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.
The U.S. will be expanding valve purchases in several areas. One is biotechnology. Another is LNG where a number of terminals to receive the LNG are now under design. The U.S. is already the leading ethanol producer with more than 100 plants in operation. To meet the administration’s goals for ethanol to comprise 50% of the transportation fuels, another 1400 - 50 MMGY plants will need to be built. The fact that many of the new ethanol plants will obtain their heat and steam from coal will also add to the valve potential.
Each new scrubber system installed on U.S. power plants requires a $1 m valve purchase. Over the next 15 years over 200 of these systems will be needed to meet environmental requirements. Additional valves are also required for the catalytic systems which reduce NOx at these same plants. The movement of over one billion people from rural Asia to its cities will boost the valve markets in water and wastewater treatment. Since Asia is more arid than other regions, the potential for desalination and the valves required to handle the corrosive seawater will be greater than other regions.
China is planning to invest in more power plant scrubbers than any other country including the U.S. China also will be building more new coal-fired power plants than any other country. They will also be the leading investor in many other basic industries. Power will be the biggest market sector for the valve industry in China in 2010. Wastewater will be the second leading sector.
So the forecasts on these two relatively humble bulk items in our industry say a lot more about the bottlenecks in our industry than just listing a few plants.
However in these perceived boom conditions we are not talking about an immediate real slow down yet. Although with every boom there has been a bust (historically) and none of us really know when and how it will end - but it will end. The danger signs are already there though - a number of major refinery expansions have been shelved, some temporarily but many of them may not see the light of day again. Grandiose schemes, many of them, floated by people who should know better - they get so far on low level cost estimates and then,,,,,,,, normally at the end of the FEED the bad news arrives (although some of them limp on into EPC proposals) - it’s often 2 to 3 times higher than expected, so that is that. Another project bites the dust.
So we have had major cost escalation, possible falling oil prices (although recently these have shown a welcome upturn), massive congestion and a shortage of resources both in engineering and construction. In spite of all of this there have been some huge projects awarded - especially in the Middle East where the Petrochemical Sector has come up trumps with a number of Worldscale Petrochemical complexes consisting of massive Ethylene plants with all the ‘trimmings’, a GTL project from Shell that will keep a number of contractors ‘fed’ for a few years and the usual gas plants. Add to that the planning of three or four vast refineries (some of which are already underway) and it is no surprise we see a company like CCC claiming resources of 120 - 140,000 (a few tears ago they only had half as many). A major GTL project has been shelved in Qatar but I guess the developer will maintain a close watch on Pearl and see how that progresses.
We are into the fourth year of this boom and with staff numbers still rising in many parts of the world I sometimes wonder where they are all coming from. A good example of this is the position Fluor find themselves - looking to hire an additional 1,000 staff in Sugarland they have subleased 191,000 square feet from Chevron through March 2010 in One Sugar Creek Place. Fluor will continue to occupy 1,000,000 square feet at its operational center at One Fluor Drive in Sugar Land! In the UK Fluor now occupy six buildings in the Camberley area and have over 2,000 staff in the UK - with all the work in the Middle East it is clear that both Fluor and Foster Wheeler are reaping the rewards of the premier positions that both hold in the region. Although it must be said some of the work around these massive complexes can be less than inspiring. But then that’s me being slightly snobbish - if it’s not differentiated don’t touch it!
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