LNG share in long-distance gas trade on rise; Planned refinery maintenance will not disrupt fuel supplies
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LNG share in long-distance gas trade on the rise
The share of liquefied natural gas (LNG) in long-distance gas trade will rise from 42% in 2014 to 53% in 2040, the International Energy Agency (IEA) has predicted in its World Outlook 2016.
The IEA, comprised of all but five of the 34-member OECD group of developed economies, predicted the old system of strong, fixed-term relationships between suppliers would be replaced by “more competitive and flexible arrangements, including greater reliance on prices set by gas-to-gas competition.”
It said this shift would be brought about by the increasing availability of footloose U.S. LNG cargoes, the arrival in the 2020s of other new exporters from East Africa, and the continued spread of unconventional gas.
Floating storage and regasification units are helping to unlock new and smaller markets for LNG, the report noted. But it said uncertainty over the direction of this commercial transition could delay decisions on new upstream and transportation projects, posing the risk of a hard landing for markets once the oversupply is absorbed.
Planned refinery maintenance not expected to impact fuel supplies
The U.S. Energy Information Administration does not expect planned refinery outages during the final quarter of the 2016 calendar year to have any adverse effect on the supply of gasoline, jet fuel, or distillate fuel.
Planned maintenance is typically scheduled between September and March when there is less demand for transportation fuels, the EIA noted.
It said planned maintenance along the Gulf Coast (PADD 3 region) of fluidized catalytic cracking, reforming, hydrocracking, and coking units is above average this fall (September to December). However, planned atmospheric crude distillation unit (CDU) maintenance is near or below the 10-year average in the region. The outages will result in moderate production loss in petroleum products.
Along the East Coast (PADD 1), planned maintenance is expected to be very light for atmospheric crude distillation, fluidized catalytic cracking, and reforming capacity. In the Midwest (PADD 2), planned maintenance is concentrated in September and October, thought atmospheric CDU outages peak at 5% of supply, less than the historic average and only one-quarter of high 2015 maintenance levels. Planned outages in the Rocky Mountain region (PADD 4) this fall are limited to only fluidized catalytic cracking units during October and November.
Along the West Coast (PADD 5), planned outages between October and November will be higher than the 10-year average, but there is no maintenance planned for September or December. Maintenance is concentrated among atmospheric crude distillation units, with outages averaging 423,000 barrels per day (15% of regional capacity) in October and November, sharply higher than the 10-year average of 78,000 bbl/d (3% of regional capacity).
Jacobs’ petroleum and chemicals unit sees revenues fall
Jacobs Engineering’s petroleum and chemicals segment earned $3.26 billion in the fiscal year ended September 30, 2016, 22.7% less than in the previous fiscal year.
The decrease was primarily due to lower business volume in the oil and gas market and to a lesser extent the refining market, particularly in North America and the Middle East, as weak oil prices have “significantly impacted client capital spending and delayed the pace of new contract awards,” Jacobs explained in its annual report.
In positive news for the petroleum and chemicals segment, Chairman and CEO Steve Demetriou said in a conference call that the backlog of orders increased by $361 million in the September quarter to $5.51 billion, almost the same level as it stood one year earlier.
“With the increased production of shale oil, condensates and natural gas liquids in the U.S., we're more focused on pursuing opportunities in the midstream arena. Process and pipeline infrastructure needs to be put into place to move these barrels to market. Additionally, propane, butane and naphtha oversupply in the U.S. Gulf Coast is forecast to continue, which will require additional export infrastructure or conversion capacity to alleviate,” he said.
In a separate announcement, Jacobs said it had received a contract from ExxonMobil Chemical to provide engineering, design and construction-management services as part of a new 650,000 ton-per-annum polyethylene facility to be located at ExxonMobil’s Beaumont polyethylene plant.
Jacobs will deliver front-end engineering, detailed design and construction management, to support enabling works and installation of offsite facilities, including rail, and interconnecting piping required for the new polyethylene train. The completed facility will produce pelletized polyethylene to be used in the manufacture of plastic products.