The shale gas bonanza in the US is inundating European and especially German industrial plant manufacturers with new projects. But the challenges associated with increasing project size affect not only EPC suppliers but also owner engineers at chemical companies.
When the chemical industry does something, it tends to do it in a big way. Chemical producers such as BASF, Bayer and Dow have launched huge projects around the world in places like Ludwigshafen, Dormagen, Al Jubail and Freeport. Industry leader BASF has set its sights on increasing annual turnover from the current level of 74 billion euros to 110 billion euros by 2020. To make this figure a reality, the company is investing around 4 billion euros a year in new plants and equipment.
The picture is similar at BASF rival Dow. The US chemical maker has multiple mega projects underway. At the Al Jubail site in the Saudi Arabian desert, Dow together with the oil company Saudi Aramco is building the Sadara petrochemical complex at a cost of around 10 billion euros. In June, Dow began construction of an ethane cracker in Freeport, Texas at a cost of 1.3 billion euros. The plant is expected to produce 1.5 million t/a of plastic and elastomer products starting in 2017.
Investment in Chemical Plants to Double within Eight Years
Assuming that figures published by ACC (American Chemistry Council) are on the mark, worldwide investment in chemical plants and equipment will double within the space of eight years, reaching a total of 487 billion euros by 2018. If that is the case, growth in chemical plant manufacturing will far outstrip the cross-industry average worldwide.
The VDMA Large Industrial Plant Manufacturing Group (AGAB) has recorded annual growth of roughly 5% for about the last eight years. This growth is driven by global megatrends including worldwide population growth, the rise of the middle class in emerging nations and strong demand for raw materials.
The Challenges to Come for Plant Engineering
This is of course welcome news, but it also creates a whole series of challenges for chemical industry investors and industrial plant manufacturers. In recent years, not only has the project structure continued to evolve, role allocation between operators, owner engineering teams and industrial plant manufacturers has also become more fluid.
“Demand volumes in the industrial plant manufacturing sector tend to remain constant, but the demand structure presents a moving target as project size continues to increase,” observed Prof. Aldo Belloni who has Executive Board responsibility for the Engineering Division at Linde.
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