The major oil and gas developments taking place now will cause the United States to become a major exporter of petroleum products and shift the entire trajectory of the global energy system over the next few years, according to the U.S. Downstream Capital Projects, Turnaround and Maintenance Market Outlook 2018 produced by Petrochemical Update.

The U.S. energy sector is going through a renaissance, mainly driven by the shale boom in the last decade.

BP Energy Outlook forecasts that the US will become energy self-sufficient in 2023. Natural gas will replace oil as the leading fuel in US energy consumption around 2023 – increasing its share from 31% today to 39% in 2035. And oil’s share of the fuel mix will fall to 29% by 2035, the lowest level on record.

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Big changes

For the first time in 40 years, new construction of refineries in the US in on the horizon. These are smaller in capacity and less complex they are tailored specifically to feedstock from shale basins in Texas and North Dakota where they are co-located.

In total, the US is expected to add between 450 million barrels/day and 600 million barrels/day of new refining capacity by the early 2020s.

Some 10.3 million tonnes of ethylene capacity will enter the U.S. market before the end of 2019. This represents an increase of 36% of existing US capacity by 2018/2019.

US polyethylene (PE) production will increase to over 54 billion pounds per year by 2020, up from 44 billion pounds as of the end of 2014.

Excess PE production available for export will be 6–9 billion pounds before the end of 2019, assuming all announced projects are built.

The resulting trend is US chemicals export will continue beyond 2020; supported by 310 projects and $185 billion in potential capital investment announced as of June 2017, according to the American Chemical Council (ACC).

The US stands to become the world’s third-largest liquefied natural gas (LNG) exporter by 2020, when it’s expected to ship about 8.3bn cubic feet a day of capacity, or 14% of the world’s share, according to London-based consultant Energy Aspects Ltd.

More than $88 billion in LNG projects are currently planned, being built or in operation across the U.S.

The industry is rapidly responding to the energy renaissance with pipelines and infrastructure to transport refined products to the Gulf Coast or nearby consumers.

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US Gulf Coast Productivity Data

Construction costs continue to rise each year. On an annual basis, labor costs are increasing by 1.9% to 2.9% while bulk materials are increasing by 4.7% to 5.7% annually, according to Compass International.

Construction labor in the U.S. Gulf Coast will continue to be in short supply and base wages rates for all trades and per diems for travelers will increase in the first quarter of 2018, according to Compass.

Travelers are individuals / craftsman (typically the Pipefitters, Welders, Electricians and Instrumentation Installers) that live more than 50 miles from the construction site and are paid a per diem to offset their daily living expenses.

This per Diem rate is between $80 and $140 ($10 to $17.50 per hour worked) for each day worked. Typically between 25% and 50% of the skilled craftsmen i.e. Pipefitters, Welders, Electricians and Instrumentation Installers can be considered travelers and are paid this per diem.

Pipefitters, welders, electricians and instrumentation installers are in the highest demand and shortest supply right now.

Insulators, carpenters, roofers, masons and painters will also be in demand for the next six to twelve months to meet the construction repair effort from hurricane damage. Base rates are expected to increase over the next couple of quarters.

Finding skilled craft workers to build America’s new petrochemical projects will be a challenge in 2018 with craft hours peaking at nearly 164 million hours in 2018, as existing mega-projects near completion.

The Petrochemical Update whitepaper provides up to the minute data on gulf coast productivity including – construction equipment rates and wage rates, average open shop wage rates and a state comparison of field productivity factors.

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Downstream Capital Project Outlook

A significant number of projects using natural gas liquids (NGL) feedstocks were announced from 2010-2012 when oil spiked to more than $100/barrel; a petrochemical construction boom the industry now refers to as the ‘first wave’.

Of those, four ethylene crackers totaling more than 5 million tonne/year of ethylene capacity are slated to start operations in 2017 or early 2018 along the US Gulf Coast. Five more are under construction and expected to begin operations before the end of 2019.

Just as these crackers begin to start operations, an entirely new wave of announcements is coming in.

A comprehensive update on the 1st wave of downstream projects and detailed analysis on the 2nd wave of projects across the downstream sector is available in the Petrochemical Update whitepaper.

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Downstream Construction Innovation

Every aspect of the anatomy of a capital project is being penetrated by technology-based software solutions to improve estimating, cost management, contracting, materials management, construction productivity, interface management, and 4D/5D visual performance tracking models.

The face of field construction is changing with less time spent in job trailers; real time access to drawings on intrinsically safe electronic tablets; mobile management of daily logs, review and approval of change orders, checklists, and punch lists; greater consistency in project documentation; and simplified contract management and digital workflows.

Detailed analysis of the latest innovations in downstream construction including AWP, Digitization / IOT, Data Analytics, 4D/5D and much more are outlined in the Petrochemical Update whitepaper.

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Maintenance & Turnarounds

Now more than ever, turnarounds do triple duty as a time for key maintenance activities, inspection and a strategic time to implement capital improvements.

Scheduled plant outages, turnarounds and shutdowns are expected to increase by 5.4% to $10.43 billion across all U.S. industrial markets in 2017, with the petroleum refining industry to see the biggest increase, according to Industrial Info Resources.

Refiners will increase planned maintenance spend by 38.5% to $1.26 billion next year, in the consultancy’s estimates. The chemicals-processing sector will see a 4% increase.

Although turnarounds and shutdowns are often planned months or even years in advance, Emerson Process Management found that 74% of plant turnarounds and outages fail to meet performance goals.

The Petrochemical Update whitepaper provides comprehensive details on 2018 activity and spending trends, cutting edge case studies and performance improvement strategies for maintenance and turnarounds.

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