The number of downstream oil and gas processing projects has steadily increased over the last 4 years, according to Oil & Gas Journal's Worldwide Construction Survey.
Counting construction projects in refining, petrochemical, gas processing, and pipeline sectors, the number of projects increased to 1,757 in 2004 from 1,682 in 2003, 1,665 in 2002, and 1,645 in 2001(Fig. 1). Contributing to growth are refining margins up as much as 14%, upcoming low-sulfur fuel specifications in the US and Europe, high refining utilization rates, strong petrochemical demand, and increased energy demand in China and India.
Refining
In a response to OGJ's survey, Kuwait National Petroleum Co. (KNPC), Safat, announced plans for construction of a 432,000 b/d grassroots refinery in the Shuaiba Industrial Area. With a total cost of $3.3 billion, the project has entered the engineering phase, and final commissioning is planned to take place in 2010. KNPC also reported a residue desulfurization expansion, a vacuum distillation expansion, a new Merox unit for its Mina Abdullah refinery, and a new ethane recovery unit for its Mina Al-Ahmadi refinery for a combined total of $500 million.
Bahrain Petroleum Co., Bahrain, also reported a project in the refining sector. The $690 million low-sulfur diesel project, awarded to JGC, Japan, includes various new units and some expansions to existing units including a steam methane reformer, a 60,000 b/d hydrocracker, two sulfur recovery units, two sour water strippers, and an amine-based natural gas sweetening unit. The entire project, currently under construction, is expected to be completed in June 2007.
In the US, Houston-based Motiva Enterprises LLC plans several diesel hydrotreating projects among its refineries. Hydrotreater unit revamps, affecting 157,000 b/d capacity, are planned for its facilities in Port Arthur, Tex., Norco, La., and Convent, La. All projects are currently under engineering by Bechtel Group Inc., San Francisco, and should reach mechanical completion by the first quarter of 2006.
Bechtel is also the lead contractor for a series of diesel hydrotreater revamps for Motiva's sister company, Shell Oil Products US of Houston. Revamp projects impacting 130,000 b/d of hydrotreating are under way at Puget Sound, Wash., and Deer Park, Tex. Shell is the licensor on all those projects.
The survey revealed a recent rash of new hydrogen projects as refiners are upgrading hydrogen production and recovery systems to support increased hydroprocessing for clean-fuels initiatives.
For example, CB&I Howe-Baker, Tyler, Tex., was awarded licensing and engineering contracts by ConocoPhillips, Houston, for five new hydrogen plants, one of each to be installed in Billings, Mont., Borger, Tex., Ponca City, Okla., Linden, NJ, and Wood River, Ill. New capacity totaling 130 MMcfd for the refiner will come on stream in 2005.
Another hydroprocessing project under way is Suncor Energy USA's Commerce City, Colo., expansion. Suncor reported expansion projects for a steam methane reforming unit and a distillate hydrotreater and plans to build a hydrodesulfurization unit. The $170 million project should be finished by the end of 2005.
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Valero Energy Corp., San Antonio, reported upgrade campaigns for six refineries. Fluid catalytic cracking (FCC) expansions are planned for New Jersey, Louisiana, and Oklahoma refineries, while new desulfurization units will be installed at the Texas and Louisiana facilities. Plans for delayed coking, visbreaking, reforming, and alkylation upgrades are moving forward at its other refineries.
Outside the US, Clough Ltd., Perth, Australia, reports mechanical completion of Interoil's 32,500 b/d grassroots refinery at Port Moresby, Papua New Guinea. Practical completion is expected by the end of November.
In Poland, Grupa Lotos SA, Gdansk, is expanding its 90,000 b/d Gdansk refinery. Construction is under way on the crude and vacuum distillation units to increase capacity by 30,000 b/d. Grupa Lotos is soliciting bids for a new Merox kerosene-sweetening unit for installation by September 2005.
China plans to construct two refineries on the country's east coast. Sinopec Group, Shanghai, will build a 205,500 b/d refinery at Qingdao, and CNOOC Group, Hong Kong, will build a 246,600 b/d refinery at Huizhou. The combined projects will cost $3.3 billion, and both should be completed by 2008.
In India, the three major refiners, Bharat Petroleum Co., Assam, Hindustan Petroleum Corp. Ltd., Mumbai, and Mangalore Refining & Petrochemicals Ltd., Mangalore, all plan new or expanded processing units. Isomerization, FCC, and hydrotreating are the main processing capacities to be increased, and all projects should be completed by 2005.
Petrochemical
Soaring petrochemical sales have favored petrochemical operations and encouraged capacity expansions. Dow Chemical Co., Midland, Mich., recently reported a 26% jump in sales, while ExxonMobil Chemical Co., Houston, reported a third quarter earnings increase of $779 million over last year, both as a result of higher worldwide margins and record sales volumes.
These strong operating economics have promoted increased petrochemical construction projects. In the OGJ survey report, the number of projects rose to 408 from 371 in 2003.
