During the opening remarks of the AFPM Annual Meeting, which recently took place in San Antonio, Texas, the trade association’s President and CEO, Chet Thompson, emphasised the importance of collaboration within the US fuel and petrochemical industries. He explained that by working together, the sector has become safer (a 30-year decline in rates of injury and illness by a factor of 10), cleaner (a 90% reduction in the sulfur content of gasoline and diesel) and more environmentally friendly (a 70% reduction in emissions over the last three decades), all the while improving efficiency and productivity. Thompson called on “American ingenuity” to solve the many challenges facing the sector in the future: “We must continue to collaborate, to engage and learn from one another, and to find practical solutions that recognise the enormous benefits of our products.”
Register for a free trial »
Get started absolutely FREE in 2 minutes, no credit card required.
As the leader in global supply growth, Thompson’s calls for collaboration within the US oil and gas industry are more important than ever. The US will account for 70% of the increase in global oil production capacity until 2024, adding a total of 4 million bpd, according to the International Energy Agency’s (IEA) ‘Oil 2019’ report.1 As a result, the IEA expects the US to become a net exporter of oil in 2021, with gross exports reaching 9 million bpd by the end of its forecast period.
While the US had the largest increase in global demand last year, the IEA notes that growth continues to shift from developed economies and transportation fuels, to Asia and petrochemicals. The agency expects strong demand for petrochemicals and jet fuel to more than offset a slowdown in gasoline, resulting in a growth in oil demand over the forecast period (although at a more measured pace). Over 50 major petrochemical projects that are due to come onstream through 2024 were identified in the report. These will add 2.2 million bpd in oil consumption.
However, the report warns of twin challenges facing refiners. Firstly, the refining industry will see a wave of capacity additions, mainly from China, with a net growth of approximately 9 million bpd in the period to 2024. The report argues that plant closures might be necessary to rebalance the market, as the new additions are expected to exceed the increase in demand for refined products. Secondly, the availability of heavier crude grades from several countries is under threat from geoploitical challenges and production cutbacks. However, the US will be in prime position as a supplier of light types of crude oil, which are growing in demand.
Meanwhile, the IEA believes that industry players are in a strong position to comply with the impending IMO 2020 marine regulations in the medium-term, although the market will initially be tight and there will be some non-compliance. Following analysis of refiners’ plans, the IEA expects that there will be enough availability of marine gasoil and, eventually, a new ultra-low sulfur fuel oil to make up for the drop in demand for high sulfur fuel oil.
‘Oil 2019’, the International Energy Agency (IEA), (March 2019).