Sponsored White Paper

US Downstream Engineering, Construction & Maintenance Market Outlook 2017

Petrochemical Update, March 31, 2017

Sponsored White Paper Description:

The following White Paper, brought to you by Petrochemical Update, provides a near- and long-term outlook on capital investments in petrochemical, refining, and liquefied natural gas (LNG) in the United States. In the second half of the paper, the focus turns to engineering and operations, including: commissioning and startups, shutdowns and turnarounds, reliability, and routine maintenance. 

U.S. crude oil production has more than doubled in the past five years. The “low for long” scenario for crude prices has settled in. Deloitte MarketPoint reference case has crude prices remaining at less than than $80 per barrel (in 2015 real terms) over the next 10 years. Despite weaker oil prices, analysts expect U.S. refinery capital spending to rise over the next three to five years as refiners race to prepare facilities to meet new regulations from the Environmental Protection Agency (EPA) and take advantage of cheap domestic feedstock. Combined American and Canadian refinery capital spending is expected to hit $6 billion for those projects beginning construction in 2016, with another $14.49 billion planned for construction kick-off in 2017 and $17.32 billion planned for 2018, according to Industrial Info Resources database.

Domestic demand for petrochemicals is still looking favorable, with overall economic improvement being seen from the automotive and construction sectors, which are both large consumers of chemicals, according to Chris Paschall, Vice President of Global Research for the Petroleum Refining Industry at consultancy Industrial Info Resources (Industrial Info Resources).

U.S. ethane production is outpacing expected U.S. demand growth, and is projected to reach a surplus of nearly 700,000 barrels per day by 2020, even after the commissioning of new ethylene production capacity, according to Petrochemical Update’s US Ethane, Ethylene and Polyethylene Exports & Markets Report from December 2015. There is still an expectation that ethane prices in the U.S. will remain low, although some analysts are projecting ethane excess with an increase in ethane sold as natural gas at fuel value rather than being extracted and used as a petrochemical feedstock. Today around 250,000 bbl/d of ethane is being rejected, and consultancy RBN Energy believes that number could triple over the next three years.

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