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Released December 18, 2019 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The continued growth of North American Oil & Gas Production is having a positive effect on planned construction of Storage Terminal projects across the continent.
Industrial Info is tracking 493 terminal projects across North America with a total investment value (TIV) of about $18.4 billion that are scheduled to begin construction in 2020. Another 300 projects valued at about $5.15 billion are slated to begin construction in 2021. Moving out to 2022, Industrial Info is tracking 88 terminal projects valued at $3.26 billion that are scheduled to break ground.
By contrast, in early 2018, developers were scheduled to begin construction on 176 storage terminal projects valued at $10.2 billion between January 2018 and December 2019. For more on that, see February 27, 2018, article - Terminals Industry Plans Record Level of Capital Project Kickoffs in 2018-19.
Industrial Info does not expect all of the projects with a 2020, 2021 or 2022 construction start date will begin construction as planned. In fact, over the 2016-2018 period, plans to build approximately 147 terminal projects across North America with a collective value of roughly $9.2 billion were cancelled or placed on hold. Global commodity fundamentals - supply, demand and price - tend to drive developers' investment decisions.
What's different this time is that the near future has such a large number of proposed projects, commented Jesus Davis, Industrial Info's research specialist for the Oil & Gas Production, Pipelines and Terminals industries.
What's also different is that there are more billion-dollar crude oil export projects being developed than in prior years.
"Based on historical averages, I would not be surprised if as much as 50% of the projects scheduled to begin construction in 2020-2022 are postponed or cancelled," Davis said in an interview. "Many of those future projects were scheduled to be built in previous years, but were delayed. That's the nature of the beast."
"But if you start with a large number of projects, the industry could have a very good year even if half of the projects don't begin construction on time."
"The continued growth of U.S. crude oil and natural gas production has helped drive the construction of billions of dollars of terminal projects, many of which are targeted to exporting liquefied natural gas (LNG) or crude oil," Davis said.
"When Congress repealed the 1970s-era law prohibiting crude oil exports a few years ago, that opened a new market for U.S. crude oil exports," Davis continued. "U.S. refiners aren't configured to process all the light, sweet crude that's being extracted from shale formations like the Permian and the Bakken, so being able to export that crude has done wonders for oil producers as well as pipeline companies and storage and terminals companies."
Hydraulic fracturing and horizontal drilling have combined to more than double U.S. crude oil production over the last decade, to a current average of about 12.5 million barrels per day (BBL/d), according to the U.S. Energy Information Administration (EIA). Next year, the agency forecasts daily production to average about 13.2 million barrels.
Click on the image at right to see a chart of rising U.S. crude oil production.
Natural gas production also has risen steadily over the last decade. In its most recent Short-Term Energy Outlook, the EIA predicted U.S. dry natural gas production will average approximately 92.1 billion cubic feet per day (Bcf/d) this year, up about 10% from 2018. Low prices are expected to slow the rate of production growth in 2020, the EIA said, predicting gas production will average about 95.1 Bcf/d next year.
U.S. gas production growth continues to outstrip domestic demand growth, the EIA noted. This is true though U.S. LNG terminal exports and pipeline exports to Mexico are taking billions of cubic feet of new domestic gas production, which is helping to keep prices from collapsing.
Texas, Louisiana and British Columbia are the three North American states or provinces with the largest number and dollar value of storage projects scheduled to begin construction in 2020, according to Industrial Info's Global Market Intelligence platform. A significant number of projects also are scheduled to begin turning dirt in other states, including Campeche, Pennsylvania, Veracruz and Tamaulipas.
Click on the image at right to see a chart of the 10 North American states with the largest dollar-value of terminal projects slated to begin construction in 2020.
Looking out to 2021, Texas once again is far and away the state with the largest number and dollar value of projects scheduled to begin construction in that year. Approximately 32 projects valued at about $2 billion are scheduled to begin construction in Lone Star State in 2021. Other states with an active slate of storage construction projects kicking off that year are:
"It's not just U.S. oil and gas production that is driving the terminals buildout," Davis noted. "Mexico continues to open its energy markets, though that has not been as fast or smooth as some would have liked. And Canadian oil and gas production is rising as well. Global demand growth for ethane and propane has led to the planned construction of several ethane export terminals across North America."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Industrial Info is tracking 493 terminal projects across North America with a total investment value (TIV) of about $18.4 billion that are scheduled to begin construction in 2020. Another 300 projects valued at about $5.15 billion are slated to begin construction in 2021. Moving out to 2022, Industrial Info is tracking 88 terminal projects valued at $3.26 billion that are scheduled to break ground.
