2023 Trade Outlook – BIC Journal

2023 Trade Outlook

**supply Reuters Power, Houston Chronical, Financial Alliance Houston Port Area, TCC/ACIT, LCA/LCIA, AFPM, API, GBRIA, Worldwide Power Company (IEA) Refinitiv, and IIR – Jan 2023 by Jeremy Osterberger, BIC Journal

Upstream

· Crude oil demand is rising in 2023

· Recession potential in 2023 may curtail some demand

· Notice recession concern index is decrease as of Jan 23, 2023 – Wall St. Journal

Upstream/Midstream mixed

· Over 1 trillion in upstream and midstream capital challenge spending projected over one to 2 years.

Midstream (Pipelines/Tanks/Terminals)

· 70k miles of pipeline infrastructure wanted to satisfy web zero carbon dioxide targets for 2050

· New tank development spending outlook is about the identical as 2022

· XRI holdings (Chevron, Exxon-xto, pioneer) – Midland to Reagan counties – started development on Evolution pipeline – water recycling and produced water infrastructure challenge

· Enterprise Merchandise – (Brazoria County) Sea Port Oil Terminal obtained file of determination for acquiring license for the terminal. Comprised of mounted platform port marine terminal within the Gulf of Mexico related to onshore crude oil storage facility

· P66 (Phillips 66) Midstream – $639MM with $329MM for sustaining asset capital and $310MM for development capital

Downstream (refining and petrochemical mixed)

· $14B in capital initiatives within the Downstream sector

· $153B in inexperienced hydrogen, ammonia and methanol associated spending in chemical course of crops

· $148B in industrial development initiatives anticipated to interrupt floor in 2023

· $2B in turnaround and outage work primarily in gulf coast 2023

· Twice as many turnarounds in 2023 vs 2022

Petrochemicals

· International petrochemicals market is anticipated to see a compound annual development price (CAGR) of 4.9% between now and 2026. Demand for crude and pure fuel will proceed to rise for plastics and petrochemical manufacturing regardless of slowing demand for gasoline for transport gasoline.

· Cars, packaging, family items and medical tools are key elements in encouraging downstream corporations to extend manufacturing capability worldwide.

· Ethylene, the constructing block of plastics, is anticipated to drive downstream income over the approaching years.

· There’s an more and more dynamic marketplace for olefins and monomeric (constructing blocks) hydrocarbons.

· Acquisitions will proceed – corporations engaged in petrochemical merchandise manufacturing proceed to endure mergers and acquisitions. In early 2022, Celanese introduced the acquisition of DuPont’s mobility and supplies enterprise for $11 billion. In August, UK firm INEOS signed not one however three petrochemical offers with Chinese language chemical substances big Sinopec, value $7 billion.

Chevron Phillips Chemical (CPChem) 

• Chevron Phillips Chemical and QatarEnergy introduced Nov. 16, 2022 plans to construct an $8.5-billion ethylene and polyethylene built-in advanced in Orange Texas on the Texas aspect of the Sabine River on the Louisiana border, with CPChem proudly owning 51% of the enterprise and startup for 2026. Consists of ethane cracker.
• C3 splitter challenge in Baytown Texas
• World scale 1 – Hexene challenge in Outdated Ocean, TX (Sweeney)

Kuraray – LaPorte  

• turnarounds in 2023 excessive exercise

Dow

• Seadrift, Texas – mid cap challenge $300MM introduced completion deliberate 2025
• Deer Park and LaPorte – small cap initiatives introduced 2023 / 2024
• Turnarounds at Dow will probably be much less in 2023 vs 2022 at Dow (world statistic)

LyondellBasell Channelview

• Propylene growth being thought of – new propylene facility for polypropylene manufacturing.  FID anticipated finish of 2023. 950 million kilos per yr facility 35% growth of present manufacturing.

Arkema – Beaumont

• $115MM growth introduced Fall 2022 –  agriculture merchandise growth

Aquaspersions – Broussard, LA  

• 7.5MM new facility – PPE manufacturing merchandise producer

CF Industries (ExxonMobil partnership)– Ascension Parish, LA

• $2B carbon seize challenge at it Amonia facility. 
• Will retailer CO₂ at ExxonMobil in Vermillion Parish.

