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DownstreamconstructionprojectsontheriseOil&GasJournal

Downstreamconstructionprojectsontherise
11/15/2004

Thenumberofdownstreamoilandgasprocessingprojectshassteadilyincreasedoverthelast4years,accordingtoOil&GasJournal'sWorldwideConstructionSurvey.
ClickheretoviewtheConstructionUpdateinPDF.

Clickheretoenlargeimage
Countingconstructionprojectsinrefining,petrochemical,gasprocessing,andpipelinesectors,thenumberofprojectsincreasedto1,757in2004from1,682in2003,1,665in2002,
and1,645in2001(Fig.1).Contributingtogrowtharerefiningmarginsupasmuchas14%,upcominglowsulfurfuelspecificationsintheUSandEurope,highrefiningutilizationrates,
strongpetrochemicaldemand,andincreasedenergydemandinChinaandIndia.

Refining
InaresponsetoOGJ'ssurvey,KuwaitNationalPetroleumCo.(KNPC),Safat,announcedplansforconstructionofa432,000b/dgrassrootsrefineryintheShuaibaIndustrialArea.
Withatotalcostof$3.3billion,theprojecthasenteredtheengineeringphase,andfinalcommissioningisplannedtotakeplacein2010.KNPCalsoreportedaresidue
desulfurizationexpansion,avacuumdistillationexpansion,anewMeroxunitforitsMinaAbdullahrefinery,andanewethanerecoveryunitforitsMinaAlAhmadirefineryfora
combinedtotalof$500million.
BahrainPetroleumCo.,Bahrain,alsoreportedaprojectintherefiningsector.The$690millionlowsulfurdieselproject,awardedtoJGC,Japan,includesvariousnewunitsand
someexpansionstoexistingunitsincludingasteammethanereformer,a60,000b/dhydrocracker,twosulfurrecoveryunits,twosourwaterstrippers,andanaminebasednatural
gassweeteningunit.Theentireproject,currentlyunderconstruction,isexpectedtobecompletedinJune2007.
IntheUS,HoustonbasedMotivaEnterprisesLLCplansseveraldieselhydrotreatingprojectsamongitsrefineries.Hydrotreaterunitrevamps,affecting157,000b/dcapacity,are
plannedforitsfacilitiesinPortArthur,Tex.,Norco,La.,andConvent,La.AllprojectsarecurrentlyunderengineeringbyBechtelGroupInc.,SanFrancisco,andshouldreach
mechanicalcompletionbythefirstquarterof2006.
BechtelisalsotheleadcontractorforaseriesofdieselhydrotreaterrevampsforMotiva'ssistercompany,ShellOilProductsUSofHouston.Revampprojectsimpacting130,000b/dof
hydrotreatingareunderwayatPugetSound,Wash.,andDeerPark,Tex.Shellisthelicensoronallthoseprojects.
Thesurveyrevealedarecentrashofnewhydrogenprojectsasrefinersareupgradinghydrogenproductionandrecoverysystemstosupportincreasedhydroprocessingforclean
fuelsinitiatives.
Forexample,CB&IHoweBaker,Tyler,Tex.,wasawardedlicensingandengineeringcontractsbyConocoPhillips,Houston,forfivenewhydrogenplants,oneofeachtobeinstalledin
Billings,Mont.,Borger,Tex.,PoncaCity,Okla.,Linden,NJ,andWoodRiver,Ill.Newcapacitytotaling130MMcfdfortherefinerwillcomeonstreamin2005.
AnotherhydroprocessingprojectunderwayisSuncorEnergyUSA'sCommerceCity,Colo.,expansion.Suncorreportedexpansionprojectsforasteammethanereformingunitanda
distillatehydrotreaterandplanstobuildahydrodesulfurizationunit.The$170millionprojectshouldbefinishedbytheendof2005.

