Trey Hamblet, Industrial Info Resources (IIR) vice president of research for chemical processing and refining, expects to see an increase in North American chemical processing project spending this year, especially after a less-than-anticipated spend in 2023.

Speaking at Industrial Info’s 2024 North American Industrial Market Outlook event, Hamblet notes the value of U.S. and Canadian projects kicking off construction in 2023 ran slightly more than $11 billion, far less than the anticipated $13 billion to $14 billion for the year.

“We had a tough year for the chemical industry overall” in 2023 due to several factors, he says. Last year’s project spending was weighed down by inflation, worries about a recession in different parts of the world and geopolitical problems. Also, the world continues to wait for China’s economic growth to restart, which may not happen for a couple of years.

For 2024, the value of projects anticipated to kick off construction in North America totals $21 billion, according to Industrial Info’s calculations.

IIR is tracking more than 160 North American capital chemical processing projects presently under construction, with a total investment value of nearly $33 billion, including pipe, valves and fittings among their key equipment needs. By sector, petrochemical projects dominate the landscape.

Hamblet acknowledges that for the project kickoff spend to go from $11 billion in 2023 to $21 billion in 2024 is “not a normal growth pattern,” but adds that some big-ticket carbon capture and blue hydrogen commodity projects could contribute to growth this year.

For example, he indicated Midland, Mich.-based Dow’s Path2Zero investment in Fort Saskatchewan, Alberta. The company plans to build what it says will be the world’s first net-zero Scope 1 and 2 emissions-integrated ethylene cracker and derivatives plant.

The $6.5 billion project — excluding government incentives and subsidies — includes a new ethylene cracker designed to increase polyethylene capacity by 2 million metric tons/year, as well as retrofitting the site’s existing cracker to net-zero Scope 1 and 2 emissions. The project kickoff is planned for the first quarter of 2024. 

“We have an impressive number of expansions and capacity (increases) in Louisiana and Texas,” Hamblet adds.

And then there’s the ethylene component. He says a substantial oil-to-gas price ratio and the long-term demand outlook for plastics are drivers for new ethylene construction starts planned for 2024 and 2025. IIR is tracking nearly 18 billion pounds of new annual ethylene capacity projects that could kick off construction in the next two years. All that capacity is unlikely to kick off during this period for a variety of reasons, Hamblet notes, but even a portion of that amount would be substantial.

Then, consider the environmental, social and governance (ESG) factors. In October, the global impact of ESG on the chemical industry was estimated at $433 billion, including $120 billion in the United States and Canada, Hamblet explains. Since then, that number has grown by $48 billion.

In the United States, much of the growth is due to government incentives such as the Inflation Reduction Act of 2022. However, many ESG-related projects are at a high risk of moving out to later years.

On the other hand, “I think it’s likely we’ll get some ‘blue’ hydrogen this year,” Hamblet notes. There are 15 to 18 individual blue hydrogen projects that were planned or proposed. “I think we will start seeing some material movement in some of those projects,” he says.

Blue facilities are designed to produce hydrogen, ammonia or similar commodities with traditional feedstock and deploy carbon-capture technology to negate the effects of carbon dioxide emissions.

Hamblet says he has a more pessimistic view regarding those projects tied to the production of “green” hydrogen, which makes use of renewable energy such as wind to produce electricity for the electrolysis of water, separating the water molecule into its hydrogen and oxygen components.

Some $8.2 billion in green-hydrogen-related construction starts are planned for 2024, but Hamblet sees two major issues that could push many of those starts into future years.

The first issue involves developing enough renewable energy to produce green hydrogen, he says; the second issue is finding a “home” for green hydrogen end-products.

“It’s great to have all these incentives to build capacity, but they have to be consumed somewhere,” he explains. Searching IIR’s Global Market Intelligence Project Database, Hamblet says he found not nearly enough projects related to hydrogen-fueled vehicles, hydrogen fuels and other products to consume all the planned green hydrogen capacity.

Looking at hydrogen-fueled boilers and related power generation projects, he said he found a “big multi-billion-dollar number,” but there were relatively few projects. 

Brian Ford is editor-in-chief at Industrial Info Resources and has been with IIR since 2014. With global headquarters in Sugar Land, Texas, and 18 offices worldwide, IIR is a provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. To contact IIR, visit www.industrialinfo.com or call 713-783-5157.