Editor’s Note: This month we start a new column featuring PVF industry expert Steve Letko. His column will take the direction of concentrating on market activity, current events and legislation that impacts the PVF industry. Steve has worked together the past few years with Tom Brown on their combined column; Tom is taking time to relax and enjoy his retirement. 

It’s bittersweet to be a solo voice in this column now. Tom and his wife are entering a new chapter in their lives — enjoying traveling together, cultural events and, of course, the golf course for Tom to lower his handicap. I wish him success! And, as Tom says, onward and upward!

The oil and gas energy sectors will again be the prime movers in 2019 for continued growth in the PVF industry. Natural gas is becoming the clean fuel of choice for fueling the new generation of power plants. Coal currently accounts for fueling only 30 percent of electric generation nationwide and will be reduced as the supply of natural gas becomes more available.

In addition, the energy sectors are the prime movers affecting capital expenditure (capex) projects in the refinery, petrochemical, pharmaceutical, power and pipeline sectors. This month’s issue will be devoted to giving an insight into major capex projects kicking off in 2019. Future columns will focus on regional activity, regulatory issues, pricing outlook and trade issues.

Responding to the increase in demand in part derived from the energy sector expansion, favorable tax treatment and trade negotiations, U.S. steelmakers are upping their capex spending for 2019. U.S. Steel announced $1.2 billion in capital spending plans for 2019. Nucor also announced it is raising capex spending to $1.8 billion for this year. There are more than $23 billion in steel mill projects slated for 2019 in the United States.

DowDuPont plans to maintain its capex level at the 2018 level for 2019, approximately $2.5 billion. The company is looking at nearly $848 million in planned U.S. project completions this year. These include the 1.1 million-per-year ethylene unit expansion in Freeport, Texas, and a 200,000 lb.-per-year polyolefins catalyst unit in Orange, Texas.

Refinery Projects

ExxonMobil is boosting capex to nearly $30 billion for 2019. It plans to triple total daily production to more the 600,000 oil-equivalent barrels by 2025 from operations in the Permian Basin. Also announced was ExxonMobil’s final decision to proceed with construction of a new crude unit at the Beaumont, Texas, refinery. The unit will increase the refinery’s capacity by more than 65 percent.

The U.S. Southwest ranks at the top of the list for refinery turnarounds, with more than $730 million planned for 2019. Turnaround spending in North America is expected to be $1.9 billion for 2019.

Valero is gearing up for unit additions and upgrades in 2019. It is planning on beginning construction in the coming months on a $750 million Coker unit addition at the Port Arthur Refinery. It will include four drums with a capacity of 55,000 barrels per day to produce additional vacuum gas oil for a pair of hydrocrackers.

The company also expects to see long-term benefits from additions and expansions of sulfuric alkylation units at its refineries:

A $300-million addition at the refinery in Houston;

A $7-million upgrade of an existing unit at Houston; 

A $400-million addition at the Saint Charles Refinery in Norcross, La.; and

A $300-million upgrade at a refinery in Wilmington, Calif.

Valero expects to complete construction this spring on a $335 million marine terminal on the Houston Ship Channel in Pasadena, Texas. And it is considering a proposed $75-million expansion at Pasadena following the completion of the initial phase.

LNG, Crude Export Projects

Approximately $83.5 billion in industrial projects are planned for startup in 2019 along the U.S. Gulf Coast between Brownsville, Texas, and Pascagoula, Miss. The projects range in size from small maintenance turnarounds to large gray roots liquid natural gas (LNG) projects.

The largest projects scheduled for kickoff are several LNG projects that include the Tellurian’s Driftwood LNG Terminal in Lake Charles, La. The plant could eventually include up to four liquefaction trains.

Crude exports have become big business in the United States with several billion-dollar-plus export terminals scheduled for potential kick off this year. These include the Plaquemines Liquids Terminals LLC’s planned 20 million-barrel crude terminal in Plaquemines Parish, La.

Jupiter Energy Group (Houston) is planning a crude export terminal about six miles off the coast from the Houston Ship Channel entryway. This terminal will have the capacity of loading very large crude carriers with capacities of up to 2 million barrels. Construction of this facility could begin in the second quarter of this year with completion scheduled for early 2021.

In Mont Belvieu, Texas, Enterprises Products Partners plans to begin construction on a second 1.65 billion-lb.-per-year propane dehydrogenation unit. This project has an estimated TIV of $900 million. Construction is expected to take four years.

Pipeline Projects

Pipelines are the lifelines of the energy sector, providing efficient media for bringing product to market, be it either gas or oil. Currently, the world’s largest producer of crude oil and natural gas has been hindered by lagging transportation infrastructure construction in critical areas; i.e., the Permian Basin in New Mexico and Texas and The Marcellus Shale area.

Responding to the need, Williams Cos. is weighing the proposed Bluebonnet Express pipeline project. The pipeline would run approximately 500 miles from the Waha Supply Hub to Katy, Texas, transporting 2 billion cf/d of natural gas to Transco’s Zone 2 mainline, which covers the northern half of the Texas Gulf Coast.

ExxonMobil, Plains All American Pipeline and Lotus Midstream formed the Wink-to-Webster crude oil pipeline joint venture. The 650-mile pipeline, made from domestically sourced line pipe already on order, would transport more the 1 million BBL/d of crude oil and condensate from the Permian Basin to the Texas Gulf Coast. The 36-in. pipeline project has a TIV of $1 billion.

The Penn East pipeline project is expected to start in the first quarter of this year. It will consist of 120 miles of 36-in. diameter pipe with a TIV of $1 billion. The line will originate in Lucerne County, Pa., and end in Mercer County, N.J.

PVF Roundtable Q2 Meeting

The PVF Roundtable’s networking meetings provide a valuable platform for keeping pace with the dynamics of the PVF industry, the exchange of ideas and information and the opportunity to expand your contact base. This is the place where industry movers, shakers and decision-makers meet. 

The board of directors encourages you to attend our next PVF Roundtable networking meeting scheduled for Tuesday, May 14, 2019, beginning at 4:30 p.m. at The Bell Tower on 34th, 901 W. 34th St., Houston.

This meeting will be preceded by the May 13 PVF Roundtable Golf Tournament to be held at The Woodlands. We encourage all interested to register early at www.pvf.org.