ROD DEAN'S 2006 REVIEW
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E & C Hydrocarbon Review - The Global view from Europe. Looking back on 2006 & ahead to 2007.
International Energy Agency refining analyst David Martin said rising costs associated with new refineries made the expansion of existing refineries a more attractive proposition. Some 15.1mn barrels per day of additional refining capacity is planned by 2011, the IEA estimates. The agency, adviser to 26 industrialised countries, expects almost 5mn bpd of the total to be delayed beyond 2011 or cancelled because the economics do not stack up or the firms involved do not have sufficient access to capital markets. "The industry view is that you need margins of $6.50 a barrel over 20-25 years to generate an internal rate of return of 10% for a relatively sophisticated cracking refinery with a 200,000 bpd capacity. The IEA takes the view you need at least $8 a barrel," 2 Martin said. "(But) some new refineries are being built for strategic reasons - for example, China and India where it is a strategic goal to expand the refining industry and 10% internal rate of return is of less importance."
Here are a couple more examples relating to pumps and valves, two regular areas of bulk expenditure on every project. Humble products I know, but good examples of the bits and pieces we buy and sell on a day to day basis:-
Sales of industrial pumps will reach an annual level of $38 bn for the first time in 2011. This is the current forecast in the continually updated online report, Pumps: World Markets. Centrifugal pumps will account for over 70% of the revenues. Diaphragm, reciprocating, and rotary pumps will account for the balance. Municipal wastewater will be the largest application segment followed by municipal drinking water. Refineries will be the third largest segment, and power will rank fourth.
Asia will increase its lead as the largest regional purchaser. The very large municipal wastewater and drinking water plant expenditures are only part of the picture. It is outspending other regions in every category except pharmaceutical. In the coal-fired power segment, Asia will outspend the rest of the continents combined. China alone will spend more for pumps for coal-fired power plant applications than all of Europe and Africa combined.
There are some very high growth sub segments. They include desalination, ethanol, LNG, oil sands, and flue gas desulfurization (FGD). One of the big long-term changes in the market will be the reduction in pump sales for conventional oil and gas and refining applications and the growth of sales in non traditional applications.
More than 10,000 companies make industrial pumps. Five companies achieve pump sales in excess of $l bn. Sulzer achieves pump sales close to $1 bn. But the sales of the other 500 companies are much smaller. Less than 20 companies have sales of pumps exceeding $500m.
And the Valve Market is changing as well - whenever new processes develop, it is certain that there will be new valve variations to make these processes operate properly. The need to liquefy gas in the Middle East and transport it around-the-world has resulted in a number of new cryogenic valve designs. They are used at the LNG liquefaction sites, on tankers, and at the regasification terminals. New requirements in LNG, ethanol, tar sands, nanotechnology, and biotechnology will boost the industrial valve market to a record $52 bn annual sales level in 2010. This is the prediction in the most recent update of the online, Industrial Valves: World Markets.
Control valves will account for 25% of the total followed by ball, gates and globes, butterfly and plug types. Other valves will make up the final 18%. Much of the growth in the market will be in Asia, but there are other hotspots as well. The tar sands expansion in western Canada represents considerable potential for increased valve sales.
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