November 2018


Editorial Comment: Looking back and looking ahead

In this editorial comment and the next, we look back at the downstream processing industry in 2018, and into 2019 and beyond.

Nichols, Lee, Hydrocarbon Processing Staff

In this editorial comment and the next, we look back at the downstream processing industry in 2018, and into 2019 and beyond. This reflection of the past and contemplation of the future comes on the eve of the unveiling of Hydrocarbon Processing’s 45th iteration of its HPI Market Data annual report.

HPI Market Data is a compilation of major trends affecting the midstream and downstream processing industries, as well as how those trends are expected to impact capital, maintenance and operations spending in the future. When HPI Market Data was first published in 1973, most of the forecast for global capital spending was based on data from Hydrocarbon Processing’s Construction Boxscore Database.

Published within Hydrocarbon Processing from 1957 to 2009, the Construction Boxscore Database tracks active construction projects in the refining, petrochemical and gas processing/LNG sectors. Many in the industry may still remember the thick pages of construction project data published within the February, June and October issues of Hydrocarbon Processing. The project details were printed in approximately 6-pt font size. Imagine scanning nearly 4,000 projects at such a small font setting! I used to joke that our Construction Boxscore Database was the reason so many in the industry needed glasses. The Database was eventually transitioned to an enhanced, online database——where it is located today.

I mention the Construction Boxscore Database since it is still used as an exceptional indicator of the industry’s health. The editors of Hydrocarbon Processing use it to forecast capital and maintenance spending within the HPI Market Data report. Over the past several years, the industry has witnessed a surge in spending. Looking at 2018, most spending for capital projects has taken place in the Asia-Pacific, Middle East and US regions. At present, these three regions account for 65% of active project market share, as well as approximately 70% of total capital spending globally. The Construction Boxscore Database is tracking more than $1.8 T in capital projects around the world.

Although trends in spending have changed from the first iteration of Hydrocarbon Processing’s HPI Market Data in 1973, the industry has always, and will always, be at the mercy of basic economics—supply and demand. Over the past year, we have witnessed Asia take precedence as the world’s demand center for fuels, petrochemicals and natural gas. That trend has been apparent for the last decade. The region’s middle-class growth has boosted demand for finished petroleum products, and most of the region’s capacity buildout has the aim of reducing imports.

On the supply side, Asia and the Middle East have continued to build out new capacity, especially to produce ultra-low-sulfur fuels and petrochemicals. This comes at a time when the US has ramped up exports of crude oil and finished petroleum products. Throughout 2018, the US has substantially boosted exports of crude oil and natural gas liquids—and LNG, to a certain extent—to regions such as Asia and Europe, while increasing distillate and gasoline exports, primarily to Latin America. Additional US petrochemical capacity that has been commissioned this year (e.g., ExxonMobil’s and Chevron Phillips Chemicals’ world-scale ethane crackers) is likely to increase US petrochemical exports in the future—a topic that will be discussed in the December editorial comment.

As we look back on 2018, it is amazing to see how much progress has been made within the downstream industry. From increasing capital construction to produce the fuels and chemicals the world needs, to new products, services and equipment to increase plant efficiency, reliability and profitability, it is an exciting time to work in the hydrocarbon processing industry. HP

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