By contrast, in early 2018, developers were scheduled to begin construction on 176 storage terminal projects valued at $10.2 billion between January 2018 and December 2019. For more on that, see February 27, 2018, article - Terminals Industry Plans Record Level of Capital Project Kickoffs in 2018-19.
Industrial Info does not expect all of the projects with a 2020, 2021 or 2022 construction start date will begin construction as planned. In fact, over the 2016-2018 period, plans to build approximately 147 terminal projects across North America with a collective value of roughly $9.2 billion were cancelled or placed on hold. Global commodity fundamentals - supply, demand and price - tend to drive developers' investment decisions.
What's different this time is that the near future has such a large number of proposed projects, commented Jesus Davis, Industrial Info's research specialist for the Oil & Gas Production, Pipelines and Terminals industries.
What's also different is that there are more billion-dollar crude oil export projects being developed than in prior years.
"Based on historical averages, I would not be surprised if as much as 50% of the projects scheduled to begin construction in 2020-2022 are postponed or cancelled," Davis said in an interview. "Many of those future projects were scheduled to be built in previous years, but were delayed. That's the nature of the beast."
"But if you start with a large number of projects, the industry could have a very good year even if half of the projects don't begin construction on time."
"The continued growth of U.S. crude oil and natural gas production has helped drive the construction of billions of dollars of terminal projects, many of which are targeted to exporting liquefied natural gas (LNG) or crude oil," Davis said.
"When Congress repealed the 1970s-era law prohibiting crude oil exports a few years ago, that opened a new market for U.S. crude oil exports," Davis continued. "U.S. refiners aren't configured to process all the light, sweet crude that's being extracted from shale formations like the Permian and the Bakken, so being able to export that crude has done wonders for oil producers as well as pipeline companies and storage and terminals companies."
Hydraulic fracturing and horizontal drilling have combined to more than double U.S. crude oil production over the last decade, to a current average of about 12.5 million barrels per day (BBL/d), according to the U.S. Energy Information Administration (EIA). Next year, the agency forecasts daily production to average about 13.2 million barrels.
Natural gas production also has risen steadily over the last decade. In its most recent Short-Term Energy Outlook, the EIA predicted U.S. dry natural gas production will average approximately 92.1 billion cubic feet per day (Bcf/d) this year, up about 10% from 2018. Low prices are expected to slow the rate of production growth in 2020, the EIA said, predicting gas production will average about 95.1 Bcf/d next year.
U.S. gas production growth continues to outstrip domestic demand growth, the EIA noted. This is true though U.S. LNG terminal exports and pipeline exports to Mexico are taking billions of cubic feet of new domestic gas production, which is helping to keep prices from collapsing.
Texas, Louisiana and British Columbia are the three North American states or provinces with the largest number and dollar value of storage projects scheduled to begin construction in 2020, according to Industrial Info's Global Market Intelligence platform. A significant number of projects also are scheduled to begin turning dirt in other states, including Campeche, Pennsylvania, Veracruz and Tamaulipas.
Looking out to 2021, Texas once again is far and away the state with the largest number and dollar value of projects scheduled to begin construction in that year. Approximately 32 projects valued at about $2 billion are scheduled to begin construction in Lone Star State in 2021. Other states with an active slate of storage construction projects kicking off that year are:
- Ohio (nine projects worth $506 million)
- Veracruz, Mexico (three projects valued at $216 million)
- Colima, Mexico (three projects worth $195 million), and
- Tamaulipas, Mexico (three projects valued at about $125 million)
"It's not just U.S. oil and gas production that is driving the terminals buildout," Davis noted. "Mexico continues to open its energy markets, though that has not been as fast or smooth as some would have liked. And Canadian oil and gas production is rising as well. Global demand growth for ethane and propane has led to the planned construction of several ethane export terminals across North America."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
