Petroleum Refining Industry Capital Spending Analysis Identifies $8.7 Billion in Potential Construction Projects for 2004

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). A recent analysis by Industrialinfo.com identified a 25.5% decrease in capital spending for the petroleum refining industry from previously forecast figures. The analysis monitored the progress of 305 capital and maintenance projects at U.S. petroleum refineries and identified that 34 projects were cancelled or deferred representing a decrease of $3 billion in Total Investment Value (TIV).

Click on the image at right to view a graphical display of the analysis.

An example of one of the larger projects to be deferred is a $275 million diesel hydrotreater addition (PEC 21000954) at BP's Cherry Point, Washington Refinery (Plant 1012430). Initially, the hydrotreater addition was studied to meet EPA guidelines for ultra low sulfur diesel (ULSD) specifications. However, as specifications were defined for on-road diesel, the scope and magnitude of the project were reduced and now the project has been replaced with a $20 million upgrade to the existing hydrotreater (PEC 21001132). The majority of the Cherry Point refinery's product is off-road diesel, and in the future, as the EPA defines the specifications for off-road diesel it may be necessary to resurrect the project or perform further modifications to the existing unit.

This example represents a major industry-wide trend, as petroleum refiners study refinery modifications to meet future EPA guidelines.

This leaves approximately 271 active projects, representing about $8.7 billion in potential capital investment, which could start construction in 2004. Forty-one percent of the active projects representing about $3 billion in TIV are located at refineries in Texas and Louisiana. Other states with notable petroleum refining spending include New Jersey, Ohio, California, and Pennsylvania.

Click on the image at right to view the Petroleum Refining Active Projects Table, featuring number of projects and TIV listed by state.

Number one on the states table is Arizona, logging in one massive $2.5 billion project. This project will most likely be deferred due to siting issues. For details on this project view the archived IIR Industry Alert: Arizona Clean Fuels Plans Construction of First New U.S. Petroleum Refinery in 27 Years.