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Researched by Industrial Info Resources (Sugar Land, Texas)--The carbon-intensive Chemical Processing Industry is seeing an influx of environmental, social and governance (ESG)-based projects, with a strong emphasis on the environmental aspect. In a Wednesday webinar, Trey Hamblet, Industrial Info's vice president of research for the Chemical Processing Industry, discussed this and other trends affecting industry spending.
The industry has seen a large uptick in "blue" and "green" projects across the world. Blue projects start with fossil fuels such as oil, natural gas or coal, and produce commodities utilizing carbon-capture technologies. Green projects use renewable energy, such as wind or solar, to power an electrolyzer to produce hydrogen, which can be used on its own or to produce other commodities.
While the technologies and logistics surrounding carbon capture and storage (CCS) have been ironed out and improved over the past 10 to 15 years, CCS implementation represents a substantial cost addition for project owners. Industrial Info is tracking more than 90 "blue" chemical projects throughout the world, representing about $40 billion in planned spending.
It's on the "green" side where project activity has really taken off, with Industrial Info researchers adding several such projects every month. Initially, the hydrogen produced from green projects was targeted toward the transportation industry for things like mass transit and long-haul shipment. But hydrogen now is being used for other things like aviation fuels, green ammonia, or with an aim toward fueling power generation turbines. Industrial Info is tracking more than 500 "green" chemical projects globally, valued at about $154 billion.
Other industry drivers include growing demand for plastics. While the price of ethylene, one of the key building blocks of plastics, is down, demand for plastics continues escalating, making this a lucrative sector, with high competition for both upstream and downstream projects. The U.S. is in a prime position to take advantage of this, as most of its ethylene is derived from ethane, compared with naphtha in other parts of the world. While the price of ethane has increased over the past year, it is still much cheaper than naphtha, in which the price has risen in line with crude oil. Conversely, natural gas prices have greatly increased in other parts of the world, such as Europe, necessitating the shutdown or reduced operation of natural gas-fueled plants.
So what can we expect for Chemical Processing project spending this year? Probably a higher level than last year. At the start of 2021, the industry had nearly $595 billion in planned spending for the year. After a fallout rate (projects cancelled, placed on hold, or deferred to a later date) of about 73%, this led to about $163.4 billion in actual spend. The chemical industry this year started with a higher amount of planned spending activity--$648.6 billion. If this year's fallout rate is similar to last year's, we can expect to end 2022 with about $176 billion in spending.
The petrochemical sector continues to dominate Chemical Processing spending, with about $259 billion in planned investments for this year--more than half of which comes from China. Maintenance in this sector is down as utilization rates are up. Industrial Info is expecting about 790 petrochemical unit turnarounds in 2022, versus more than 1,000 last year.
ESG-based chemical projects represent nearly $27 billion in planned spending this year, dominated by "green" projects. These projects primarily affect short- and mid-term spending, while traditional growth will continue to drive industry spending over the coming years.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The industry has seen a large uptick in "blue" and "green" projects across the world. Blue projects start with fossil fuels such as oil, natural gas or coal, and produce commodities utilizing carbon-capture technologies. Green projects use renewable energy, such as wind or solar, to power an electrolyzer to produce hydrogen, which can be used on its own or to produce other commodities.
While the technologies and logistics surrounding carbon capture and storage (CCS) have been ironed out and improved over the past 10 to 15 years, CCS implementation represents a substantial cost addition for project owners. Industrial Info is tracking more than 90 "blue" chemical projects throughout the world, representing about $40 billion in planned spending.
It's on the "green" side where project activity has really taken off, with Industrial Info researchers adding several such projects every month. Initially, the hydrogen produced from green projects was targeted toward the transportation industry for things like mass transit and long-haul shipment. But hydrogen now is being used for other things like aviation fuels, green ammonia, or with an aim toward fueling power generation turbines. Industrial Info is tracking more than 500 "green" chemical projects globally, valued at about $154 billion.
Other industry drivers include growing demand for plastics. While the price of ethylene, one of the key building blocks of plastics, is down, demand for plastics continues escalating, making this a lucrative sector, with high competition for both upstream and downstream projects. The U.S. is in a prime position to take advantage of this, as most of its ethylene is derived from ethane, compared with naphtha in other parts of the world. While the price of ethane has increased over the past year, it is still much cheaper than naphtha, in which the price has risen in line with crude oil. Conversely, natural gas prices have greatly increased in other parts of the world, such as Europe, necessitating the shutdown or reduced operation of natural gas-fueled plants.
So what can we expect for Chemical Processing project spending this year? Probably a higher level than last year. At the start of 2021, the industry had nearly $595 billion in planned spending for the year. After a fallout rate (projects cancelled, placed on hold, or deferred to a later date) of about 73%, this led to about $163.4 billion in actual spend. The chemical industry this year started with a higher amount of planned spending activity--$648.6 billion. If this year's fallout rate is similar to last year's, we can expect to end 2022 with about $176 billion in spending.
The petrochemical sector continues to dominate Chemical Processing spending, with about $259 billion in planned investments for this year--more than half of which comes from China. Maintenance in this sector is down as utilization rates are up. Industrial Info is expecting about 790 petrochemical unit turnarounds in 2022, versus more than 1,000 last year.
ESG-based chemical projects represent nearly $27 billion in planned spending this year, dominated by "green" projects. These projects primarily affect short- and mid-term spending, while traditional growth will continue to drive industry spending over the coming years.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
