According to Hydrocarbon Processings HPI Market
Data 2014, total capital spending in the hydrocarbon processing industry (HPI) is
estimated to exceed $77 billion (B). This amount includes
investments in the development and construction of grassroots
facilities, along with expansions and upgrades to existing
HPI facilities to meet growing global
With so much construction activity forecast around the
world, there are several major construction trends and regions to
watch. This months column discusses a number of these
trends and projects that will be seen in 2014
and beyond. For more information, please view the 2014 Market
Outlook Webcast at www.HydrocarbonProcessing.com.
A market share trend analysis of new project announcements
from 20112013 (Fig. 1) shows
considerable growth in regions such as the US. This is due
mainly to the shale gas boom, which has provided cheap
available feedstock to fuel the gas processing
and petrochemical industries. New
project market share for the US was near 8% in 2010, and it has
since risen to approximately 30% during the past two
1. Market share analysis of new project
by region, 20112013. Source: Hydrocarbon Processings
Construction Boxscore Database.
The Asia-Pacific region has seen a dip of almost 10% since
2011, but the region still maintains the greatest total number
of active projects. Africa, Latin America and the Middle East
remain virtually unchanged over the past few years. The Middle
East has seen a steady stream of new project announcements over
the past three years. European construction activity has
increased by a small percentage due to new project growth in
Eastern Europe, Russia and the Commonwealth of Independent
This region continues to dominate in total active
construction projects. Growing middle classes, predominantly in
China and India, have spurred demand for
transportation fuels and petrochemical products. This scenario,
in turn, has created the need for additional capacity in the
Asia-Pacific refining and petrochemical sectors,
which account for the majority of active projects in the
region. Asia-Pacific will also surpass Europe as the worlds
second-biggest natural gas market as early as 2016. Dozens of
liquefaction and regasification terminals are planned or
already under construction.
The majority of the construction activity in the region
consists of petrochemical and refining projects in China and
India. These two countries account for over 50% of the total
active projects in the region and almost 15% of the total
active projects globally. According to Indias 12th Five
Year Plan, refining capacity is expected to reach 313 million
tons per year (MMtpy) by 2017, or approximately 7 million
barrels per day (MMbpd). Indian refiners are investing over $30
B in refinery construction, expansions and upgrades through 2017
to meet spiking demand for transportation fuels.
Presently, Indian gas production meets about half of
domestic demand. However, Indian gas demand is forecast to
triple by 2017. Demand from gas-consuming industries, such as
power and fertilizer, are rising steadily. This scenario has
forced India to import gas, mainly in the
form of liquefied natural gas (LNG). In response, India is
expanding capacity at its LNG terminals and has proposed the
construction of over a dozen LNG terminal projects in the next
five years. This includes floating LNG (FLNG) facilities such
as the Kakinada LNG import terminal, and the industrys
first barge-based FLNG regasification unit offshore Andhra
China is in the midst of a refinery building boom, with
almost 20 major new refinery facilities, upgrades and expansions
taking place. China is expected to raise its existing refining capacity of 11 MMbpd to 14
MMbpd by 2015 and to 16 MMbpd by 2020.
The threat of overcapacity has delayed the start of some
projects, however. PetroChina has delayed the startup of more
than 600 thousand barrels per day (Mbpd) of new refining
capacity for up to two years, and expansion plans for other
refineries have been postponed.
The Chinese petrochemical and gas processing
industries also continue to remain strong. Chinas
ethylene capacity is forecast to hit almost 25 MMtpy by 2015,
representing an increase of more than 50% from 15 MMtpy in
2010. Chinese LNG imports reached 15 MMtpy in 2012 and are
expected to double by 2015. To prepare, China has planned over
a dozen new import terminals for completion by 2020. However,
plans could change should China successfully develop its
domestic shale gas reserves.
Although India and China are the dominant
players in the region in terms of total active projects, many
large capital expenditure projects exist throughout the
region. Australia is investing over $160 B in LNG terminal construction and an additional $85 B
for FLNG facilities. The majority of these projects are
scheduled to be operational by 2017, but high labor costs and
cost overruns could threaten construction time lines.
To meet increasing demand for gasoline and diesel, Indonesia
has planned almost $20 B in expansions, upgrades and greenfield
facilities. However, many of these projects have been delayed
due to low refining margins and a lack of government incentives
to attract international partners. If completed, this new refining capacity will accomplish
Indonesias goal of becoming self-sufficient in fuel
supplies by 2019.
Indonesia is also expanding its LNG export capacity with the
Donggi-Senoro LNG project and the Tangguh LNG Train 3
expansion project. Combined, these projects will add 6 MMtpy of
LNG export capacity by 2019, at a cost of $15 B.
