Treading through shores opportunities

Treading through shores of opportunities

5:24 AM, 16th September 2017
Colin Chapman, President of Euro Petroleum Consultants
Colin Chapman, President of Euro Petroleum Consultants.

In an interview, Colin Chapman, President of Euro Petroleum Consultants with Chemical Today Magazine delves into the growth prospects of oil & gas chemicals in the global market.

By Debarati Das 

Trends in oil & gas chemicals and petrochemicals segment. 

Supply and demand factors have been re-shaping the petrochemical market, the most influential were availability of unconventional gas in the North America and high demand for oil and petrochemicals in the Asia Pacific, spearheading the expansion of the industry.

USA has shown the most significant growth due to the shale boom, mainly in new gas processing, GTL plant capacity, ethylene, methanol and ammonia plants. Low ethane prices have triggered a revival of the US petrochemical sector - a substantial number of petrochemical plants have been built and new projects are in the pipeline.

The Middle East and Asia-Pacific regions have slowed down their rate of construction since 2012, with Middle Eastern companies focusing on refining cluster development, and Asian-Pacific – on world-class scale petrochemical complexes.  

An alternative olefins production route is encouraged by high crude prices – coal & methanol-to-olefins (CTO) and methanol-to-propylene (MTP). These processes are actively developing, particularly in China that has to import vast amounts of hydrocarbons to feed domestic supply while having lower quality coal in reserves. Currently, these alternatives look less attractive but they do offer competitive economics, especially in coal-rich regions.

Demands from oil & gas chemicals and petrochemicals users 

Undoubtedly, chemical and petrochemical products have become indispensable to modern society. Of course, the main requirement for users is safety - human life and health should be an absolute priority.

Another important aspect - environmental friendliness - modern society bears full responsibility to future generations for the proper conservation of ecosystems. Hence, much attention is paid to both recycling and development and application of special materials ie. biofuels and biodegradable polymers.

Another important objective for special materials development is getting materials with unique properties capable of expanding usage of chemical and petrochemical products and thus replacing traditional materials to improve end-product performance, increase lifetime or reduce operating costs.

Technologies that will benefit oil & gas processing chemicals industry. 

Development of technologies has vast importance for oil & gas and chemical industries. With efficient GTL technologies, more consumers may introduce gas - a more environmentally friendly fuel - to their energy balances on a larger scale.

As for gas to (petro) chemicals, development of these ways of gas monetization helps to both cope with the lack of gas pipeline infrastructure faced by landlocked gas fields and satisfy demand for petrochemical and chemical products that grows globally in response to developing economies and expanding population.

Growth potential in Russia.

Russia has huge growth potential related to the chemical sector development due to the extensive feedstock availability.

EPC has been operating on the Russian market for over 20 years and lately we have seen a sustainable trend: local oil & gas companies contemplate new ways to monetise natural resources. In addition to oil residue deep conversion and gas liquefaction, Russian companies are considering and implementing various options for gas processing into chemical products, primarily methanol and ammonia; as for refiners, they look into integration of downstream activities with focus on propylene, aromatics and their derivatives.

Growth prospect for biofuels and low-carbon economy

Environmental concerns have led to a significant demand for biofuels growth - their importance in global energy system has been strengthening for more than 10 years now, starting from US and EU regions. Asia Pacific region is expected to be the most rapidly growing area of the world in this industry. Nevertheless, the issue of food security remains critical in countries that contributed to demand growth the most – India, Indonesia, Thailand. Three main factors might increase Asian bio plants competitiveness: low-cost effect, government support, long-term downstream partners.

Some experts believe that replacing fossil fuels in the next decades is possible, and biofuels provide the best possible alternative if utilized rationally; some countries seem to reject wider introduction of bioenergy to their energy balance. With overcoming critical challenges, synergy effect can be achieved in feedstock availability, processing & logistics, conversion and extraction.

Incorporating sustainability in refining and petrochemicals segment

In order to ensure sustainability producers would need to increase output quantity, choose configuration and technology according to in-depth study to evaluate which scheme best fits market and budget, select optimal project implementation strategy, take into account multi-technology options.

Process safety is helping business to maintain its stability, gain strength on the market, including share growth from positive reputation and company image, while saving costs on repairing assets after incidents, fines for environmental damage, let alone taking care of health and lives of employees and locals.

A complex safety system approach was designed to solve various important issues: understanding processes, identifying hazards and causes, determine credible consequences, evaluate & mitigate risks, highlight weak points, maintain asset integrity, prepare emergency response, encourage cultural changes, provide knowledge, increase visibility of safety.

Challenges faced by the oil & gas industry global

With reduced refining margins, coupled with weaker global demand and production overcapacity, last year proved to be a challenging one for refiners. The increased crude demand with the announced cuts in oil production will lead to a more balanced supply/demand market in the region.  This increased demand in the Asian market will attract a lot of interest from important producers. First in line will be the Middle East with new crude production capacities expected to come online. Alternative suppliers from South America and the US will face strong competition from established traders and exporters.

There are a few important questions to be addressed, such as market needs and opportunities for gasoline and/or diesel, power generation, coke production and petroleum gas utilization, use of unconverted materials, dealing with budget constraints, best ways to integrate within existing refinery, etc.

The consequences of low crude price could be withholding of major investment projects; selection of low-cost projects for processing of heavy residues, and reduction of refining margins.

Environmental and government policies impacting oil & gas chemicals business.

Traditionally, the oil & gas and chemical industries are under serious pressure from regulators, whose aim is to ensure process, environmental and health safety in consumption of end products. I would like to draw attention to regulation that might be implemented soon - the International Marine Organization (IMO) requirements for sulfur content in bunker fuels. According to that, since 2020, restrictions are imposed on SOx emissions from sea-going ships, and these limitations can change the structure of global demand for bunker fuel radically, stimulating the development of new vessel designs (installation of scrubbers for flue gas cleaning, use of electricity and nuclear power), as well as the use of alternative fuels (distillate fuel, LNG, methanol).

The introduction of these requirements poses a major challenge for refiners around the world, forcing to reconsider operational strategies within reducing demand for high-sulphur fuel.

Training required for emerging markets.

There are some major areas that need to be developed more within companies and key managers and specialists should have in-depth knowledge of company’s goals and strategy as well as ways and instruments to achieve best results – they should all be trained and brought into teams to ensure better cooperation:

  • Operational Efficiency - includes a wide range of topics: essential instruments for creation of corporate continuous improvement system as well as process structure optimization with the help of benchmarking, advanced IT and software,
  • Project Management - best ways to execute each phase of the project lifecycle and ways to optimize project activities,
  • Strategy Development, including master planning, markets and specific oil, gas and petrochemicals master-classes,
  • Health, Safety and Environment - process safety seminars are particularly topical for companies developing corporate safety culture and looking for in-depth review of different instruments such as HAZOP, RCA and others.

© Chemical Today Magazine

 

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https://www.worldofchemicals.com/digitalissue/chemical-today-september-2017/23

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