North American Petroleum Refining Project Investments up 240% from 2007

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Researched by Industrial Info Resources (Sugar Land, Texas)--With the price of crude oil as high as $147 a barrel these days and all the pessimistic news about the economy, one might be surprised to see that certain facets of the construction industry are still booming. As of July 7, there were 444 projects in the Petroleum Refining Industry that have kicked off this year or will start construction before year's end at North American refineries. The total investment value for all projects in this industry is more than $34 billion. If all projects move forward, this would be a 240% increase from 2007 activity.

Click on the image at right to see a spending analysis of 2008 projects in the North American Petroleum Refining Industry.

More than 254 projects worth about $22 billion have already begun construction this year. Of that amount, $11 billion has been spent on 131 projects in the Great Lakes and Southwest market regions.

The Southwest, which usually has the highest numbers simply because there are more refineries in the area, has 92 projects under construction totaling more than $5 billion. The region has about 50 of the United States' 151 operational refineries. For details, view related June, 30, 2008, news article - U.S. Refineries Budget $215 Million Over Next 18 Months for Maintenance Shutdowns on Gasoline and Diesel Hydrotreating Units.

However, the Great Lakes region accounts for the largest amount of investments this year with $5.94 billion from 39 projects. This is mainly due to the $1.85 billion Detroit Refinery expansion, which consists of six projects: a $275 million delayed coker unit addition, a $100 million crude union expansion, a $300 million off-site utilities addition, an $80 million hydrogen unit addition, a $130 million distillate hydrotreater unit addition and a $200 million sulfur-recovery complex addition. Detroit's division of Marathon Oil Corporation (NYSE:MRO) (Houston, Texas) awarded the engineering, procurement and construction contract to a Fluor Corporation (NYSE:FLR) (Irving, Texas) subsidiary based in Aliso Viejo, California. Construction began in late June and is expected to be complete by October 2010. The projects will increase the refinery's heavy oil processing capacity by about 80,000 barrels per day (BBL/d) and will increase total crude oil refining capacity from 100,000 BBL/d to 115,000 BBL/d.

The increased demand for oil refining capacity in North America remains constant, albeit slightly lower for next year. As of July 7, 381 projects were planned to kick off in 2009 with a total investment value of $28 billion. Although the number of projects is expected to go down 128 projects compared with 2008, the total investment value will be only 25% lower than this year, and it remains 180% higher than 2007. Industry experts hope that increasing the number of refineries or capacity will eventually lead to some relief at the gas pump.

Although capital spending in the Petroleum Refining Industry remains high and the outlook for proposed projects remains positive, some of the projects planned for the next few years could be placed on hold or shelved, depending the costs of gas and crude oil. This year, 121 projects have been placed on hold or canceled. Two of the largest projects put on hold this year were in Canada: a $2.5 billion, 125,000-BBL/d grassroot bitumen upgrader in Calgary, Alberta, and a $2.3 billion, 200,000-BBL/d grassroot crude oil refinery in McLennan, Alberta.

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