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Intheforegroundisthe5.2milliontonne/yearliquefactionTrain4
underconstructionatAtlanticLNGLtd.'sPortFortin,Trinidad,
complex.BehindTrain4areexistingliquefactionTrains3and2,
each3.3milliontonnes/yearandTrain1with3milliontonnes/yearof
capacity.PhotocourtesyofAtlanticLNG,Trinidad.
Clickheretoenlargeimage
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ValeroEnergyCorp.,SanAntonio,reportedupgradecampaignsforsixrefineries.Fluidcatalyticcracking(FCC)expansionsareplannedforNewJersey,Louisiana,andOklahoma
refineries,whilenewdesulfurizationunitswillbeinstalledattheTexasandLouisianafacilities.Plansfordelayedcoking,visbreaking,reforming,andalkylationupgradesaremoving
forwardatitsotherrefineries.
OutsidetheUS,CloughLtd.,Perth,Australia,reportsmechanicalcompletionofInteroil's32,500b/dgrassrootsrefineryatPortMoresby,PapuaNewGuinea.Practicalcompletionis
expectedbytheendofNovember.
InPoland,GrupaLotosSA,Gdansk,isexpandingits90,000b/dGdanskrefinery.Constructionisunderwayonthecrudeandvacuumdistillationunitstoincreasecapacityby30,000
b/d.GrupaLotosissolicitingbidsforanewMeroxkerosenesweeteningunitforinstallationbySeptember2005.
Chinaplanstoconstructtworefineriesonthecountry'seastcoast.SinopecGroup,Shanghai,willbuilda205,500b/drefineryatQingdao,andCNOOCGroup,HongKong,willbuilda
246,600b/drefineryatHuizhou.Thecombinedprojectswillcost$3.3billion,andbothshouldbecompletedby2008.
InIndia,thethreemajorrefiners,BharatPetroleumCo.,Assam,HindustanPetroleumCorp.Ltd.,Mumbai,andMangaloreRefining&PetrochemicalsLtd.,Mangalore,allplannewor
expandedprocessingunits.Isomerization,FCC,andhydrotreatingarethemainprocessingcapacitiestobeincreased,andallprojectsshouldbecompletedby2005.

Petrochemical
Soaringpetrochemicalsaleshavefavoredpetrochemicaloperationsandencouragedcapacityexpansions.DowChemicalCo.,Midland,Mich.,recentlyreporteda26%jumpin
sales,whileExxonMobilChemicalCo.,Houston,reportedathirdquarterearningsincreaseof$779millionoverlastyear,bothasaresultofhigherworldwidemarginsandrecord
salesvolumes.
Thesestrongoperatingeconomicshavepromotedincreasedpetrochemicalconstructionprojects.IntheOGJsurveyreport,thenumberofprojectsroseto408from371in2003.
DowChemicalreportedethyleneexpansionprojectsinFreeport,Tex.,andTarragona,Spain,alongwithnewethylenecrackerstobebuiltinSeadrift,Tex.,andShuaiba,Kuwait.Dow
alsoplansaworldscalepetrochemicalcomplextobebuiltattheSoharIndustrialPortareaofOman.
InAugust2004,ExxonMobilandPetroleosdeVenezuelaSA,Caracas,signedanagreementtobuilda$2.5billionworldclasspetrochemicalplantintheeasternVenezuelanstateof
Anzoategui.Thecomplexwillincludea1milliontonne/year(milliontpy)ethyleneplantwithderivatives.FeasibilitystudiesbeganinSeptember.
StateownedPetrochemicalIndustriesCo.(PIC)ofKuwaitplanstwonewprojectsinShuaiba.Anew768,000tpyparaxyleneplantandanew325,000tpybenzeneplantwillbothbe
completedbythesecondquarterof2007.Inaddition,PICandDowplantoconstructanewethyleneandderivativescomplex,tobeknownasOlefinsII,atthatlocation.PICandDow
indicatedthattheymightconsiderfuturecooperativepetrochemicalventuresoutsideofKuwait.
SaudiArabiaplanstoexpandpetrochemicalproductionandwillincreasetheuseofnaturalgasasafeedstock.AccordingtotheUSDepartmentofEnergy'sEnergyInformation
Administration,SaudiBasicIndustriesCorp.(Sabic)ofRiyadhisexpectedtobecomeoneoftheworld'stopfiveethyleneproducersby2005andcurrentlyaccountsforabout10%of
theworld'spetrochemicalproduction.

Clickheretoenlargeimage
ThepetrochemicalsurveyreportitemizesninenewpetrochemicalprojectsinSaudiArabiainadditiontopreviouslistings(Table1).Mostprojectsareexpectedtobecompletedin
2007and2008.

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OneofSabic'sprojects,a1.7milliontpymethanolcomplexattheSaudiMethanolCo.,(ArRaz)AlJubail,isscheduledforcompletioninthethirdquarterof2007.AccordingtoSABIC,
thecomplexwillmakeArRaz,ajointventurewithMitsubishi,thelargestsinglemethanolproductioncomplexintheworld.

