Mcilvaine Insights

No. 100   April 12, 2019

WELCOME

Weekly selected highlights in flow control, treatment and combustion from the many McIlvaine publications.

• Low Cost Oil and Gas will Boost the U.S. Combust, Flow and Treat Market
• U.S. Petrochemical Companies will increase IIoT and Remote O&M Purchases by 8%/yr through 2025

Low Cost Oil and Gas will Boost the U.S. Combust, Flow and Treat Market

The 2025 market for combust, flow, and treat (CFT) products will be much larger in many industries because of cheap oil and gas in the U.S. McIlvaine is revising its long range forecasts for all CFT products based on an anticipated surge of U.S. oil and gas production in the 2021-25 period. The petrochemical industry will show growth of 8 percent per year while the natural gas processing and transport growth will be even higher. There will be impacts on final products such as plastic  and synthetic fibers and then in the industries which finally use those products.  This includes building materials, appliances, pharmaceuticals and coatings.

There will be a broader impact on the CFT components due to lower energy costs. The U.S. will be more competitive in energy intensive industries such as cement, inorganic chemicals, mining, steel, pulp & paper and food processing.  Based on the new U.S. oil and gas production estimates McIlvaine is adjusting its 2025 forecasts in each service by from a -5 percent change in flue gas desulfurization to a 30 percent increase for pumps.

The steel industry will benefit due to the fact that it is a major energy user and will be more competitive with lower oil and gas prices.  It also supplies products to many industries which  will directly benefit from the expanded oil and gas production. For example a large investment in steel is required for the construction of a hydraulic fracking manufactured sand plant.

A few industries will experience smaller markets. The coal fired power and specifically the flue gas desulfurization system market will actually shrink as more U.S. coal fired plants are retired than would have occurred with higher gas prices.

Details on each market report are provided at http://home.mcilvainecompany.com/index.php/markets

The Most Profitable Market program is described at http://home.mcilvainecompany.com/index.php/component/content/article/30-general/1469-most-profitable-market-program

For more information on these reports contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com 

847 784 0012 ext. 122 or cell 847 226 2391

U.S. Petrochemical Companies will increase IIoT and Remote O&M Purchases by 8%/yr through 2025

U.S. petrochemical producers are increasing their IIoT and Remote O&M investments per ton of product at the same time they are accelerating the construction of new plants to take advantage of the low cost feedstocks in the U.S. Just within the last few months the major oil companies have made clear their intention to invest a higher percentage of capital on U.S. shale oil and gas extraction. Chevron believes that it can extract oil at a cost as low as  $15 per barrel. ExxonMobil believes it can be profitable with $30/bbl oil. Both companies are expecting the U.S. liquids production to be 25 million bl/d by 2025. This compares to IEA and OPEC forecasts for the U.S. production at just half this amount.

The impact on the petrochemical industry will be substantial. The availability of cheap and abundant feedstocks such as ethane make the U.S. Shale Crescent in the East and the Permian basin in the Southwest ideal locations for new production facilities. The U.S. Congress just received a report from the Secretary of Energy which predicts that the Eastern U.S. will become a petrochemical and plastics manufacturing hub. A detailed analysis by the McIlvaine Company built on specific projects and plans concludes that the U.S. petrochemical IIoT and remote O&M  market will grow by 8%/yr vs 6.5%/yr for the rest of the world.

The U.S IIoT and Remote O&M opportunity will approach $2 billion per year by 2025. There is a Most Profitable Market (MPM) segment which includes those products where a clear lowest total cost of ownership can be established.  The total U.S. IIoT market in 2025 will be $1.9 billion but the MPM market will be close to $1 billion.

The guide segment will account for 25 percent of the total as petrochemical companies continue to accelerate purchases of process management software systems. Nearly  $500 million will be spent on instrumentation.

There will be a number of technical challenges as shale gases with varying percentages of ethane and other natural gas liquids are converted into ethylene and other petrochemical products. In recent years the automaton  market growth in the U.S. has been less than in Asia. This has handicapped  suppliers whose primary strengths lie outside Asia. The opportunity to maximize profits in the U.S. market is therefore unique. Many of the automation markets such as coal fired boilers are mature. This reduces the profit potential because of the emphasis on price to sustain revenues. A growing market is much more likely to result in maximum profits.

The McIlvaine N031 Industrial IoT and Remote O&M provides forecasts for five product categories in every country in every industry.  This analysis provides the basis for determining the Most Profitable Market in a program explained at   http://home.mcilvainecompany.com/index.php/component/content/article/30-general/1469-most-profitable-market-program

The program also is customized for forecasts for specific products such as gas chromatographs and control of pressure, temperature, level, flow and other parameters.

The program also supports forecasts of the Most Profitable Market at each of the petrochemical producers such as, Dow, Chevron, SABIC, Total, Shell and LyondellBasell.  Continuing adjustments in the forecasts for individual prospects are provided with N049 Oil, Gas, Shale and Refining Markets and Projects