Dow Chemical reported ethylene expansion projects in Freeport, Tex., and Tarragona, Spain, along with new ethylene crackers to be built in Seadrift, Tex., and Shuaiba, Kuwait. Dow also plans a world-scale petrochemical complex to be built at the Sohar Industrial Port area of Oman.
In August 2004, ExxonMobil and Petroleos de Venezuela SA, Caracas, signed an agreement to build a $2.5 billion world-class petrochemical plant in the eastern Venezuelan state of Anzoategui. The complex will include a 1 million tonne/year (million tpy) ethylene plant with derivatives. Feasibility studies began in September.
State-owned Petrochemical Industries Co. (PIC) of Kuwait plans two new projects in Shuaiba. A new 768,000 tpy paraxylene plant and a new 325,000 tpy benzene plant will both be completed by the second quarter of 2007. In addition, PIC and Dow plan to construct a new ethylene and derivatives complex, to be known as Olefins II, at that location. PIC and Dow indicated that they might consider future cooperative petrochemical ventures outside of Kuwait.
Saudi Arabia plans to expand petrochemical production and will increase the use of natural gas as a feedstock. According to the US Department of Energy's Energy Information Administration, Saudi Basic Industries Corp. (Sabic) of Riyadh is expected to become one of the world's top five ethylene producers by 2005 and currently accounts for about 10% of the world's petrochemical production.
The petrochemical survey report itemizes nine new petrochemical projects in Saudi Arabia in addition to previous listings (Table 1). Most projects are expected to be completed in 2007 and 2008.
One of Sabic's projects, a 1.7 million tpy methanol complex at the Saudi Methanol Co., (Ar-Raz) Al-Jubail, is scheduled for completion in the third quarter of 2007. According to SABIC, the complex will make Ar-Raz, a joint venture with Mitsubishi, the largest single methanol production complex in the world.
Gas-to-liquids
The worldwide construction survey currently lists eight non-US GTL projects in the planning stage, one project under construction, and two in an engineering phase.
One of the engineering-phase projects is ChevronTexaco Corp.'s 34,000 b/d Escravos GTL project in Nigeria. Chevron recently reported that the project has been put on hold due to higher than expected commercial bids from contractors. Originally slated for a 2006 start-up date, the project might not be completed until sometime in 2007.
Despite the challenging economics of today's GTL projects, industry experts are confident that GTL will have a place in future transportation fuels.
Evidence of such confidence was recently underlined by Shell International Gas Ltd.'s GTL fuel trial in California.
Shell's trial, using fuel GTL in diesel commercial vehicles, resulted in a 16% reduction of NOx emissions and a 23% reduction of particulate emissions without a particulate filter. With filter, the trial resulted in a 20% reduction of NOx emissions and 97% reduction of particulate emissions.
The GTL fuel came from Shell's 14,500 b/d GTL plant in Bintulu, Malaysia. Shell sells blended GTL fuel in Germany, the Netherlands, Thailand, and Greece.
Gas processing
The number of gas processing facility construction projects has increased to 266 from 244 listed in the last survey, with many nearing completion at the end of the year.
Latest reports indicate the new $260 million gas processing plant at Lang Lang, Australia, will be commissioned sometime this month. Origin Energy Ltd., Sydney, let the EPC contract to Clough Ltd., Perth. The 75 MMcfd plant will produce 67 terrajoules/day of sales gas, 3,700 b/d of condensate, 166 tonnes/d of propane and 95 tonnes/d of butane.
Chiyoda Corp., Yokohama, Japan, reported that ExxonMobil Middle East Gas Marketing Ltd.'s gas sweetening and NGL recovery project in Ras Laffan, Qatar, is currently under construction. After completion in August 2006, the facility will produce 680 MMcfd of sales gas, 1.7 million tpy of LPG, and 300,000 tpy of condensate.
Snamprogetti SPA, Milan, reported that construction is under way on a 6.6 bcm/year gas sweetening, dehydration, and dew point control project in Libya. The project will produce gas and LPG at AGIP Gas BV's new facility in Mellitah. Snamprogetti shares the contract with ABB Lummus Global of Bloomfield, NJ, and Hyundai Engineering & Construction Co. Ltd., Seoul, S. Korea. Expected completion is June 2005.
Snamprogetti will also work with Hyundai on the NGL fractionation and processing plant at Mesaieed, Qatar, for operator Qatar Petroleum. The facility is under construction and will have a capacity of 1,650 tonnes/day to produce ethane, butane, propane, and natural gasoline.
In addition to that project, Snamprogetti is working on an NGL recovery and fractionation plant with Ortloff Engineers Ltd., Midland, Tex., for operator BP Global Investment Ltd., London, at the El Gamil facility in Egypt. The 1,100 MMcfd plant will produce propane, LPG, and natural gasoline. Expected completion is March 2005.
