September 2018

Trends & Resources

Industry Perspectives: Refining’s real growth is through secondary unit capacity

According to multiple industry reports, the global refining sector will add between 7 MMbpd and 8 MMbpd of new crude distillation unit (CDU) capacity by the early 2020s.

Nichols, Lee, Hydrocarbon Processing Staff

According to multiple industry reports, the global refining sector will add between 7 MMbpd and 8 MMbpd of new crude distillation unit (CDU) capacity by the early 2020s. Most of this new capacity will be located in the Asia-Pacific region. By 2023, the Asia-Pacific region will add approximately 3.5 MMbpd of new CDU capacity. Most of this increase—approximately 2 MMbpd—will be from China.

China has several active grassroots and expansion projects in the works, including refining and petrochemical integrated complexes. India has announced ambitious plans to increase refining capacity from 4.6 MMbpd in 2017 to 6.3 MMbpd by the early 2020s. These two countries will be the leaders in new CDU capacity over the near term, with the Middle East close behind.

Most capacity additions will be for additional secondary unit processing capacity. As detailed in the March 2018 issue of Hydrocarbon Processing, the global refining industry is forecast to add more than 11 MMbpd of secondary unit capacity by the early 2020s. According to OPEC’s World Oil Outlook 2017, most of this new capacity will be new desulfurization units—conversion and octane-boosting capacity additions will increase by more than 3.2 MMbpd and nearly 2 MMbpd, respectively.

By 2023, nearly 7 MMbpd of new desulfurization capacity is forecast to begin operations. The buildout in desulfurization capacity is due to strict government regulations on fuel quality. Dozens of nations around the world are enacting new limitations on sulfur in transportation fuels. Most new desulfurization units will be built in the Middle East and Asia-Pacific regions (FIG. 1). Many of these will be included in new grassroots facilities and brownfield expansions to adhere to new fuel quality regulations and mitigate emissions in densely populated cities.

FIG. 1. New desulfurization capacity additions by 2023. Source: OPEC’s <i>World Oil Outlook 2017.</i>
FIG. 1. New desulfurization capacity additions by 2023. Source: OPEC’s World Oil Outlook 2017.

The higher-quality fuels will also enable Asia-Pacific and Middle Eastern countries to export to more destinations, especially those with strict limitations on sulfur content. In total, the Middle East and Asia-Pacific regions are forecast to add 4.5 MMbpd of new desulfurization capacity by 2023, which equates to approximately 68% of total market share for desulfurization capacity additions. HP

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