Chevron expects LNG supply shortage by 2025

MOSCOW (MRC) -- Chevron Corp said it expected supply shortage in the global liquefied natural gas (LNG) market by around 2025, echoing comments made last month by top LNG trader Royal Dutch Shell, reported Reuters.

Demand for natural gas, which burns cleaner than coal and oil, has surged as countries such as China look to curb environmental pollution.

Chevron, owner of the giant Gorgon and Wheatstone LNG projects in Australia, said it expects global demand to be nearly 600 MMtpy by 2035, while supply could be just about half of that.

"China’s demand is increasing significantly - they’ve had a very active program to move off of coal in heating industrial applications, and that’s pulled on LNG," Pierre Breber, EVP -downstream at Chevron, said during the company’s analyst day, when asked about spot LNG prices.

China imported record levels of LNG in January, as the world’s second-largest economy shored up supplies ahead of the Lunar New Year celebrations

Shell in February estimated that more than USD200 billion of investments in LNG is needed to meet the boom in demand by 2030.

The global LNG market is set to continue its rapid expansion into 2020 as facilities approved for construction in the first half of the decade come on line.

However, a decline in spending in the sector since 2014 will create a supply gap from the mid-2020s unless new investments emerge, Shell said in its 2018 LNG Outlook.

As MRC wrote before, in July 2016, a USD36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest investment by private sector oil companies this decade, was given the go-ahead by Chevron of the US, bucking the trend of delays and cancellations resulting from the slump in crude prices since mid-2014. The investment will add 260,000 barrels a day of crude to production at Tengiz. That would increase the output at TCO, the Chevron-led consortium that runs the field, by 44 per cent from its average of 595,000 b/d last year. The expansion is scheduled to deliver oil from 2022.

Chevron is the second-largest US oil group by production and market capitalisation, after ExxonMobil. Chevron Phillips Chemical (part of Chevron), headquartered in The Woodlands, Texas (north of Houston), US,l is one of the world’s top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. Chevron and Phillips 66 each own 50% of Chevron Phillips Chemical.
MRC

New Motiva CEO says no decision yet on expansion

MOSCOW (MRC) -- Motiva Enterprises' new Chief Executive Officer Brian Coffman said that no decision has been made on how to spend USD18 billion corporate parent Saudi Aramco has pledged for expansion, reported Reuters.

Aramco said in May 2017 it wanted to spend USD18 billion in the next five years and was interested in adding petrochemicalproduction capacity. The company's 603,000 barrel per day plant at Port Arthur, Texas, is the largest refinery in the United States.

"We're evaluating investment, obviously." Coffman said to reporters at the CERAWeek conference in Houston. "We're looking at our options. Investing in petrochemicals, obviously, is one of things that's on the books that we're evaluating right now."

In response to a reporter's question, Coffman said the possible impact of tariffs approved by President Donald Trump on an expansion was unknown.

"Obviously it's too early to tell that as well," he said. "We don't have the project approved."

About the coming change to ultra-low maritime fuel in 2020, Coffman said those refineries with coking capacity would benefit the most.

Cokers process residual crude, from which most maritime fuel is made. Cokers convert residual crude into fuel feedstocks or petroleum coke, a substitute for coal.

Coffman took over as president and chief executive of Motiva in late January, replacing Dan Romasko.
MRC

Oil and corn tout dueling studies on future of U.S. biofuel program

MOSCOW (MRC) - Big oil and big corn are touting opposing studies released this week on proposed biofuels policy reforms under consideration by the Trump administration, part of an ongoing clash between the two sides over the future of the program, as per Hydrocarbonprocessing.

Valero Energy Corp, a major oil refiner, funded a study by Charles River Associates that supports placing a cap on the price of biofuel blending credits under the U.S. Renewable Fuel Standard (RFS) - a change meant to help refiners that complain the RFS now costs them a fortune.

A rival report from Iowa State University, also released this week, said such a cap on credits would backfire by eroding U.S. demand for corn-based ethanol and potentially lowering corn prices, already under pressure from a supply glut. The corn industry did not directly fund the Iowa State study, but does provide funding to the university.

The studies are meant to inform the administration's deliberations on how, and if, to reform the RFS - which has become a major point of tension between two of President Donald Trump's most important constituencies.

The RFS requires oil refiners to blend increasing amounts of biofuels, mainly corn-based ethanol, into the fuel supply each year, or buy the renewable fuel credits, called RINs, from other companies that do the blending.

