
previous owner/operating company. The difference now will be
the ability to leverage different assets by the new owner. Over
the past 90 years, there have been periods in which small and
agile groups trump large, integrated organizations. Also,
mergers of great companies have failed to overcome the tests
and hardships generated by the global economy. Such mergers
again divide in hopes that the surviving parts will
Innovation will continue. Developments will focus on
conserving energy and producing desired refined products and petrochemicals. Over the next 10
years, the HPI will continue to rely on new equipment,
catalysts and so forth to increase production, eliminate waste,
reduce emissions, and increase the safety
and reliability of facilities.
Communication continues to impact the modern HPI
Communication/automation/monitoring systems are the latest
round of innovative advancements creating economic
opportunities. Information from the processing unit is
captured, recorded and presented to stakeholders, who can then
make informed business decisions. Likewise, the Internet and
social media now quickly relay news about fires, releases and
other negative events. The HPI is interconnected to the global
economy, no matter its location or size.
The HPI has adapted to the numerous changes from its past.
Likewise, this industry continues to introduce changes that
improve the quality of life for all nations. It will be
interesting to see what the next years will hold for the HPI
and the global economy.
The final word
HP itself is making changes for the new year.
Beginning in January 2013, HP will launch a daily
newsletter entitled News Brief. Knowledge is power.
With the interconnectivity of the global HPI, events across the
world have a ripple effect on other economies. The availability
of energy supplies is a critical reality.