Singapore has a rich history as an oil trading hub, and it
plans to become the regions first LNG trading hub.
Singapore LNG (SLNG) completed construction on its $1.7-B
bidirectional LNG terminal at Jurong Island in mid-2013;
construction on additional storage tanks is ongoing until 2017.
Due to high demand, SLNG has proposed an expansion to the terminal. A final
financial decision is expected to be made in the second quarter
Malaysia is constructing its own bidirectional LNG terminal
at Pengerang. The $1.3-B Pengerang Integrated Petroleum Complex
will coincide with Indonesias largest-ever infrastructure
project, the Refinery And Petrochemical
Integrated Development (RAPID) project. The $20-B RAPID project
will consist of a 300-Mbpd refinery and a 4.5-MMtpy
petrochemical complex. Completion has been delayed to 2018.
Additional Malaysian gas projects include a ninth LNG train at
Bintulu and two FLNGsPFLNG 1 and PFLNG 2.
Additional notable Asian projects include Vietnams
$9-B Nghi Son refinery and petrochemical complex and the $25-B
Binh Dinh refinery and petrochemical complex.
The International Energy Agency reports that the US will
become energy self-sufficient by 2035 due to rising shale
energy production and improved transportation fuel
Shale gas production has created an LNG export terminal
building boom in the country. Due to recent market changes,
many previously planned US LNG import terminals have either
been canceled or will be converted or expanded into export
terminals. US companies aim to construct over 200 MMtpy of LNG
export capacity over the next several years. Almost two dozen
LNG export facilities are awaiting approval from the US
Department of Energy to export LNG to non-Free Trade Agreement
(non-FTA) nations. Only a small amount of projects have
received non-FTA approval. These include the Dominion Cove
Point LNG, Freeport LNG, Lake Charles liquefaction and Sabine
Pass liquefaction projects. If these projects and others are
completed, the US is poised to become an LNG-exporting
powerhouse by the end of the decade.
The US Energy Information Administration forecasts that US
gas production will jump from 21.6 trillion cubic feet (Tcf) in
2010 to almost 36 Tcf in 2040. Rising shale gas output has
established the US as the worlds leading gas producer and
has almost tripled new gas processing project market share
within the past four years. These new projects include the
construction of cryogenic and gas processing plants; natural
gas liquid (NGL) fractionators; and small, mid-level and
mega-sized gas-to-liquids (GTL) plants.
Cheap ethane feedstocks are fueling additional
project activity in the US petrochemical sector, including over
$100 B of investments by the end of the decade. Over 10 MMtpy
of new ethylene capacity has been announced, is planned or is
under construction. Projects include multiple world-scale
crackers with capacities of 1 MMtpy or greater, by companies
such as Axiall, ExxonMobil, Chevron Phillips Chemical, Dow,
Sasol and Shell. These facilities will be located primarily
along the US Gulf Coast, in Louisiana and Texas. Shell is the
exception, with a planned ethylene cracker in Monaco,
Pennsylvania, in the heart of the Marcellus shale play.
Other notable ethylene cracker projects are a 500-Mtpy
facility by Ingleside Ethylene and Formosa Plastics
800-Mtpy cracker in Point Comfort, Texas. Additionally, Braskem
and Odebrecht have formed a JV to build a large petrochemical complex in West
Virginia. The Ascent project includes the construction of a
large ethylene cracker. If built, Braskem may scrap its
expensive Comperj project in Brazil.
Forecasters predict that Canadian crude oil production will
more than double to 6.7 MMbpd by 2030, up from 3.2 MMbpd in
2012. This growth is contingent on the construction of vital
additional pipeline infrastructure. Almost all of Canadas
oil production is centered in Canadas Alberta oil sands.
Major, capital-intensive downstream projects include construction of
bitumen refineries and upgraders, such as the $8.5-B Sturgeon
refinery, to process heavy oil
Due to the recent shale gas boom, the US no longer needs to
import excess natural gas from Canada. To offset this financial
hit, Canada has planned over 50 MMtpy of LNG export capacity.
This includes over a dozen LNG terminals to be constructed,
primarily on British Columbias Pacific Coast at Kitimat,
Prince Rupert, Lelu Island and Grassy Point. Two additional LNG
terminals have been proposed in Nova Scotia on Canadas
east coast. Almost all of the countrys LNG exports will
target high natural gas demand in Asian markets.
Hydrocarbon Processings global
construction outlook, covering
Africa, Europe, Latin America and the Middle
East, continues in April 2014. HP