The U.S. and global chemical investment wave is set to slow “considerably” in the coming years, as companies slash their capex to preserve cash, ICIS said this week.
According to Joseph Chang, global editor at ICIS, “major cuts to capex plans for oil and gas, and midstream energy companies are a long-term problem for the U.S. petrochemical industry, as access to abundant and low-cost natural gas liquids (NGL) feedstocks is its lifeblood.”
The industry crisis caused by the coronavirus pandemic and the collapse in oil prices has forced companies around the globe to cut their spending and defer growth projects, Kallanish Energy notes.
A number of upstream and midstream firms have already announced revised plans for 2020 and 2021. Earlier in the month, Shell said it was temporarily suspending works on its Pennsylvania cracker to prevent the spread of Covid-19. There’s been no indication when work would resume.
Other U.S. crackers under construction include the Port Arthur, Texas, facility developed by Total, Borealis and Nova; and the Corpus Christi, Texas, facility by Sabic and ExxonMobil. These are expected to start between the end of the year and the first half of 2022.
Planned U. S. cracker projects for start-up further down the road in 2023-2025 where final investment decisions (FIDs) have yet to be me made include those by Formosa’s FG LA LLC; PTTGC/Daelim; Chevron Phillips Chemical/Qatar Petroleum; and Saudi Aramco’s Motiva.
Midstream energy companies such as Targa Resources, Hess Midstream, Enlink Midstream and ONEOK have also announced plans to slash their expenditure.
“The U.S. shale gas cost advantage has spurred hundreds of billions of dollars in chemical investment. With the crash in crude oil prices, which has severely diminished this advantage, the investment boom is clearly under threat,” warned Chang.
This post appeared first on Kallanish Energy News.