Terminals Industry Plans Record Level of Capital Project Kickoffs in 2018-19

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The surge in North American crude oil, natural gas and natural gas liquids (NGL) production has triggered a corresponding surge in capital construction plans in the Terminals Industry, where developers are scheduled to begin construction on 176 projects valued at $10.2 billion between January 2018 and December 2019.

U.S. crude oil production is expected to grow by more than 1 million barrels per day (BBL/d) this year, to an average of 10.6 million BBL/d, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.). The agency's February Short-Term Energy Outlook (STEO) predicts 2019 daily production will average about 11.2 million BBL/d. Both years would exceed the previous record of 9.6 million BBL/d, set in 1970.

For natural gas, the EIA projects production will average 80.3 billion cubic feet per day (Bcf/d), a new record and a healthy gain over 2017's average daily production of 73.6 Bcf/d. EIA's STEO sees a further gain in 2019 of about 2.6 Bcf/d, to a new record of 82.9 Bcf/d.

Industrial Info does not expect all 176 terminals projects scheduled to begin construction by the end of 2019 will begin turning dirt as planned. Indeed, several projects scheduled to kick off between now and December 2019 have been delayed for many months, or even years. Still, robust production and firm prices for oil and gas could drive increased construction activity.

Viewed by historical standards, 2018 could be a record-breaking year. Recent years have seen 50-77 North American terminals projects completed each year, representing total investment value (TIV) of between $2.9 billion and $3.9 billion. This year, 136 projects collectively valued at $8.45 billion are scheduled to begin turning dirt. In 2019, developers have scheduled construction to begin on 40 projects valued at $2.26 billion. Even if a number of 2018 projects get pushed off to 2019, developers will be busy over the next two years.

Click on the image at right to see a list of North American Terminals capital projects completed from 2014 to 2017, and scheduled kickoffs for 2018 through 2020.

The North American states or provinces with the highest level of scheduled terminal capital project activity over the 2018-2019 period are Texas, Louisiana, Ohio and British Columbia. Strong scheduled project capital activity in 2018 and 2019 continues the recent trend of elevated construction activity for that industry across North America. For more on that see, March 2, 2017, article - North American Oil & Gas Terminals Buildout Expected to Quicken in 2017.

Click on the image at right to see a graphic for the top 10 North American states or provinces for Terminals Industry capital project activity.

A terminals market characterized by strong demand could result in the reactivation of projects that have been cancelled or placed on hold in recent years. Across North America, Industrial Info is tracking 114 terminals capital projects worth $6.39 billion that were scheduled to kick off construction between January 2015 and December 2017, but which were cancelled or placed on hold. It is possible some of these projects could come back to life if oil and gas fundamentals remain strong. Texas, Alberta, Louisiana and Florida are the states or provinces with the greatest dollar value of terminals that have been cancelled or placed on hold since January 2015.

Click on the image at right to see a list of the states or provinces with the highest dollar value of terminals project cancellations or deferments since January 2015.

"Developers are starting off 2018 with an aggressive slate of terminals projects for a variety of hydrocarbon projects," commented Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "In some markets, demand for skilled craft labor is outstripping local supply, forcing companies to pay extra to bring in traveling labor." For more on that, see January 3, 2018, article - Burgeoning Demand for Labor Hits Tight Gulf Coast Market.

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/.