Refining

• 15 oil refineries have turnarounds (shutdowns/outages) scheduled between Jan and Might 2023.
• 1.4MM in barrels per day processing capability will probably be offline which is double the 5 yr avg.
• Refineries didn’t shut down in 2022 as a result of margins had been robust. Crack unfold robust.
• International capability increasing – Iraq’s Karbala oil refinery is anticipated to begin in March, and a second leg of Kuwait’s 615,000 barrel per day al-Zour refinery is because of begin up subsequent quarter.
• Refining Margins are sensational – Refiners are incomes about $35.40 per barrel utilizing the business’s crack unfold <CL321-1+R>, a revenue measure which compares the price of crude oil to sale costs for gasoline and diesel, in line with Refinitiv.

BLADE – Beaumont Mild Atmospheric Distillation Enlargement challenge, ExxonMobil Beaumont Refinery  

• 250,000 barrels per day (bpd) crude distillation unit (CDU) on the present 369,000 bpd refinery is anticipated by Jan. 31, the sources stated, making the Beaumont refinery the second largest in the US behind Motiva in Port Arthur
• constructed from modular sections over 4 years
• new Crude Distillation Unit will make up for the refining capability to be misplaced on the finish of this yr when LyondellBasell Industries shutters its 263,776 bpd Houston refinery, stated analysts.
• There are refineries being constructed outdoors the USA in Kuwait, Mexico, Nigeria and China.

Chevron Pasadena Refining

• Mild Tight Oil (LTO) – will increase capability and warmth management / effectivity challenge for present web site.  Refinery modernization for various feedstock.
• Main turnaround upcoming 2024

P66 Capital outlay for 2023

• $853MM for sustaining asset capital
• $1.1B development capital for upstream, midstream and downstream 
• Refining – $1.1B together with $389M for reliability, security funding. $729MM for conversion of renewable diesel conversion at Rodeo San Francisco. 

LNG 

• Freeport LNG – 4^th practice to be put in – no timeline of breaking floor. Present challenge is a brand new carbon seize and sequestration challenge will increase FLNG’s fuel liquefaction capability.   Consists of new pipeline.  
• Russia/Ukraine battle driving extra U.S. Export to Europe/Asia.

ESG – Renewables and Sustainability/Carbon Seize

• $85B in initiatives deliberate for 2023
• $20B in carbon dioxide pipelines and piping initiatives
• To fulfill 2020 web zero targets we want 70,000 miles of pipelines
• $40B in Renewable Diesel Tasks
• Most sustainability initiatives within the refining sector are increasing renewable diesel manufacturing capability (Valero/Diamond Inexperienced Diesel, P66 Rodeo, Marathon Martinez, and so on). Authorities subsidies for renewable diesel manufacturing by way of soy beans or waste oils are driving the investments.   These fuels CANNOT present for the transportation gasoline demand outlook additionally these initiatives take two to a few years to return on-line.
• The oil refining business is among the key shoppers of hydrogen proper now, however most refineries are utilizing “grey hydrogen”–derived from fossil fuels, reasonably than clear, inexperienced hydrogen derived from photo voltaic, wind, and so on.
• Blue hydrogen is the more than likely winner within the refining business so far as hydrogen sources.
• ExxonMobil – Blue hydrogen challenge Baytown Texas. CF industries in Louisiana – hydrogen challenge and blue ammonia manufacturing challenge with carbon seize.  

Energy

• Cleco Energy, Central LA-  Carbon Seize challenge introduced – no particulars

Houston Ship Channel Space Tasks

• 23 initiatives majority petrochemical and various fuels or sustainability.
• $6.1 billion in worth. 
• Three vital challenge bulletins in 2022 together with OxyVinyl, Chevron and Kaneka.  
• The ship channel itself is including infrastructure enhancements and Houston Ship Channel growth challenge, Challenge 11, $1B funding underway which deepens and widens the ship channel. Working in tandem with the U.S. Military Corps of Engineers won’t solely widen the channel from 530 ft to 700 ft, but additionally will deepen upstream segments to 46.5 ft.

TCC/ACIT  2023 Outlook

• TCC’s legislative priorities embody TCEQ Sundown laws and passage of a brand new property tax incentive now that Chapter 313 has expired. 
• Legislative priorities embody tax coverage, electrical energy reliability and prices, workforce growth, in addition to environmental, well being, and issues of safety.

Downstream Trade Challenges

• Challenges: regulatory uncertainties, allowing tempo are all the time a priority – allowing at federal degree and in some instances held up at state degree
• Demand for transportation fuels is actually not on the rise as EV gross sales enhance and extra of us WFH.
• No business is immune from the upheaval a world pandemic may cause. Flexibility is crucial for resilience.

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