HPInsight: The global HPI's top August headlines from 1922 through 2012
As summer 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 2002:
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 chemicals.
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 value chain.
Headlines from Hydrocarbon Processing, August 1992:
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 10 years.
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 in 1990.
Headlines from Hydrocarbon Processing, August 1982:
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% utilization rates.
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 7%.
- Natural gas prices are expected to be decontrolled by 1985. Wellhead prices should increase about 25% to $4.25/MMBtu.
- 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 power demand.
Headlines from Hydrocarbon Processing, August 1972:
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 1973.
US LNG 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.
With construction almost completed,
production operations will begin at Enjays new
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 1959).
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 operation.
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 Phillips-owned facilities.
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 levels.
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 1952:
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 Arthur,
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 1952.
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 refinery
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 California.
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 for gasoline.
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 ft3.
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