May-2019

America’s energy transformation to bring 10,000 energy executives together

U S petrochemicals are set for significant growth in output as new production capacity comes online and demand strengthens in key end-use markets, but in the face of such growth, core challenges exist for owners and the companies who serve them.

Heather McGuire Doyle
Petrochemical Update

Article Summary

“Growth rates in US chemistry over the next five years are expected to surpass average growth over the previous 20 years,” said Martha Moore, senior director of policy analysis and economics at the American Chemistry Council (ACC). “Provided that access to export markets remains open to our producers, expanding global demand will be met by shale-advantaged chemistry sourced from the US.”

More than 300 shale-gas chemical projects valued at just over $200 billion have been announced since 2010. Of these, more than $100 billion have been completed or are under construction, according to the ACC.

The US is now expected to export more oil and liquids than Saudi Arabia. This remarkable turnaround is a result of the rise in oil production from shale plays and increased export capacity from the US Gulf Coast.
 
Core Challenges
As the US becomes the largest energy and petrochemical producer in the world, it has created the biggest challenge the downstream sector has seen in a generation.

Demands for innovative solutions for the supply chain, workforce, project management, engineering, construction, and technology management have never been so vast.

“There has never been a more pressing need for the entire downstream community to come together and share ideas, make new connections and inspire the next generation,” said Kerr Jeferies, Project Director at Petrochemical Update, the team behind the Downstream 2019 event.

More than 10,000+ downstream professionals within Process Engineering, Engineering & Construction, Reliability & Maintenance, Shutdowns & Turnarounds and Supply Chain & Logistics will meet at the Downstream 2019 event on June 11-12, 2019 at the George Brown Convention Center in Houston to tackle core challenges with world-class experts, hear about the latest disruptive technology, and to meet and form partnerships with new and existing suppliers.

In the face of this almost unprecedented growth, the market is dealing with instability in oil prices, disruptions in technology, and a growing trade war.

Global Impact
The US economic expansion is nearing the longest in history. At 10 years old, this is the second longest expansion since 1900. Meanwhile, 2018 represented the sixth year of an extended upcycle in global petrochemical markets. The extended period of profitability caused another surge in investment globally increasing competition for US goods.

Expansion phases last five years or so. As a result, some analysts are warning that a recession is just around the corner and are concerned about current and future investment in the US petrochemical industry.
Economic indicators are showing weakness and uncertainty in major economies China and Europe, but the US remains the one positive among the major economies.

In 2019, we see the unravelling of the synchronised global expansion, US-China trade tensions, an incomplete US -Mexico-Canada trade agreement, and a construction boom coming online, which combine to create a challenging outlook for the US petrochemical industry.

New Production
The second wave of ethylene and derivatives capacity is slated to start up in 2019 from new cracker projects on the US Gulf Coast and will put pressure on export markets, producer margins, as well as the supply chain. Plenty more projects are in the pipeline as well.

A projected 50 percent increase in exports by the end of 2019 and a doubling of exports by 2022 is expected, owners have said.

The planned expansion of productive capacity assumed that China was to be a major purchaser of US resins, so will some of the investments shutter if the trade war continues, or will the product find new destinations in Latin America, Europe, and Africa?

Are US ports ready to handle the added exports? Will the demand be met amid a trade war? Will the US make too much of these products?

The delay in Sasol’s 1.5 million tonne/year ethane cracker project in Lake Charles, Louisiana, raises the risk of overcapacity in US ethylene supply in the second half of 2019. The opening puts the Sasol start-up in the same timeframe as Formosa Plastics’ cracker in Point Comfort, Texas.

This, along with weak demand in key markets could make the petrochemical industry more challenging that investors anticipated.

Reconfigure Status Quo
Against the backdrop of the downstream industry’s incredible growth, the market must address these core challenges amid a new consumer focus on sustainability. This perfect storm has resulted in a re-configuration of the status quo. The industry needs to change rapidly.

The Downstream event has become the largest and most valuable meeting point for petrochemical, chemical, liquified natural gas (LNG) and refining decision makers in terms of both lessons learned and networking opportunities.

The speaker line-up includes some of the biggest names in the industry who will tackle issues across the entire downstream value chain, sharing insights into industry challenges and possible solutions.

Downstream 2019
Attendees can look forward to keynote talks and panels by Stuart Bradie, KBR CEO; Alasdair Cathcart, Bechtel president of Oil, Gas and Chemicals; Samik Mukherjee, McDermott COO; Andrew Stewart, Wood Americas CEO and Jim Brittain, Fluor Energy and Chemicals President.

Downstream 2019’s program includes five tracks serving the entire value chain: Engineering & Construction; Reliability & Maintenance; Shutdowns & Turnaround; an all-new Process Engineering & Technology track; and Supply Chain & Logistics, with relevant content for every attendee’s entire organisation.