August 2015

Columns

HP Editorial Comment: An extraordinary year and new beginnings

It is quite extraordinary, the events that can happen within a single year. Beginning in July 2014, the world began to witness a widespread fall in crude oil prices. By the end of January 2015, both W..

Nichols, Lee, Hydrocarbon Processing Staff

It is quite extraordinary, the events that can happen within a single year. Beginning in July 2014, the world began to witness a widespread fall in crude oil prices. By the end of January 2015, both West Texas Intermediate (WTI) and Brent crude oil prices had fallen from around $106/bbl to $45/bbl and $47/bbl, respectively. By mid-July, WTI and Brent prices settled in the $52/bbl to $58/bbl range. With such an immense price impact to the upstream sector of the industry, what has that meant to the downstream sector over the past year?

Refiners saw increased revenues during the global crude oil price drop, as pump prices fell much more slowly than the price of oil. For integrated companies, downstream refining operations provided somewhat of a cushion to offset hits to upstream revenues. These increased refining margins were a welcome sight to regions such as OECD Europe, which had rarely seen refining margins over $5/bbl for the past six years. By 3Q 2015, Europe’s refining margins had increased to $9/bbl, on average. Almost all regions have seen refining margins increase as the price of crude feedstock has diminished.

Global refinery crude throughputs continue to increase globally as refiners ride the wave of robust margins. Hydrocarbon Processing’s Construction Boxscore Database continues to track a steady stream of new project announcements, averaging nearly 25 per month (Fig. 1). Adversely, the drop in crude oil prices did result in a multitude of national oil companies delaying or abandoning capital-intensive projects. However, global capital expenditure on downstream projects is at an all-time high. Presently, the Boxscore Database is tracking nearly $1.2 T in downstream projects. This includes upgrades, expansions, modernizations and greenfield facilities being built across the globe.

 
  Fig. 1. New global project announcements.

The billion-dollar question is: How long can this last? We at Hydrocarbon Processing will be instituting new sections to help provide answers to these questions. As part of my new role as Editor/Associate Publisher of Hydrocarbon Processing, I, along with my team, will incorporate new data and information sections into each issue. This will include new business and global trends information to provide our readers with better insight into the global marketplace. Although some aspects of the magazine will change, we will always continue to bring our readers the highest-quality technical and operating articles in the industry. It is what we have been doing since 1922, and will continue to do now and into the future.

It is a dynamic time in the downstream industry, and Hydrocarbon Processing will continue to be at the forefront of technology and trends intelligence. HP

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