Released May 20, 2014 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Chemical Processing Industry is one of several industries that have benefited significantly from the surge in natural gas production, Industrial Info's Trey Hamblet told attendees at the Industrial Market Outlook 2014 executive briefing in Washington, D.C., earlier this month. "In the 20-plus years I've been covering this industry, I've not seen this level of project activity--the growth has been tremendous," said Hamblet, Industrial Info's vice president of global research for the Chemical Processing Industry.
"For chemical processors, a lot of good things happen when the price of your main feedstock, natural gas, remains well below historical lows," he said on May 7. "Looking forward, I think the good news will continue, as gas prices are projected to stay relatively low through the end of 2020."
Click on the image at right to see a chart of actual and projected prices for natural gas in the U.S.
Hamblet identified three distinct business clusters within the Chemical Processing Industry that have benefitted most dramatically from low gas prices: ethylene, ammonia and methanol. Across North America, he estimated, low-cost natural gas has helped drive a total of $64.5 billion of approved and planned project activity across those three segments.
Capital projects totaling $7.9 billion have been approved by companies in North America's ethylene industry, and another $22.6 billion of projects are planned. In the ammonia segment, companies have approved $5.3 billion in projects, and an additional $12.4 billion is planned. And in the North American methanol segment, companies have approved $7.5 billion of projects, while another $8.8 billion are being considered.
Click on the image at right to see Industrial Info's forecast for project spending for North American chemicals plants.
Industrial Info does not believe all of these projects will begin as scheduled. In fact, Hamblet cast doubt on whether Royal Dutch Shell's (NYSE:RDSA) (The Hague, Netherlands) large ethylene plant, rumored to be built near the Marcellus Shale to take advantage of low feedstock costs, would ever be built.
The Eastern Seaboard has been particularly active for chemical processors. Chemicals companies are developing 49 projects in that region, 17 of which are slated to take place in Pennsylvania, which lies in the heart of the Marcellus Shale formation. The Eastern Seaboard includes 15 states and the District of Columbia, stretching from South Carolina to Maine.
More broadly, Hamblet cautioned attendees there is insufficient labor and demand for all planned North American chemical processing projects to move forward as scheduled: "We simply don't have all the skilled craft labor and demand to make those planned projects happen. Exports will help some. Still, we project spending by chemical processors will reach $26.5 billion this year, a 21.4% increase over last year's forecast spending."
Chemicals plants also will be performing more scheduled turnarounds at their plants this year when compared with earlier years, Hamblet noted: About 652 turnarounds worth approximately $1.9 billion are scheduled to take place across North America in 2014. The value of these projects is up nearly 33% from 2013.
Click on the image at right to see scheduled turnarounds for North American chemicals plants.
U.S. natural gas production surged 35% since 2003, rising to 66.3 billion cubic feet per day (Bcf/d) in 2013 from 49 Bcf/d in 2003, Chris Paschall, Industrial Info's group vice president of global research for the Oil & Gas and Petroleum Refining industries, told the Outlook attendees. Leading that surge has been the Marcellus Shale, located underneath Pennsylvania, New York and West Virginia. The combination of horizontal drilling and hydraulic fracturing has led to the surge in gas production across the U.S. and Canada. Gas produced from some portions of the Marcellus Shale is "dry," lacking crude oil or natural gas liquids (NGLs). Absent strong local demand for "dry" gas by petrochemicals companies, much of that gas would not be economical to produce.
By 2023, U.S. gas production is projected to jump an additional 28% to 84.7 Bcf/d, Paschall continued. The dramatic growth of gas production has led to regional realignments in the nation's gas pipeline system, he added: Whereas pipelines once predominantly moved gas from the Southwest and Southeast to the Northeast and Mid-Atlantic regions, some of those pipelines are being reversed to carry gas southward, out of the Northeast and mid-Atlantic regions.
Marcellus gas is driving pipeline reversals totaling about 9.3 Bcf/d between 2014 and 2017, Paschall said. "The Marcellus really has changed everything."
Additional information about project spending projections for the Oil & Gas Production, Chemical Processing, Petroleum Refining, , Power and other industries are contained in Industrial Info's Global Industrial Outlook. Each quarter, this online resource provides updated spending statistics for industrial projects, breaking them out by industry, market region and budget type (capital or maintenance). Industrial Info's experts, like Chris Paschall and Trey Hamblet, also explain how the data and information reflect broader industrial trends.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR provides the most accurate and timely project and plant spending intelligence, based on the highest quality-assurance standards in the industry.
