Last updateThu, 16 Feb 2017 9pm


How New U.S. Policies Will Affect the Chemical Industry

“In 2017, barring a recession in the U.S. and Europe or a slowdown in China, Moody’s Investor Service expects EBITDA in the chemicals industry to slip by 1 or 2% year-over-year.”

A new report from PwC predicts that the Trump administration “is likely to embrace policies that are antithetical to free trade and globalization as well as to reduce regulations on businesses. To a degree, this could increase demand for chemicals by stimulating domestic manufacturing investment. But the other side of the coin is more problematic for chemicals companies: If the U.S. impacts trade flows, producers that depend on access to international markets or that plan to make resource investments outside the U.S. could be harmed.” 

$2.2 Billion Investment Approved for Mad Dog Phase 2 Project

BHP Billiton has approved expenditure of $2.2 billion for its share of the development of the Mad Dog Phase 2 project in the Gulf of Mexico. During the fourth quarter of 2016, BP, which holds a 60.5% participating interest, sanctioned the Mad Dog Phase 2 project.

Mad Dog Phase 2, located in the Green Canyon area in the Deepwater Gulf of Mexico, is a southern and southwestern extension of the existing Mad Dog field. The project includes a new floating production facility with the capacity to produce up to 140,000 gross barrels of crude oil per day from up to 14 production wells. Production is expected to begin in the 2022 financial year. 

Tight Oil Making Up Most of U.S. Production Increase Through 2040

The U.S. Energy Information Administration’s (EIA) recently released Annual Energy Outlook 2017 projects that U.S. tight oil production will increase to more than 6 million barrels per day (b/d) in the coming decade, making up most of total U.S. oil production. After 2026, tight oil production remains relatively constant through 2040 as tight oil development moves into less productive areas and as well productivity decreases. Side cases with different resource and technology assumptions result in different tight oil and total U.S. oil production projections.

U.S. production of tight oil has increased significantly since 2010, driven by technological improvements that have reduced drilling costs and improved drilling efficiency in major shale plays such as the Bakken, Eagle Ford and the Permian Basin. Production from tight oil plays surpassed 50% of total U.S. oil production in 2015 when tight oil production reached 4.9 million b/d. Tight oil production and overall U.S. oil production are expected to increase through around 2030.

California Could be First to Recycle Water to the Drinkable Supply

A report from California’s Water Resources Control Board concludes that it is feasible to develop and adopt regulations for using recycled water as drinking water, provided that certain research and key knowledge gaps are addressed. Recycled water is part of a multi-faceted effort to diversify California’s water supplies and increase long-term resilience amidst the drought conditions the state will be dealing with for years to come.

Direct potable reuse (DPR) is the addition of recycled water directly into a drinking water system or into a raw water supply immediately upstream of a drinking water treatment plant. No other state has yet developed regulations specifically for direct potable reuse. 

Net U.S. Ethanol Exports at Highest Level in 2016

Net exports of ethanol from the United States set a new record of 1.01 billion gallons in 2016, according to the Renewable Fuels Association (RFA). Gross U.S. ethanol exports totaled 1.05 billion gallons in 2016, second only to 2011’s record of 1.19 billion gallons. Meanwhile, ethanol imports registered at just 34 million gallons, the lowest total since 2010. Brazil was the leading destination for U.S. ethanol exports, followed by Canada and China. Together, the three countries accounted for 68% of total ethanol exports.

“U.S.-produced ethanol continues to be the lowest-cost, cleanest octane source on the planet. Our industry produced 15.2 billion gallons of ethanol last year, and while we continue to meet our domestic needs, ethanol exports are essential for future growth,” said RFA president and CEO Bob Dinneen. “Just a few years ago, the U.S. was a net importer of Brazilian ethanol, but as U.S. producers have become more efficient and world sugar prices have risen, Brazil is now the top recipient of our domestic product.” 


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