An expected surge in planned maintenance turnarounds across south Louisiana and the Gulf Coast in 2017 could have a minimal impact on manpower needs—or a massive one, depending upon when and if certain capital projects are mobilized. It’s all in the timing.
As 10/12 Industry Report details in its new cover story, Industrial Information Resources estimates turnarounds and shutdowns are expected to increase by 5.4%, to $10.43 billion across all U.S. industrial markets in 2017, with the petroleum refining industry seeing the biggest increase.
Refiners are projected to increase planned maintenance spending by 38.5%, to $1.26 billion. Additionally, the chemical sector will see a 4% increase—to $1.81 billion—and the power sector a 9.3% increase, to $3.54 billion.
Deferred turnaround work is the culprit. Some 7,000 additional craftsmen might be needed to handle pent-up demand for maintenance turnarounds in the first quarter alone, according to IIR. Much of that will be felt along the Gulf Coast.
The reason for the maintenance deferrals? Before their margins fell in mid-2016, refineries were coming off a year of uninterrupted production. “During that 12-month period, they didn’t take anything down,” says Tony Salemme, IIR’s vice president of labor risk assessment. “They delayed and postponed all their maintenance, except, of course, for the unplanned maintenance. They now have a lot of pent-up demand for turnarounds.”
Based in Sugar Land, Texas, IIR performs direct market research and labor forecasting by surveying industrial owners about future budgets, both for capital and maintenance work. Salemme says the level of work in the Gulf Coast region—maintenance and capital projects combined—is unprecedented.
“If you look back at 2001 to 2007, we were looking at about $30 billion a year being spent in the 11 metropolitan areas of what we call the Gulf Coast,” he says. “Then, that exploded to about $65 billion in 2015, and it’s really climbing now.”
IIR predicts another 40% increase in man hours from 2016 to 2017 in the Gulf Coast region, most of which will occur in the first quarter of this year. Areas in Louisiana to see the biggest increase will be Baton Rouge and Lake Charles. In Baton Rouge, IIR is tracking maintenance turnarounds—either planned or underway—at Dow Chemical, ExxonMobil, Georgia-Pacific, Motiva Enterprises, Rubicon, Shell Chemical and Total Petrochemicals.
“Throughout the year, there are some 86 unit maintenance events (across the greater Baton Rouge area),” Salemme says.
Read the full cover story, check out more stories from first quarter issue of 10/12 Industry Report and sign up for a free subscription. Send your feedback, story ideas and company news to editor@1012industryreport.com.
