IRPC Americas '17: US supply growth creates opportunities for refining/petchem

Adrienne Blume, Executive Editor

HOUSTON—Robert E. Trubac, Technology Director–Petrochemicals, Aromatics and Higher Olefins for CB&I, kicked off the opening of Gulf Publishing Company's International Refining and Petrochemical Conference (IRPC) Americas 2018 with a keynote address on paraxylene (PX) production via double reslurry crystallization.

Robert E. Trubac, Technology Director-Petrochemicals, Aromatics and Higher Olefins for CB&I.
Robert E. Trubac, Technology Director-Petrochemicals, Aromatics and Higher Olefins for CB&I.

CB&I licenses BP's PX Double Reslurry technology, which is estimated to produce more than 8 MMtpy of PX at various sites, Mr. Trubac said. The technology is split into three parts: (1) isomerization, (2) fractionation, and (3) crystallization.

The technology has an OPEX advantage of up to $30/metric t–$40/metric t of PX over adsorption and desorption processes. It also features greater than 99% process reliability and results in lower CAPEX and OPEX due to the smaller, less expensive design of the xylene column.

Energy market outlook. A second keynote followed from IHS Markit's Vice President of Global Consulting, Oil Markets, Midstream and Downstream, Blake Eskew. IHS Markit foresees strong liquids supply growth in North America, and believes that crude markets are stabilizing.

Mr. Eskew noted that there have been five oil cycles since 1960, including the present one. Each cycle is characterized by either surplus or tightness. The question of how long this cycle will last remains to be answered, but Mr. Eskew acknowledged that the cycle "should be a little different this time around," primarily because the oil markets are characterized by different features than in previous cycles. "We think it will be a shorter cycle," Mr. Eskew said. "Not a 15-yr cycle."

Supply scenarios. The Permian Basin is driving North American oil and condensate output growth at present, absorbing the majority of US exploration and production investment. Exports are increasing from North America to Europe, Latin America and Asia.

Over the long term, IHS Markit has a bullish outlook for US supply. The US will produce enough domestic liquids to meet domestic demand, and around 2025 a net surplus of liquids is likely, Mr. Eskew said. Refinery configurations will ensure that the US continues to import medium and heavy crudes, particularly as Canada develops its oilsands.

Blake Eskew, Vice President, Global Consulting, Oil Markets, Midstream and Downstream at IHS Markit.
Blake Eskew, Vice President, Global Consulting, Oil Markets, Midstream and Downstream at IHS Markit.

Natural gas liquids (NGL) production is anticipated to grow rapidly, aided by unconventional associated gas production. This will cement the US' growing position as the world's largest exporter of NGL.

Demand growth questions. Mr. Eskew sees steady demand growth through 2020, followed by a decline as GDP grows slows and efficiency gains take hold. Growth remains strongest in China, India and other Asian nations. Over the long term, demand growth rates in India and China will moderate as demand matures, but the countries will still represent the largest demand growth rates in the world.

US gasoline demand is weaker in 2017 than in 2016, despite low retail prices and the advent of the summer driving season. As a result of this faltering demand for gasoline, US product demand is anticipated to decline through 2040.

Meanwhile, the upcoming IMO bunker fuel sulfur reductions, set to go into effect in 2020, will mark the next wave of fuel quality improvements, Mr. Eskew noted. The IMO transition will be "very disruptive" and will result in a period of heavily discounted prices for high-sulfur fuels. The differential between low-sulfur fuel oil (LSFO) and high-sulfur fuel oil (HSFO) will widen considerably.

In summary, Mr. Eskew noted that the downstream outlook is characteristically turbulent, but US supply growth is creating opportunities for the refining and petrochemical sector.

IRPC Americas 2017 is taking place at Norris Conference Center–CityCenter in Houston, Texas, from 18–19 July.

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