At IHS, we like to call petrochemicals ‘the enabler of modern living,’” said Mark Eramo, IHS vice president, chemicals. “It is the industry where, through billions of dollars of investment and technology and engineering and capability, you can start with a barrel of crude oil and wind up with the durable and nondurable goods that you and I consume every day.”
Chairing a panel titled “Energy and Petrochemicals: New Challenges, New Opportunities” at IHS Energy CERAWeek held recently in Houston, Eramo noted the way crude oil prices will trend in the next 12 to 24 months will have a significant impact on regional competitiveness, cash margins and, perhaps most importantly, future decisions being made about putting new assets in the ground.
“While we may need to take a deep breath as the global economy settles, we are convinced that we are on the verge of a growth curve,” said Mark Lashier, Chevron Phillips Chemical Co. LP’s executive vice president, commercial. “We have an enthusiastic long-term view for petrochemicals, thanks to a one-two combination of strong global demand and competitive feedstocks from the U.S. shale resource boom.”
By 2030, the global middle class is predicted to grow to nearly 5 billion people.
Lashier noted the economic growth accompanying that population increase will fuel demand for more plastic consumer products.
“Billions of people will have access to better quality of life products such as flexible packaging to store and transport food and beverages, enabling modern living,” he said.
Chevron Phillips Chemical, Lashier said, is focused on the mid-2017 start-up of its $6 billion U.S. Gulf Coast Petrochemicals Project, which includes a 1.5-million-metric-ton-per-year ethane cracker that will produce ethylene. The project also includes two world-scale polyethylene units capable of producing 500,000 metric tons of resin every year along the Texas Gulf Coast.
Mohammad Husain, president and CEO of EQUATE Petrochemical Co., reminded conference delegates fluctuations in energy markets are nothing new.
“There shouldn’t be any surprise,” he said. “This is a cyclic business.”
It is essential for companies to anticipate these fluctuations, Husain said, and make sure personnel remain strategic and innovative to meet the challenges of “bad times.”
Brandon Spencer, vice president of oil, gas and chemicals, North America for ABB Group, agreed, adding it is also essential for the industry to train new personnel as the existing workforce “grays out.”
“ABB is focused on enabling the technologies and innovation to continue to drive and make projects feasible,” Spencer said. “What can we do to boost efficiency and augment the people side of it?
“Whether projects are on the Gulf Coast or in the Middle East or in China, we’re trying to make sure we’re a key part of the solution that makes those projects the most economically feasible they can be and do it in a safe, cost-efficient way that best serves our customers.”
Doug May, president of olefins, aromatics and alternative feedstocks for The Dow Chemical Company, observed fundamental demand for oil derivatives remains strong, “with future demand growth somewhere in the range of 1 million to 1.4 million barrels a day, going forward.
“We anticipate, as the saying goes, the best solution to low prices is low prices,” May said. “We’re seeing upstream producers begin to react and cut capital budgets, and we’re going to see this rebalance itself and start to see upward movement in 2017. “Regardless, even in the low oil environment that we have today, the Middle East and the U.S. Gulf Coast maintain a competitive advantage.”
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