Petroleum Refiners Surmount Obstacles to Spend Forecasted $20 Billion in 2003

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Globally, petroleum refiners continue to battle high crude oil prices, environmental compliance, clean fuels regulation mandates, labor strikes, terrorism threats, and generally poor economies. All of this combined has presented a real challenge for most petroleum refiners and their bottom lines over the past year or more. Capital spending in future years greatly depends on the outcome of world trade relations and the long-term price of crude oil.

"Most of the project spending activity planned in the near future is allocated to environmental compliance projects for low sulfur gasoline and ultra low sulfur diesel (clean fuels) and air quality control," commented Chris Paschall, Petroleum Refining Group Manager with Industrialinfo.com. "These capital projects don't necessarily add to a refiners profitability, in fact these projects total billions in capital spending and often rob dollars from projects that offer a return-on-investment (ROI), " Mr. Paschall added.

Gasoline remains one of the highest profit making products produced at a refinery. This being true, refiners generally spend every available dollar in the fluid catalytic cracking area of the complex to increase gasoline yields.

Rising energy costs have plagued this industry just as it is many others, forcing refinery owners to evaluate their consumption levels of electricity and natural gas across the entire complex and implement new protocols and routines where energy can be saved or conserved. Agreements for purchasing power from Private Energy Producers (PEP) have become very attractive as they can shop for the price to beat as deregulation moves across the U.S.

Although this industry is significantly smaller in size and number of plant locations compared all other industries, it represents roughly $20 billion in forecast spending for 2003 and ranks fifth out of the twelve industries that Industrialinfo.com tracks in North America.

For a unique half-hour discussion on upcoming capital and maintenance spending trends in the petroleum refining industry, join Chris Paschall as he is interviewed by Crazy Al at 8:30am Monday, February 24, 2003 on industrialinfo.com's Industry Today radio program.