July 2018

Trends and Resources

Industry Perspectives

In the June issue of Hydrocarbon Processing, the Industry Perspectives section detailed the increase in new project announcements in the downstream processing sector.

Nichols, Lee, Hydrocarbon Processing Staff

In the June issue of Hydrocarbon Processing, the Industry Perspectives section detailed the increase in new project announcements in the downstream processing sector. To recap, more than 320 new downstream capital projects have been announced over the past year, according to Hydrocarbon Processing’s Construction Boxscore Database. The majority of these new projects are within the gas processing/LNG and petrochemical sectors. These two sectors represent 80% of projects announced over the past year. A breakdown of each sector includes: 

  • Gas processing/LNG—39% (127 projects)
  • Petrochemicals—41% (133 projects)
  • Refining—20% (61 projects).

Diving deeper into the data, an interesting trend emerges. Over the past 3 yr, there has been a dramatic shift in the types of new projects that have been announced. As shown in FIG. 1, the gas processing/LNG sector’s new project market share has increased from 20% in 2016 to nearly 40% in 2018. Within that same time frame, new refining project market share has decreased from 44% to 20%. The petrochemical industry increased its new project market share from 36% in 2016 to 41% in 2017. Over the past year, the petrochemical industry’s market share has remained unchanged. 

FIG. 1. New project market share analysis by sector, June 2015– June 2018. Source: Hydrocarbon Processing’s Construction Boxscore Database.

This analysis provides a good indication of what types of projects are being developed. Although refining projects were dominant 2 yr ago, the gas processing/LNG sector has witnessed a surge in new project announcements. This wave of new capital expenditures is a direct effect of new initiatives being implemented in most regions around the world. These programs focus primarily on government regulations that call for a switch from coal-fired power generation to the use of natural gas for power generation. In turn, dozens of nations have announced capital-intensive programs to construct infrastructure to import and transport additional supplies of natural gas. For example, several Asia-Pacific nations have announced plans to boost LNG regasification capacity to satisfy natural gas consumption rates. To supply these nations, millions of tons per year of additional liquefaction capacity have been announced. These capacity additions are led by Australia and the US. In the near term, the data shows that global gas processing/LNG capacity will increase substantially. HP

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