Demand for LPG in India is on the rise. To answer the demand, Total SA, Courbevoie, France, and Hindustan Petroleum Co. Ltd., Hindustan, formed South Asia LPG Ltd. to build and operate an LPG import and underground storage terminal at Visakhapatnam, a port in Andhra Pradesh. With a storage capacity of 60,000 tonnes, the terminal, when completed in the third quarter of 2006, will be the first facility of its type on India's east coast.
Sulfur
As expected, the number of sulfur recovery projects listed in the survey report has increased. The number of projects rose to 51 from the last survey's total of 46. The total capacity increase represented by these projects is 18,876 tonnes/day, up from 14,748 tonnes/day.
Black & Veatch Pritchard Inc., Overland Park, Kan., reported a major project to be built for Indian Oil Corp. of Panipat. The project will recover sulfur from refinery acid gas using two 225 tonne/day Claus trains, a tail gas treating unit, and a sulfur degasser. The project is expected to be completed by yearend.
Black & Veatch Pritchard reported the same type of project for Pertamina in Cilacap, Indonesia. The project is currently under construction and will recover 68 tonnes/day.
Other, Black & Veatch Pritchard projects like these are under way at refineries at Marathon Ashland, St. Paul Park, Minn.; Shell Chemical Co., Yabucoa, Puerto Rico; Shell Refining & Marketing, Anacortes, Wash.; Motiva Enterprises LLC, Delaware City, Del.; and BP PLC, Ferndale, Wash., and Coryton, England.
In Canada, Bechtel reported a Claus sulfur recovery unit with an accompanying hydrogenation/amine tail gas unit, and amine treating unit, and a sour water stripper to be installed at Suncor Energy Inc. Fort McMurray, Alta. When completed in 2008, the project will add 250 tonnes/day of sulfur recovery capabilities.
Ortloff reported engineering work at two new recovery units to be built at the Port Arthur, Tex., refinery operated by Premcor Inc. of Old Greenwich, Conn. The 260 tonnes/day unit is expected to be completed by 2005 and the 424 tonnes/day unit is expected to be completed by 2006.
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Valero Energy Corp., San Antonio, will add sulfur recovery capacity at three of its refineries. A new $28.9 million, 130 tonnes/day unit will be placed in service at the Ardmore, Okla., refinery in April 2005, a new $20.6 million, 130 tonnes/day unit will be completed at the Three Rivers, Tex., refinery about the same time, and a new $13.6 million, 450 tonnes/day unit will be completed at the San Nicolas, Aruba, refinery in May 2005.
Jacobs Engineering, Pasadena, Calif., received a contract from Abu Dhabi Gas Industries Ltd. to provide design and engineering services for installation of two new Super Claus units and an acid gas enrichment unit for the expansion of the Habshan gas complex in Abu Dhabi. The new sulfur recovery plant is required due to increased oil production at the facility and will boost sulfur capacity by 1,600 tonnes/day.
Pipelines
Pipeline operators and construction contractors reported more projects in the current survey than in the previous survey. The number of projects rose to 193 from 182 and includes 11,588 miles of crude pipeline, 24,789 miles of gas pipeline, and 5,842 miles of products pipeline, worldwide. The last survey indicated 11,381 miles of crude pipeline, 23,598 miles of gas pipeline, and 5,049 miles of products pipeline, worldwide.
Click here to view the Pipeline Update in PDF.
Valero LP, a master limited partnership of Valero Energy, reported two products pipeline construction projects planned for Texas. The first, a new 41-mile line to run from Edinburg to Harlingen, will carry 35,000 b/d at completion in December 2005. The second, a replacement line of 51 miles, will carry 40,000 b/d from Corpus Christi to Seeligson when completed by yearend. Valero LP recently acquired Kaneb Services LLC and Kaneb Pipe Line Partners LP in a $2.3 billion deal that will make Valero the largest US petroleum storage operator. The new assets include 9,700 miles of pipeline, 101 terminal facilities, and four crude oil storage tank facilities.
In October, the US Senate and House of Representatives approved legislation to provide a $18 billion federal loan guarantee to support the proposed Alaskan pipeline. The 3,500-mile pipeline, if built, would be one of the largest private construction projects ever and would be built over 10 years. The loan guarantee will make it easier for bidders to get financing for the project.
Outside the US, Petrobras SA, Rio de Janeiro, recently announced plans to spend $4 billion to develop gas pipelines in Brazil during the next 6 years. The main project is a 750-mile pipeline to connect the southeast part of the country to the northeast in order to supply power facilities. Overall, the initiative will add about 3,000 miles of pipeline to the country's existing 3,500-mile gas transport network.
In Russia, oil exports are constricted by a lack of pipeline capacity. The Russian government is reported to be considering construction of several new pipeline routes. At least one new pipeline would be needed to connect Western Siberia to the arctic coast to export oil to Europe and the US. Another pipeline would be needed for exports to Japan or China. A proposed 2,300-mile Japanese export line would run from Angarsk near Lake Baikal to the port city of Nakhodka. A proposed 1,500-mile Chinese export line would run from Angarsk to Daqing.
