Game of Dominoes: Terminals Projects Stymied by Oil & Gas Market Fundamentals

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Like a game of dominoes, the North American Terminals Industry is the latest industry to feel the effects of the swoon in crude oil and natural gas prices. Over 60 terminals projects valued at $3.42 billion that were scheduled to kick off between January 2015 and December 2016 have been cancelled or placed on hold, according to Industrial Info Resources' North American Industrial Project database.

The effect has been particularly pronounced in Western Canada, where four projects valued at $925 million have been placed on hold. Two of those projects were tank additions planned for the Trans Mountain Pipe Line, which is being developed by a unit of Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas). Both of those projects has a total investment value (TIV) of $300 million. They were placed on hold earlier this year.

A third $300 million project on hold is the Calgary Cornerstone Grassroot Diluent Pipeline, a project being developed by Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta). The developer originally planned to begin construction of that project in late 2015, but placed it on hold shortly after announcing it in mid-2014. The fourth project on hold in Western Canada is the $25 million Saleski Grassroot Stony Mountain Pipeline Bitumen Blending and Storage Terminal.

Click on the icons at right to see which North American regions and states or provinces have the largest dollar-value of Terminals projects that have been cancelled or placed on hold.

In late 2015, PEMEX (Mexico City), the Mexican national oil company, placed its Reynosa Grassroot Refined Products Terminal on hold. That $200 million project was scheduled to begin construction in mid-2015 and be operating by late-2016.

Large Terminals projects that were recently cancelled include:

• Longview Grassroot Propane and Butane Export Terminal, a $275 million project slated to be built in Washington State. The project was cancelled in late 2015 after it was unable to obtain all the necessary permits. It was being developed by a unit of Sage Midstream LLC (Houston, Texas).
• Phase I of the Pittsburg Crude Oil Terminal Modernization, a $200 million project that was planned for Northern California. The developer, WesPac Midstream LLC (Irvine, California), cancelled that project earlier this year.
• The Channelview Black Oil Terminal Expansion and Truck Loading/Unloading Stations, a $200 million project on the Texas Gulf Coast that would have added 14 storage tanks ranging from 20,000 to 80,000 barrels each to the 32 tanks already there. That project was cancelled in April 2015.

"We know that more Terminals projects are announced than will ever be completed," said Jesus Davis, vice president of research for the Oil & Gas Production, Pipelines and Terminals Industries. "What we're seeing in the Terminals industry is the ripple effect of soft global demand, high levels of production and low prices for oil & gas commodities as well as strong local opposition in some cases. There is about a 50/50 split between cancellations and delays, which means that several dozen of these projects could be reactivated in the future if market conditions warrant it."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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/.