Refining’s Real Growth Lies In Secondary Unit Capacity
According to multiple industry reports, the global refining sector will add between 7 million barrel per day (Mbpd) and 8 Mbpd of new crude distillation unit (CDU) capacity by the early 2020s. Most of this new capacity will be located in the Asia-Pacific region. By 2023, the Asia-Pacific region will add approximately 3.5 Mbpd of new CDU capacity. Most of this increase—approximately 2 Mbpd—will be from China.
China has several active grassroots and expansion projects in the works, including refining and petrochemical integrated complexes. India has announced ambitious plans to increase refining capacity from 4.6 Mbpd in 2017 to 6.3 Mbpd by the early 2020s. These two countries will be the leaders in new CDU capacity over the near term, with the Middle East close behind.
Most capacity additions will be for additional secondary unit processing capacity. As reported in Hydrocarbon Processing, the global refining industry is forecast to add more than 11 Mbpd of secondary unit capacity by the early 2020s. According to OPEC’s World Oil Outlook 2017, most of this new capacity will be new desulfurization units—conversion and octane-boosting capacity additions thatwill increase by more than 3.2 Mbpd and nearly 2 Mbpd, respectively.
By 2023, nearly 7 Mbpd of new desulfurization capacity is forecast to begin operations. Most new de- sulfurization units will be built in the Middle East and Asia-Pacific regions. Many of these will be included in new grassroots facilities and brownfield expansions to adhere to new fuel quality regulations and mitigate emissions in densely populated cities.
The higher-quality fuels will also enable Asia-Pacific and Middle Eastern countries to export to more destinations, especially those with strict limitations on sulfur content. In total, the Middle East and AsiaPacific regions are forecast to add 4.5 Mbpd of new desulfurization capacity by 2023, which equates to approximately 68% of total market share for desulfurization capacity additions.