The regulation was introduced during the administration of President George W. Bush to help farmers, cut petroleum imports, and improve air quality. But a surge in the price of RINs in recent years has upset merchant refiners who say the policy now costs them hundreds of millions of dollars a year.

Trump waded deeply into the debate last week, urging representatives of both sides to accept a compromise deal that caps prices for the credits while also removing seasonal limits on high-ethanol blend gasolines to expand the biofuels market.

A cap would control costs for small refiners and help them stay afloat, said Brendan Williams, vice president of government relations for refining company PBF Energy.
MRC

Siemens delivers five compressor trains for Fermaca pipeline in Mexico

MOSCOW (MRC) -- Siemens has recently delivered five gas turbine-driven compressor trains to Fermaca Enterprises (Fermaca) for two pipeline stations in Mexico, as per Hydrocarbonprocessing.

The pipeline projects, which also include a long-term service agreement, are part of the Comision Federal de Electricidad de Mexico’s (CFE) ongoing energy reform program intended to increase the availability of low-cost energy and stimulate the country's economic growth.

Both stations plan to begin commercial operation in 2018, and the entire 500 kilometer pipeline is expected to be fully operational in 2019.

The five compressor trains, packaged at Siemens’ Telge Road facility in Houston, Texas, USA, each consist of a SGT-400 gas turbine driving a STC-SV single-shaft pipeline compressor. The gas turbine trains will provide compression power for a 1,500 kilometer pipeline that will transport natural gas from northern Mexico to the center of the country. Two of the trains will be installed at a pipeline station in La Laguna, Coahuila, Mexico. The other three units will be part of a pipeline compressor station in Villa de Reyes, San Luis Potosi, Mexico.

This order follows on the heels of three pipeline compressor trains driven by SGT-750 gas turbines that Siemens provided in 2015 for the El Encino compression station pipeline project that is part of the same pipeline transportation system that includes La Laguna y Villa de Reyes. The complete system is powered by the three stations developed exclusively using Siemens equipment. This recent order continues the momentum of the Mexican oil and gas industry’s goal to supply high-efficiency power plants with natural gas to boost local economies.

Siemens has sold more than a dozen SGT-400 turbines to customers in Mexico over the last three years and more than 60 worldwide. Both the 13.4- and 15-MW versions of the SGT-400 high-efficiency gas turbines offer excellent emissions performance in a rugged industrial design. This makes it an ideal choice for a wide variety of applications, from simple- and combined-cycle power plants, to cogeneration, to power generation and mechanical drive applications for onshore and offshore projects in oil and gas.

Project teams for Fermaca and Siemens worked closely together to determine the optimum train solution that resulted in a competitive CAPEX and OPEX offering, paired with short cycle times. In addition, Siemens designed identical packages for both sites, including all auxiliaries systems to maximize common parts and streamline operations and maintenance teams. The only difference between the two projects is the gas turbine core engine and compressor bundles due to different power demands and operational conditions of each site.

"We are pleased to be selected as the only equipment provider for this important pipeline project," said Eric Carlos, Head of Sales for Latin America at the Dresser-Rand business. "Our ability to deliver a proven product with the lowest total life cycle cost, on time and on budget, demonstrates Fermaca's confidence in us to provide leading-edge technologies that enable the safe, efficient operation of their compressor trains."

"Because of our previous work with Siemens, we were able to review past projects and incorporate lessons learned and best practices into this most recent project,” said Dr. Raul Monteforte, Chief Development Officer of Fermaca. "The close proximity of Siemens facilities and their impressive performance with past projects and equipment makes it easy to manage expectations for this pipeline extension," Monteforte added.
MRC

Prices of European PP are mixed for CIS coutnries in March

MOSCOW (MRC) -- The March contract price of propylene was agreed in Europe down by EUR20/tonne from February. However, European producers reduced their export prices only for propylene copolymers to be shipped to the CIS markets in March, according to ICIS-MRC Price report.

Negotiations over March prices of European PP began on Monday. All market participants stated the ambiguity of decisions on export prices for polymer in March, given lower propylene prices in Europe. In fact, prices of propylene homopolymers (homopolymer PP) virtually either rolled over or went up from February, whereas prices dropped by EUR20-25/tonne in the propylene copolymers segment.

Deals for March shipments of homopolymer PP were done in the range of EUR1,060-1,145/tonne FCA, whereas February deals were negotiated in the range of EUR1,030-1,140/tonne FCA. Some producers had limited export quotas for injection moulding homopolymer PP.

Deals for block copolymers of propylene (PP block copolymers) were discussed in the range of EUR1,195-1,250/tonne FCA, down by an average of EUR20-25/tonne from February.
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