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Can you believe the end of the second quarter is here? This year is passing very fast and the third quarter is around the corner. Refinery turnarounds initiated during the second quarter have provided added stimulus to the PVF distribution industry, a welcomed increase in activity after a slow start in the first quarter. This activity should continue well into the third quarter.
Industrial Info Resources reports more than 175 maintenance-related projects in the domestic oil and gas industry are scheduled to begin now and through the end of the summer. Almost half of them are located in the states of Texas, Louisiana and Oklahoma, particularly in gas-processing plants. Those facilities account for nearly 50 percent of the total investment value (TIV) for oil and gas maintenance projects in the United States this summer.
Oklahoma has a pair of significant projects from two of the largest companies in the industry — Kinder Morgan Inc.’s Train 2 turnaround at the plant in Paden, Okla., and DCP Midstream’s turnaround at the plant near Moreland, Okla. The Paden plant produces 6,000 BBL/d of natural gas liquid and the Moreland plant produces 20,000 BBL/d.
Energy Products Partners is preparing for major inspections and repairs to two trains at a natural gas liquids (NGL) recovery plant in Meeker, Colo., each processing 1.8 billion cubic feet/day of gas. ExxonMobil Corp. is also preparing for major maintenance at a four-train gas treatment plant located near Kemmerer, Wyo.
Crude oil pipelines are scheduled to see maintenance projects in some of the fastest growing regions of domestic production. Magellan Midstream Partners is preparing for two “pigging” projects in the Texas Permian Basin. The Longhorn Crude Oil Pipeline traversing the state from El Paso to Houston will have pigging performed on a 140-mile stretch from Crane to Cottonwood and a 100-mile stretch from Cottonwood to El Paso along with any repair work deemed necessary.
Offshore production projects are some of the highest TIV projects for oil-related maintenance. In the Gulf of Mexico, BP is preparing for a turnaround and shut-in at the Na Kira Offshore platform with a capacity of 130,000 barrels of oil and 550 million cubic feet/day of natural gas. Also, Energy Inc. is set for a shut-in at the Pompano Offshore Platform, which has a capacity of 60,000 barrels of oil and 200 million cubic feet/day of natural gas.
The energy sector of the U.S. economy remains the engine propelling the PVF industry during the second quarter and well into the third quarter of 2019. Takeaway capacity remains the bottleneck for bringing product to market in the Permian Basin, Marcellus Shale, Utica Shale and Bakken Shale regions.
Production in the Permian Basin has been especially strong. Earlier this year, both ExxonMobil and Chevron announced plans to increase capacity in the Permian Basin of West Texas and Southeastern New Mexico. The only problem is pipeline capacity is falling short of demand. Other companies including BP, Royal Dutch Shell and Occidental Petroleum Corp. are also considering increasing activity in the Permian.
As a result, several companies are responding to the issue announcing new pipelines to alleviate the bottlenecks in getting product to market.
Plains All American Pipeline announced that the Cactus II Pipeline was fully committed with long-term, third-party contracts. The initial capacity for the pipeline is 585,000 barrels of oil/day, extending from the Permian Basin to the Corpus Christi/Ingleside area in Texas. The pipeline will have origination points at Orla, Wink, Midland, Crane and McCarney, Texas.
The system includes a combination of capacity on existing pipelines and the addition of two new 26-inch pipelines. The first new pipeline will extend from Wink to McCarney and the second will extend from McCarney to the Corpus Christi/Ingleside area.
Cimarron Express Pipeline is a joint venture project that will include the construction and operation of a new crude oil pipeline serving the STACK producers in central Oklahoma with a 65-mile, 16-inch crude oil line extending from northeastern Kingfisher County, Okla., to Blueknight’s crude oil terminal in Cushing. The pipeline will provide direct market access at Cushing for producers.
The Keystone XL Pipeline Project is planning a 1,179-mile, 36-inch crude oil pipeline from Hardison, Alberta, Canada, to Steele City, Neb., at an estimated TIV of $8 billion. The pipeline will transport crude oil from Canada as well as the Bakken Shale region of Montana and North Dakota.
Dominion Energy Inc. has surprised analysts with plans to restart the Atlantic Coast Pipeline. The massive ACP project is designed to carry 1.5 billion cubic feet/day of natural gas from the Marcellus and Utica shale plays in Pennsylvania, Ohio and West Virginia to the U.S. southeast. Dominion will resume construction on a West Virginia-to-North Carolina segment in the third quarter with completion set for early 2021.
Data Center Construction
Data centers are another industry sector favorably impacting the PVF industry as the world continues to consume vast amounts of digital data. More land is being turned over for new data center construction and expansion.
Iowa is one state selected for 13 new data center projects with a TIV of approximately $5.48 billion. Iowa’s location in the central Midwest points to its increasing importance for the sector as data usage continues to rise.
Arizona is another state also on the upswing with expected job growth of 2.6 percent due to increased activity in the high technology and manufacturing sectors. Virginia, West Virginia, North Carolina, South Carolina and Georgia are also seeing increased activity in data center growth.
The state of Utah is experiencing the fastest growth in the West due to cloud-computing construction in addition to software development, aerospace and life sciences. A new airport in Salt Lake City represents a $3.6 billion investment and should be ready sometime in 2020.
Please note that this column is an overview of key events impacting the second and third quarter of 2019. The second quarter has seen an upturn in PVF activity in several sectors of the market. The remainder of the year 2019 is presenting many opportunities for those of us in the PVF industry. We look for a strong second half of 2019.
Pricing for carbon steel butt-welding fittings and forged-steel flanges will remain firm into the third quarter. Predicated on current world and national events, the supply chain for these products could see possible disruptions. Therefore, it is recommended that you check with your sources in the event of an unexpected interruption in availability and pricing structure.
Keeping up-to-date with developing opportunities and increasing your network of contacts are two reasons to attend the PVF Roundtable networking meetings. They provide a valuable opportunity to keep pace with the ever-changing dynamics in the fast-paced PVF industry.
The PVF Roundtable board of directors encourages you, and your associates, to attend the next meeting scheduled for Aug. 13, 2019, at The Bell Tower on 34th, Houston. Please register early using the PVF Roundtable website at www.pvf.org.
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