"For chemical processors, a lot of good things happen when the price of your main feedstock, natural gas, remains well below historical lows," he said on May 7. "Looking forward, I think the good news will continue, as gas prices are projected to stay relatively low through the end of 2020."
Click on the image at right to see a chart of actual and projected prices for natural gas in the U.S.Hamblet identified three distinct business clusters within the Chemical Processing Industry that have benefitted most dramatically from low gas prices: ethylene, ammonia and methanol. Across North America, he estimated, low-cost natural gas has helped drive a total of $64.5 billion of approved and planned project activity across those three segments.
Capital projects totaling $7.9 billion have been approved by companies in North America's ethylene industry, and another $22.6 billion of projects are planned. In the ammonia segment, companies have approved $5.3 billion in projects, and an additional $12.4 billion is planned. And in the North American methanol segment, companies have approved $7.5 billion of projects, while another $8.8 billion are being considered.
Click on the image at right to see Industrial Info's forecast for project spending for North American chemicals plants.Industrial Info does not believe all of these projects will begin as scheduled. In fact, Hamblet cast doubt on whether Royal Dutch Shell's (NYSE:RDSA) (The Hague, Netherlands) large ethylene plant, rumored to be built near the Marcellus Shale to take advantage of low feedstock costs, would ever be built.
The Eastern Seaboard has been particularly active for chemical processors. Chemicals companies are developing 49 projects in that region, 17 of which are slated to take place in Pennsylvania, which lies in the heart of the Marcellus Shale formation. The Eastern Seaboard includes 15 states and the District of Columbia, stretching from South Carolina to Maine.
More broadly, Hamblet cautioned attendees there is insufficient labor and demand for all planned North American chemical processing projects to move forward as scheduled: "We simply don't have all the skilled craft labor and demand to make those planned projects happen. Exports will help some. Still, we project spending by chemical processors will reach $26.5 billion this year, a 21.4% increase over last year's forecast spending."
Chemicals plants also will be performing more scheduled turnarounds at their plants this year when compared with earlier years, Hamblet noted: About 652 turnarounds worth approximately $1.9 billion are scheduled to take place across North America in 2014. The value of these projects is up nearly 33% from 2013.
Click on the image at right to see scheduled turnarounds for North American chemicals plants.U.S. natural gas production surged 35% since 2003, rising to 66.3 billion cubic feet per day (Bcf/d) in 2013 from 49 Bcf/d in 2003, Chris Paschall, Industrial Info's group vice president of global research for the Oil & Gas and Petroleum Refining industries, told the Outlook attendees. Leading that surge has been the Marcellus Shale, located underneath Pennsylvania, New York and West Virginia. The combination of horizontal drilling and hydraulic fracturing has led to the surge in gas production across the U.S. and Canada. Gas produced from some portions of the Marcellus Shale is "dry," lacking crude oil or natural gas liquids (NGLs). Absent strong local demand for "dry" gas by petrochemicals companies, much of that gas would not be economical to produce.
By 2023, U.S. gas production is projected to jump an additional 28% to 84.7 Bcf/d, Paschall continued. The dramatic growth of gas production has led to regional realignments in the nation's gas pipeline system, he added: Whereas pipelines once predominantly moved gas from the Southwest and Southeast to the Northeast and Mid-Atlantic regions, some of those pipelines are being reversed to carry gas southward, out of the Northeast and mid-Atlantic regions.
Marcellus gas is driving pipeline reversals totaling about 9.3 Bcf/d between 2014 and 2017, Paschall said. "The Marcellus really has changed everything."
Additional information about project spending projections for the Oil & Gas Production, Chemical Processing, Petroleum Refining, , Power and other industries are contained in Industrial Info's Global Industrial Outlook. Each quarter, this online resource provides updated spending statistics for industrial projects, breaking them out by industry, market region and budget type (capital or maintenance). Industrial Info's experts, like Chris Paschall and Trey Hamblet, also explain how the data and information reflect broader industrial trends.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR provides the most accurate and timely project and plant spending intelligence, based on the highest quality-assurance standards in the industry.