Gastoliquids
TheworldwideconstructionsurveycurrentlylistseightnonUSGTLprojectsintheplanningstage,oneprojectunderconstruction,andtwoinanengineeringphase.
OneoftheengineeringphaseprojectsisChevronTexacoCorp.'s34,000b/dEscravosGTLprojectinNigeria.Chevronrecentlyreportedthattheprojecthasbeenputonholddueto
higherthanexpectedcommercialbidsfromcontractors.Originallyslatedfora2006startupdate,theprojectmightnotbecompleteduntilsometimein2007.
Despitethechallengingeconomicsoftoday'sGTLprojects,industryexpertsareconfidentthatGTLwillhaveaplaceinfuturetransportationfuels.
EvidenceofsuchconfidencewasrecentlyunderlinedbyShellInternationalGasLtd.'sGTLfueltrialinCalifornia.
Shell'strial,usingfuelGTLindieselcommercialvehicles,resultedina16%reductionofNOxemissionsanda23%reductionofparticulateemissionswithoutaparticulatefilter.With
filter,thetrialresultedina20%reductionofNOxemissionsand97%reductionofparticulateemissions.
TheGTLfuelcamefromShell's14,500b/dGTLplantinBintulu,Malaysia.ShellsellsblendedGTLfuelinGermany,theNetherlands,Thailand,andGreece.

Gasprocessing
Thenumberofgasprocessingfacilityconstructionprojectshasincreasedto266from244listedinthelastsurvey,withmanynearingcompletionattheendoftheyear.
Latestreportsindicatethenew$260milliongasprocessingplantatLangLang,Australia,willbecommissionedsometimethismonth.OriginEnergyLtd.,Sydney,lettheEPCcontract
toCloughLtd.,Perth.The75MMcfdplantwillproduce67terrajoules/dayofsalesgas,3,700b/dofcondensate,166tonnes/dofpropaneand95tonnes/dofbutane.
ChiyodaCorp.,Yokohama,Japan,reportedthatExxonMobilMiddleEastGasMarketingLtd.'sgassweeteningandNGLrecoveryprojectinRasLaffan,Qatar,iscurrentlyunder
construction.AftercompletioninAugust2006,thefacilitywillproduce680MMcfdofsalesgas,1.7milliontpyofLPG,and300,000tpyofcondensate.
SnamprogettiSPA,Milan,reportedthatconstructionisunderwayona6.6bcm/yeargassweetening,dehydration,anddewpointcontrolprojectinLibya.Theprojectwillproducegas
andLPGatAGIPGasBV'snewfacilityinMellitah.SnamprogettisharesthecontractwithABBLummusGlobalofBloomfield,NJ,andHyundaiEngineering&ConstructionCo.Ltd.,
Seoul,S.Korea.ExpectedcompletionisJune2005.
SnamprogettiwillalsoworkwithHyundaiontheNGLfractionationandprocessingplantatMesaieed,Qatar,foroperatorQatarPetroleum.Thefacilityisunderconstructionandwill
haveacapacityof1,650tonnes/daytoproduceethane,butane,propane,andnaturalgasoline.
Inadditiontothatproject,SnamprogettiisworkingonanNGLrecoveryandfractionationplantwithOrtloffEngineersLtd.,Midland,Tex.,foroperatorBPGlobalInvestmentLtd.,
London,attheElGamilfacilityinEgypt.The1,100MMcfdplantwillproducepropane,LPG,andnaturalgasoline.ExpectedcompletionisMarch2005.
DemandforLPGinIndiaisontherise.Toanswerthedemand,TotalSA,Courbevoie,France,andHindustanPetroleumCo.Ltd.,Hindustan,formedSouthAsiaLPGLtd.tobuildand
operateanLPGimportandundergroundstorageterminalatVisakhapatnam,aportinAndhraPradesh.Withastoragecapacityof60,000tonnes,theterminal,whencompletedinthe
thirdquarterof2006,willbethefirstfacilityofitstypeonIndia'seastcoast.

Sulfur
Asexpected,thenumberofsulfurrecoveryprojectslistedinthesurveyreporthasincreased.Thenumberofprojectsroseto51fromthelastsurvey'stotalof46.Thetotalcapacity
increaserepresentedbytheseprojectsis18,876tonnes/day,upfrom14,748tonnes/day.
Black&VeatchPritchardInc.,OverlandPark,Kan.,reportedamajorprojecttobebuiltforIndianOilCorp.ofPanipat.Theprojectwillrecoversulfurfromrefineryacidgasusingtwo
225tonne/dayClaustrains,atailgastreatingunit,andasulfurdegasser.Theprojectisexpectedtobecompletedbyyearend.
Black&VeatchPritchardreportedthesametypeofprojectforPertaminainCilacap,Indonesia.Theprojectiscurrentlyunderconstructionandwillrecover68tonnes/day.
Other,Black&VeatchPritchardprojectsliketheseareunderwayatrefineriesatMarathonAshland,St.PaulPark,Minn.ShellChemicalCo.,Yabucoa,PuertoRicoShellRefining&
Marketing,Anacortes,Wash.MotivaEnterprisesLLC,DelawareCity,Del.andBPPLC,Ferndale,Wash.,andCoryton,England.
InCanada,BechtelreportedaClaussulfurrecoveryunitwithanaccompanyinghydrogenation/aminetailgasunit,andaminetreatingunit,andasourwaterstrippertobeinstalledat
SuncorEnergyInc.FortMcMurray,Alta.Whencompletedin2008,theprojectwilladd250tonnes/dayofsulfurrecoverycapabilities.
OrtloffreportedengineeringworkattwonewrecoveryunitstobebuiltatthePortArthur,Tex.,refineryoperatedbyPremcorInc.ofOldGreenwich,Conn.The260tonnes/dayunitis
expectedtobecompletedby2005andthe424tonnes/dayunitisexpectedtobecompletedby2006.

