The Texas Gulf Coast took a beating this past year with record-breaking weather and oil uncertainty; however, the oil and gas industry, specifically the refining sector, continued to move past a few bumps and bruises. Most notably, refining operations did not suffer massive damage-related delays, even though Hurricane Harvey inflicted more damage from rain than wind. In years past, heavy winds have caused the most infrastructure damage to the region's operations.
Even though one-third of the nation's refinery capacity was shut down days after the storm's landfall, the refining industry quickly ramped up operations and proceeded to run operations smoothly.
"The faster-than-expected recovery by the refining industry has calmed product markets and the local communities," remarked Austin Fontenot, products control manager, Marathon Petroleum.
A panel consisting of plant managers and the Texas City-La Marque Chamber of Commerce presented at the State of Industry Business Luncheon on how all aspects of the industry are performing well, from economics to transportation.
Fontenot discussed recently completed projects worth more than $1.5 billion along the Gulf Coast and future projects worth an overall investment of $4 billion over the next five years, noting the capex plans are near record spending, despite Hurricane Harvey driving up labor costs and slowing work progress. Refiners and recovery projects from the hurricane are competing for the same labor, causing labor shortages. Overall, the industrial investment in the Gulf Coast should hit $51.9 billion next year, requiring vast amounts of skilled labor.
Eastman Site Manager Sergio Matute noted the transportation sector will continue to contribute to global oil demand for the next two decades but will move away from petroleum and focus more on noncombusted liquid fuels. Driven by growth in the use of biofuels and natural gas, nonpetroleum energy now makes up the highest percentage of total fuel consumption for transport since 1954, according to a new report from the EIA. Biomass from corn-based ethanol represented the largest nonpetroleum energy source and is being used primarily to fuel cars and other light vehicles. Use of natural gas to operate pipelines followed close behind. The report also shows smaller but still significant increases in the use of electricity, biodiesel and natural gas in vehicles.
This transition greatly affects the industry, remarked Pete Nowobilski, plant manager of BP Texas City, but the renewable sector will grow as well. "This evolving transition forces us to focus on how to best provide resources for consumption," he stated. "While one part of the world is focusing on leading technology, another part is focusing on just developing. Growth isn't going to be in North America; it's going to be in underdeveloped countries -- roughly two-thirds."
BP's annual Energy Outlook 2018 states the global energy mix is the most diverse the world has ever seen, with oil, gas, coal and nonfossil fuels each contributing around one-quarter. Renewables will be the fastest-growing fuel source, increasing five-fold and providing around 14 percent of primary energy.
Nowobilski also noted the number of electric cars will grow to around 15 percent. "This is the area that is most exciting because, as technology advances, so does the availability of electric cars to the masses, making it an affordable option for consumers," he said.
The panel noted the industry would continue to influence local economies. During the fracking boom of 2011-2014, the Greater Houston area added 80,000-90,000 residents per year. The county led the nation in population growth by adding almost half a million residents. It accounted for just over half the region's growth during that period. As for 2017 to February 2018, around 67,100 jobs were created, according to the Texas Workforce Commission.
Oil field services added 3,500 jobs over the 12 months, supported by a rig count that rose nearly 30 percent over the same period. The manufacturing sector added 4,800 workers, with the growth closely tied to the increase in drilling activity. The construction sector hired 3,700 workers in February and 9,300 for the year as hurricane recovery efforts continued.
Participating in the State of Industry Business Luncheon are, from left (top row), Pete Dunn Jr. of Dunn Heat Exchangers, Austin Fontenot of Marathon Petroleum Galveston Bay Refinery, Sergio Matute of Eastman, Aaron Cameron of Ashland, Pete Nowobilski of BP Texas City Chemicals, Sal Viscontini of Valero, (front row) Roselle Bleile of Dow and Jenny Senter of the Texas City-La Marque Chamber of Commerce.
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