American energy is great again
Dear friends, I’m here to cheer you up today with this: It’s a great time to be an American working in just about any energy job.
A year ago, I attended the American Fuel & Petrochemical Manufacturers’ (AFPM) reception in Washington D.C. for the presidential inauguration. The theme of the event was “Make American Energy Great Again.” There was some optimism the new administration would help foster an environment for our industries and the general economy to grow. To be clear, I believe no president deserves all the credit, nor all the blame, for our nation’s successes or failures. However, it is clear the stars have aligned: U.S. shale production, federal tax policy and regulatory certainty, combined with the world’s major economies experiencing an upswing, all set up tremendous momentum for our various energy markets.
Manufacturing is ramping up, business investment is on the rise, and domestic exploration and production is on the rebound with stabilizing commodity prices and restructuring of operations.
In a recent global survey by the Fraser Institute, six U.S. states were named among the top 10 most attractive jurisdictions for oil and gas investment; only four foreign countries made the top 10. (Texas was No. 1.) In another indication of bullishness, a survey by Ernst & Young shows 96 percent of oil and gas executives expect the M&A market to improve over the next 12 months, and 69 percent expect to actively pursue an acquisition.
Here’s more good news for you, dear readers. Almost without exception, across all education levels, degree majors, genders, races and occupation types, those who work in the oil and gas industry earn more than those who do not. Let’s look at some of the various sectors:
- Petrochemicals — The U.S. is expected to increase its ethylene capacity by more than one-third in the next few years. For example, Shell Chemical Appalachia LLC has started the main construction phase of its major petrochemical complex in Pennsylvania with early work already done on the interstate, building bridges, repositioning a rail line, etc. Four process units — an ethane cracker and three polyethylene units — are now being built.
LyondellBasell recently marked the arrival of its Hyperzone polyethylene reactor in La Porte, Texas. The company broke ground in 2017, and startup is planned for 2019. Additionally, LyondellBasell has recently completed expansion projects in Channelview, La Porte and Corpus Christi, Texas. Further, the company plans to invest $2.4 billion — the single largest capital investment in its history — in the world’s largest propylene oxide and tertiary butyl alcohol plant.
The American Chemistry Council is tracking 310 projects and $185 billion in investment, which will result in the continuing trend in U.S chemical exports. Just as the “first wave” of projects using LNG projects are coming online, a “second wave” of projects is being announced.
- Refining — For the first time in 40 years, new construction of refineries in the U.S. is on the horizon. This new construction is a direct effect of the abundant light oils coming from shale plays. For example, Meridian is in the last step of getting its permit to construct an oil refinery in North Dakota. In total, the U.S. is expected to add about 500 million barrels/day of new refining capacity by the early 2020s. Refiners are also expected to increase their maintenance spend by a whopping 38 percent. Lots of turnarounds are combining capital work and extensive maintenance.
- Terminals and pipelines — Natural gas inventories remain higher than the five-year average, per the EIA. Strong current inventory, plus expected increases in production will require new storage. For example, Mountaineer NGL has announced plans for phase one investment of $150 million for ethane storage to supply the Marcellus and Utica shale plays. Similarly, Howard Energy plans to construct a products terminal in Corpus Christi. It seems a new pipeline project or expansion is announced weekly. Recently, CITGO began the first phase of its EPIC pipeline project, a 650-mile line from New Mexico to Corpus Christi. Another CITGO line is the 400,000-barrels a-day Gateway pipeline, which will serve the Permian Basin.
- LNG — More than $88 billion in LNG projects is planned, being built or in operation in the U.S. Per Energy Aspects, the U.S. stands to become the third-largest exporter of LNG in the world by 2020.
There is even good news in energy sectors not directly affected by the “shale gale.”
- Ethanol — The final rule establishing the renewable fuel volumes for 2018 has been issued. The volume was not cut significantly. Renewable Fuels Association President Bob Dineen said, “We are pleased” with the volume, which includes corn ethanol. Interestingly, with all the wins for the petroleum business, AFPM was not pleased with the decision, which illustrates that the administration is not in petroleum’s pocket as opponents aver.
- Offshore oil and gas — In the Gulf of Mexico, the EIA predicts seven new projects will go on line by the end of 2018. Further, offshore Arctic exploration operations were recently approved for the first time in two years.
BIC Magazine is proud to bring you relevant news in all sectors of our energy industry, and we are glad to know your sector is well and has a bright future and you are likely paid well compared to individuals in other industries.
In this issue of BIC, we feature leadership insight from Earl Crochet, director of engineering and operational optimization, Kinder Morgan Terminals; Daniel Velasquez, plant manager, Kuraray America Inc. — SEPTON™; Mike Watson, founder/CEO, Tube Tech International; Raymond Ashworth, vice president, Ashworth Industries; and Pete Haberbosch, vice president of business development, SBP Holdings.
We also spotlight a variety of industry hot topics, including work access, fall protection, port expansion, the state of energy, project management, turnaround reliability and more, and learn more about industry groups like the AIChE Foundation and the Port Arthur Industrial Group giving back to communities.
In closing, I hope you will share this issue of BIC with your friends and colleagues. Thank you for reading this and every issue of BIC, and we hope to see you at an upcoming industry event.