TPH: "U.S. ethylene-cracker build-out opportunity (alone) represents a potential of some $20 billion in expenditures...." If they build it, the price will come.... In the midst of ethane rejection at Conway and somewhat-stranded Canadian oil-sands and North Dakota oil, several build-out and new-build fractionation, ethane-cracker, gas-export and refining projects are on the books across the U.S. to monetize producers' new NGLs, dry gas and crude oil. While burgeoning U.S. hydrocarbon supply has heralded expectations for a U.S. manufacturing renaissance, it is certainly resulting in a U.S. engineering and construction (E&C) windfall. Here are details on some downstream build-out to take on new, indigenous supply as well as insight on further build-out, according to Tudor, Pickering, Holt & Co. Securities Inc.'s equity-research analysts' notes since commencing coverage of E&C stocks this spring: --Globally, "identifiable ethane-cracker work represents $20- to $30 billion of opportunity with a potential, overall chemical/petrochemical pipeline of $70- to $90 billion of projects, e.g. ethylene, PDH (propane dehydrogenation), butadiene." --Chicago Bridge & Iron Co. NV (CB&I) won a PDH construction job from Enterprise Products Partners LP, which enjoys "unparalleled access to Gulf NGL supplies," for a fee-based PDH facility, giving Enterprise "a new growth platform and marginally improves propane supply/demand fundamentals with 35,000 barrels per day of demand, i.e. 3% of the market." --HollyFrontier Corp. is expanding its Woods Cross refinery in Salt Lake City. Marathon Petroleum Corp. has a $2.2-billion heavy-oil under way at its Detroit refinery. Valero Corp., which expects to quit using imported, light, sweet crude on the Gulf Coast by year-end 2013, has two $1.5-billion hydrocracker projects under way. --E&C firm Fluor Corp. won $5 billion of additional oil and gas projects this spring globally, bringing its total for the sector to $19.5 billion. "Going forward, oil- and gas-sector prospects remain robust, especially on the low-U.S.-gas-price-driven side, given petrochemical, GTL (gas to liquids) and even LNG (liquefaction) opportunities...Fluor believes the U.S. markets-led by oil and gas and associated chemicals/industrial work-look promising." --Besides Fluor, KBR Inc. also expects some U.S. GTL-facility construction projects to come. "While we're not certain of the economics there, (Fluor) maintains it is involved in some discussions on that front." --CB&I's planned purchase of The Shaw Group Inc. in early 2013 will bring its all-sector backlog from $18 billion to $28 billion. "The acquisition also adds material U.S. leverage to CB&I as Shaw's revenue is some 85% U.S. versus CB&I, which does some 80% international. Locking up a U.S. labor force for low-gas-/LNG-driven infrastructure build-out is also a potential goal here...(And) large, greenfield petchem projects have yet to hit E&C backlogs." --Technip bought Shaw Group's "ethylene-cracker-capable energy and chemicals group" for $300 million. "Petchem capabilities are so hot right now...The deal demonstrates that E&Cs without petchem leverage are looking to jump in pre- the build-out boom-a theme we're onboard with." --KBR's North American construction-services backlog grew to some $2.3 billion this summer, such as for gas-processing. "Not coincidentally, the downstream backlog was up a whopping 60% to more than $700 million as shale production drives petrochemical and gas-processing work domestically and abroad." --The TPH analysts don't expect many U.S. LNG export facilities will be permitted, though. "Exporting base hydrocarbons is not historically a U.S. forte...." That may bode well for more U.S. (end-user) E&C awards. "The U.S. prefers processing the hydrocarbons in-house and selling refined products-e.g. shale gas processed and fractionated, ethane extracted and cracked into ethylene then into plastic for export." --Williams Cos.' Williams Olefins LLC is well on its way to expand its ethylene plant at Geismar, Louisiana, from 1.35- to 1.95 billion pounds a year, awarding CBI with a $300-million E&C contract for this earlier this year. --Meanwhile, KBR won a contract from Ineos Olefins & Polymers USA to build a 465-million-pound-per-year ethylene furnace along the Houston Ship Channel. "We believe U.S. ethylene-cracker build-out opportunity represents a potential of some $20 billion in expenditures by E&C clients; associated processing/fractionation opportunities offer an additional multibillion dollars of upside." --Bechtel Corp. has won Cheniere Energy Inc.'s Sabine Pass, Louisiana, liquefaction E&C project. Meanwhile, CBI has received the FEED project for Freeport LNG Development LP's LNG project at Freeport, Texas. --"CB&I views the North American petchem opportunity as $16 billion during the next 24 months, which we believe may surprise some folks to the upside. We estimate the U.S. ethylene-cracker opportunity alone at some $20 billion, but over a longer time horizon. Large greenfield cracker projects-potentially $4 billion each-are not likely a 2012 story but, as we saw with the $300-million Williams Olefins award, CB&I will benefit from ethylene-cracker expansions via its technology and E&C businesses in 2012." It will still be a while for downstream infrastructure to catch up to upstream supply, however. Brad Olsen, TPH's midstream analyst and author of its monthly NGLs report, notes, "We are seeing returns migrate from upstream companies towards the midstream and even the downstream-i.e. refining and petrochemical... "Ethane supply is sufficiently robust and pricing versus crude is already sufficiently weak that petrochemical companies are rushing to build new and to convert existing ethylene crackers that are capable of consuming greater quantities of ethane. The rub: Ethylene crackers take two to three years to convert; five to seven years to build. "That's a lot longer than drilling wells, laying pipe or building new fractionation towers to deliver the end product to petchem consumers. Expect ethane supply to outpace demand through 2017-18." -Nissa Darbonne, Editor-at-Large, Oil and Gas Investor,, Oil and Gas Investor This Week, A&D Watch,, Contact Nissa at