December 2016

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Editorial Comment: Hydrocarbon Processing forecasts $321 B in total HPI spending in 2017

What is the state of the global hydrocarbon processing industry (HPI)? Which regions and sectors are seeing growth, and which are stagnant, or possibly shrinking? These were some of the questions that Hydrocarbon Processing editors tackled at the 43rd Annual Hydrocarbon Processing Forecast Breakfast.

Nichols, Lee, Hydrocarbon Processing Staff

What is the state of the global hydrocarbon processing industry (HPI)? Which regions and sectors are seeing growth, and which are stagnant, or possibly shrinking? These were some of the questions that Hydrocarbon Processing editors tackled at the 43rd Annual Hydrocarbon Processing Forecast Breakfast. The presentation included a forecast on cap­ital, maintenance and operating expend­itures for the petrochemical, refining and gas processing/LNG sectors for 2017.

The event also included the launch of Hydrocarbon Processing’s HPI Market Data 2017. This market outlook provides an exhaustive breakdown on individual regions and industries, as well as comprehensive analysis on worldwide economic, social and political trends driving HPI activity across all sectors. Hydrocarbon Processing forecasts that the HPI’s total capital, maintenance and operating budgets will reach $321 B in 2017. The full report can be purchased at GulfPub.com. Following are some of the major trends within each sector that are discussed in depth in HPI Market Data 2017.

Refining

Although new refining project announcements have slowed, the refining sector continues to build new capacity to meet future demand for refined products. The vast majority of new refining capacity will be located in non-OECD nations. Of that capacity, countries in non-OECD Asia will account for most of the new refining capacity by 2022.

Along with continued capacity growth in the global refining sector, new technologies are moving the industry toward clean, low-sulfur transportation fuels. Refiners are investing billions of dollars in new units, upgrades/retrofits and expansions to meet new sulfur and emissions regulations. These investments include sulfur-reduction programs such as Tier 3 in the US and Canada, National V in China and Bharat Stage 6 (BS-6) in India, as well as increased ethanol blending rates, use of biofuels, and electric and natural gas-powered vehicles. Refiners are making the necessary investments to produce high-quality fuels that meet Euro 4, Euro 5 and Euro 6 specifications. This trend will continue to be a major theme through the end of the decade.

Petrochemicals

Over the past few years, the world has witnessed a surge in new petrochemical capacity announcements, led by the Asia-Pacific, Middle East and US regions, which continue to build up petrochemical capacity to satisfy demand, increase product export market share and increase and/or diversify downstream product portfolios. The global petrochemical sector will continue to see growth through the rest of the decade. Many new construction projects remain active, but the outlook for the industry is not as bullish as it was 18 to 24 months ago. Regardless, the world will see a strong rise in ethylene and ethylene derivatives capacity, as well as growth in specialty chemicals, methanol, ammonia and urea capacity.

Gas processing/LNG

Natural gas is becoming the fastest-growing fossil fuel. Growth on both the supply and demand sides has resulted in the announcement of billions of dollars of capital investments. These investments include the construction of billions of cubic feet per day of additional natural gas processing capacity, as well as millions of tons per year of LNG regasification and liquefaction capacity. However, even with natural gas demand increasing around the world, LNG supply capacity is outpacing demand growth. This is leading to a glut of supplies. The LNG glut could jeopardize future LNG terminal final investment decisions, as LNG developers would be hesitant to invest in heavily capital-intensive terminal construction. HP

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