Last updateThu, 09 Jul 2020 3pm

Dominion and Duke Energy Cancel Atlantic Coast Pipeline

Both Dominion Energy and Duke Energy have announced that they are no longer moving forward with the $8 billion Atlantic Coast Pipeline. The companies say that a need for new infrastructure in the region remains an issue, but there is too much legal uncertainty for them to continue moving forward with the project.

Dominion has also agreed to sell its natural gas transmission business.

BP Selling its Petrochemicals Business for $5 Billion

BP has agreed to sell its global petrochemicals business to INEOS for a total consideration of $5 billion, subject to customary adjustments. Under the terms of the agreement, INEOS will pay BP a deposit of $400 million and will pay a further $3.6 billion on completion. An additional $1 billion will be deferred and paid in three separate instalments of $100 million in March, April and May 2021 with the remaining $700 million payable by the end of June 2021. Subject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.

BP’s petrochemicals business is focused on two main businesses – aromatics and acetyls – each of which has leading technology and advantaged manufacturing plants, including a strong presence in growth markets in Asia. In total, the businesses have interests in 14 manufacturing plants in Asia, Europe and the U.S. and in 2019 produced 9.7 million tons of petrochemicals.

U.S. Refinery Capacity Reached New High as of Jan. 1, 2020

U.S. operable atmospheric crude oil distillation capacity increased 0.9% during 2019, reaching a record of 19.0 million barrels per calendar day (b/d), up 0.2 million b/d from the previous record of 18.8 million b/d the year before. According to the U.S. Energy Information Administration’s (EIA) annual Refinery Capacity Report, U.S. operable crude oil distillation unit (CDU) capacity has increased slightly in seven of the past eight years.

As the United States has increased crude oil production over the past decade, the average density of U.S. crude oil has become lighter. Because U.S. refineries imported less of the crude oil they processed and replaced imports with domestically produced crude oil, the average API gravity—a measure of a crude oil’s density where higher numbers mean lower density—of crude oil inputs to refineries increased. For example, the U.S. Gulf Coast, which is home to about half of U.S. refining capacity, used imported crude oil for only 28% of its crude oil inputs to refineries during 2019, down from 69% in 2010.

Declining U.S. Chemical Industry to Rebound in 2021

Key U.S. chemical industry metrics will be lower this year, according to the American Chemistry Council’s (ACC) Mid-Year 2020 Chemical Industry Situation and Outlook. Production volumes, shipments and capital spending will fall due to economic and business disruption caused by COVID-19. A rebound in 2021 is projected, although significant uncertainty remains.

ACC’s Outlook begins with a review of the global economy. Data suggest that the global recession may have bottomed out, yet the 2020 outlook is one of the poorest in decades. Global GDP will contract 4.6% in 2020 before expanding 5.3% in 2021. Global industrial production will contract 3.8% in 2020 before increasing by 5.3% in 2021.

Oil & Gas Activity Severely Contracted in Second Quarter

Activity in the oil and gas sector deteriorated further in second quarter 2020, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—fell from -50.9 in the first quarter to -66.1 in the second quarter. It was the lowest reading in the survey’s four-year history and indicative of significant contraction in activity. The business activity index for oilfield services firms plunged from -46.3 to -73.5, while the business activity index for exploration and production (E&P) firms fell from -53.3 to -62.6.

Production indexes suggest oil and gas production sank relative to the previous quarter. According to E&P executives, the oil production index declined sharply, falling 36 points to -62.6. The natural gas production index also fell significantly, from -21.2 to -47.8. The oil production index is at its lowest point in the survey’s four-year history.

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