IIR Webinar: Crude Diet Flexibility, ESG Dominate North American Refining Spending

Researched by Industrial Info Resources (Sugar Land, Texas)--The type of spending occurring at refineries depends largely on where one is in the world. That was one of the key takeaways from this week's IIR webinar on the crude oil, refining and alternative fuels sectors. In the webinar, Trey Hamblet, IIR's vice president of research for Chemical Processing and Refining, and Hillary Stevenson, senior director of energy market intelligence, discussed both present and future trends in these sectors.

Oil demand is set to increase by 1.5 million barrels per day (BBL/d) in 2023 and a further 1.8 million BBL/d in 2024, with China driving most of the consumption gains in 2023. While increased inventory gains will help put a cap on the price of crude, this increased demand will lift it as time progresses.

To help meet this increased demand, there is 19 million BBL/d of refining capacity planned throughout the world through 2030. This is driven largely by Asia, with limited growth being seen in the U.S., Canada and Europe. Most of the growth is planned for less mature markets such as Africa, Southeast Asia and Western Asia. There are presently 15 new refineries under construction in Africa, Asia and Latin America, which will increase capacity by 2.7 million BBL/d. Some of this capacity will be offset by unit closures, which account for 1.68 million BBL/d of capacity to be taken offline at a future date.

In North America, one of the key drivers of refinery spending is the need to increase the crude oil diet flexibility of refineries in order to take fuller advantage of domestic crudes from the U.S. and Canada. In total, about 800,000 BBL/d of capacity will be expanded or converted in North America to use U.S. and Canadian crudes. Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas), for example, recently finished expanding its refinery in Beaumont, Texas, by 250,000 BBL/d to process more Permian crude. Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Project Database can click here for more details of the project.

Other drivers in spending, particularly in mature markets, are projects aimed at environmental, social and governance (ESG) issues. Industrial Info is tracking nearly $27 billion worth of ESG projects throughout the world, with the U.S., Canada and Europe leading in spending. Plans to make renewable fuels such as renewable diesel and sustainable aviation fuel account for nearly half of this total. In the U.S. and Canada, almost $40 billion in spending is planned for alternative fuels projects outside of traditional refineries, with $30.8 billion of this taking the form of grassroot plants.

Upcoming maintenance spending is expected to be heaviest in areas that have the largest concentration of refineries, such as North America. The U.S. and Canada have the highest proportion of planned maintenance spending. Many maintenance projects were placed on hold in the early days of the COVID-19 pandemic, and then delayed once refined product demand picked up again. Maintenance this year will help refineries catch up with pandemic-related delays, and the spring 2023 maintenance season should help see refineries moving back to more normal maintenance schedules.

If you missed this webinar or would like to review some of its key takeaways, it will soon be available in Industrial Info's On-Demand Webinar Library.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).