Industrial Info Webinar Discusses Changing Refining Industry

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Refining Industry is one of the most dynamic sectors on the global stage, with diverse types of projects both happening now and planned for the future. On Wednesday, Hillary Stevenson, Industrial Info's senior director of Energy Market Intelligence, and Vice President of Research for the Chemicals, Refining and Alternative Fuels Industries Trey Hamblet presented the webinar discussing the trends and market drivers shaping this industry.

While one can address the Refining Industry on a global scale, different regional factors affect the types of projects being seen across the world. For example, while demand growth for traditional road fuels is slipping in North America and Western Europe, regions and countries such as China, India and Africa are seeing demand increase. With this comes project differentiation by region. Most grassroot projects are occurring where demand for new fuels is higher, while the West has shifted to increased incentivization for environmental, social and governance (ESG) projects.

Maintenance Spending
Maintenance spending throughout the world was high in 2023 as refiners performed maintenance that had been previously delayed during and immediately after the onset of the COVID-19 pandemic. During the pandemic, several older and inefficient units across the world were closed, pushing existing units to work harder and longer between planned shutdowns. This delayed maintenance resulted in a high maintenance spend in 2023, which is carrying over to this year. The most maintenance spending is occurring where the most refineries are located, Asia.

Capacity Increases
For obvious reasons involving red tape and technical expertise, building a grassroot refinery or new refining unit is much more difficult than tweaking an existing unit to produce more. With this mind, projects that lead to incremental capacity expansions for existing units are much more likely to see the light of day than a new unit or plant, which involves much more planning and regulatory oversight. Asia leads the world for the highest amount of barrels added due to planned capacity increases at existing units, with more than 444,000 barrels per day (BBL/d) planned to be added in this way. North America follows with a planned 152,500-BBL/d increase through capacity expansions.

Throughout the world, eight grassroot refineries have a planned 2024 start date, but delays have occurred, with the three largest refineries, representing nearly 1.4 million BBL/d of new capacity, seeing a push-out of planned startup dates:

• The 650,000-BBL/d Lekki Refinery in Nigeria began test runs using African crude oil in January but ran out of feedstock, halting the startup process. A new shipment of West Texas Intermediate has been received, and test runs are expected to resume later this month.
• The 400,000-BBL/d Nanshan Yulong Refinery in China did not begin test runs in February as expected; rather, test runs at the two 200,000-BBL/d crude units are planned for April and June.
• Pemex (Mexico City) missed the planned February public inauguration of its new Dos Bocas Refinery in Mexico, intended to lead to commercial startup in May. The new inauguration date may not be until the second half of the year, and commercial startup time remains undetermined.

ESG Spending
On a global scale, ESG projects kicking off in 2024 at refineries represent a fairly small portion of spending, coming in at about US$5 billion across the world, versus more than US$45 billion worth of non-ESG projects. However, these projects represent a substantial portion of spending for certain world regions. Europe, which is subject to many more "green" goals and mandates than other regions, leads the globe in planned ESG spending, coming in at more than $3.5 billion. The next-highest spender, Asia, comes in at a distant US$880 million worth of planned ESG projects, followed by North America at US$650 million.

While this represents substantial spending for these regions, the non-ESG numbers provide a view of how these stack up in proportion to overall projects. ESG leader Europe is spending more than $6.3 billion on non-ESG capital projects, Asia has more than $27 billion in planned non-ESG projects, and North America shows more than $2.9 billion worth of these projects.

Most ESG projects focus on emissions reduction and include mostly smaller projects adding up to $1.4 billion in planned spending. Other ESG examples include carbon capture and storage (CCS) projects (US$1.1 billion planned), which are seeing the most movement in Europe and North America, where CCS is incentivized.

Alternative Fuels
In certain, mostly Western, regions, substantial attention is being paid to alternative fuels. Renewable diesel operational capacity surpassed 300,000 BBL/d last year, with most units located in North America. Many of the feedstocks currently in use for alternative fuels production (corn, soybeans, sugarcane bagasse) are reaching their supply limits. Moving into the future, alternative fuels project developers therefore will need to consider the next generation of feedstocks, such as used cooking oil, tallows and waste plastics.

Spending on alternative fuels is highest where regulatory frameworks exist. Europe, for example, has the highest planned spending this year for alternative fuels projects. As an example of incentivization driving spending, Europe has set the lofty goal of having 70% of all flights to, from and within the European Union using sustainable aviation fuel (SAF) by 2050, resulting in movement toward SAF production.

If you missed this webinar or would like to review some of its key points, it soon will 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).