SabicEthyleneGlycolConstructioncontinuesatthenewethyleneglycolplantat
Sabic'sJubailUnitedPetrochemicalcomplexinAlJubail,SaudiArabia.Thisis
Sabic'sseventhethyleneglycolplantand,whencompletedattheendof2005,
willhaveanannualcapacityof625,000metrictonnes/year.PhotocourtesyofHill
andKnowlton,Houston.
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ValeroEnergyCorp.,SanAntonio,willaddsulfurrecoverycapacityatthreeofitsrefineries.Anew$28.9million,130tonnes/dayunitwillbeplacedinserviceattheArdmore,Okla.,
refineryinApril2005,anew$20.6million,130tonnes/dayunitwillbecompletedattheThreeRivers,Tex.,refineryaboutthesametime,andanew$13.6million,450tonnes/dayunit
willbecompletedattheSanNicolas,Aruba,refineryinMay2005.
Aruba

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JacobsEngineering,Pasadena,Calif.,receivedacontractfromAbuDhabiGasIndustriesLtd.toprovidedesignandengineeringservicesforinstallationoftwonewSuperClaus
unitsandanacidgasenrichmentunitfortheexpansionoftheHabshangascomplexinAbuDhabi.Thenewsulfurrecoveryplantisrequiredduetoincreasedoilproductionatthe
facilityandwillboostsulfurcapacityby1,600tonnes/day.

Pipelines
Pipelineoperatorsandconstructioncontractorsreportedmoreprojectsinthecurrentsurveythanintheprevioussurvey.Thenumberofprojectsroseto193from182andincludes
11,588milesofcrudepipeline,24,789milesofgaspipeline,and5,842milesofproductspipeline,worldwide.Thelastsurveyindicated11,381milesofcrudepipeline,23,598miles
ofgaspipeline,and5,049milesofproductspipeline,worldwide.
ClickheretoviewthePipelineUpdateinPDF.
ValeroLP,amasterlimitedpartnershipofValeroEnergy,reportedtwoproductspipelineconstructionprojectsplannedforTexas.Thefirst,anew41milelinetorunfromEdinburgto
Harlingen,willcarry35,000b/datcompletioninDecember2005.Thesecond,areplacementlineof51miles,willcarry40,000b/dfromCorpusChristitoSeeligsonwhencompleted
byyearend.ValeroLPrecentlyacquiredKanebServicesLLCandKanebPipeLinePartnersLPina$2.3billiondealthatwillmakeValerothelargestUSpetroleumstorageoperator.
Thenewassetsinclude9,700milesofpipeline,101terminalfacilities,andfourcrudeoilstoragetankfacilities.
InOctober,theUSSenateandHouseofRepresentativesapprovedlegislationtoprovidea$18billionfederalloanguaranteetosupporttheproposedAlaskanpipeline.The3,500
milepipeline,ifbuilt,wouldbeoneofthelargestprivateconstructionprojectseverandwouldbebuiltover10years.Theloanguaranteewillmakeiteasierforbidderstogetfinancing
fortheproject.
OutsidetheUS,PetrobrasSA,RiodeJaneiro,recentlyannouncedplanstospend$4billiontodevelopgaspipelinesinBrazilduringthenext6years.Themainprojectisa750mile
pipelinetoconnectthesoutheastpartofthecountrytothenortheastinordertosupplypowerfacilities.Overall,theinitiativewilladdabout3,000milesofpipelinetothecountry's
existing3,500milegastransportnetwork.
InRussia,oilexportsareconstrictedbyalackofpipelinecapacity.TheRussiangovernmentisreportedtobeconsideringconstructionofseveralnewpipelineroutes.Atleastone
newpipelinewouldbeneededtoconnectWesternSiberiatothearcticcoasttoexportoiltoEuropeandtheUS.AnotherpipelinewouldbeneededforexportstoJapanorChina.A
proposed2,300mileJapaneseexportlinewouldrunfromAngarsknearLakeBaikaltotheportcityofNakhodka.Aproposed1,500mileChineseexportlinewouldrunfromAngarsk
toDaqing.

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