My first visit to a Texas petrochemical plant felt like stepping into a little country — it has its own strict security borders (photo identification required); its own national dress (blue flame-retardant coveralls and hard hats); and even its own language (with words like ethylene oligomerization and polyalphaolefins), the Association of Chemical Industry of Texas published.

Workers pedal around tanks and machines on bicycles, following the country’s rules of the road by stopping for the occasional railroad car and white pickup truck. Clusters of employees tinker with machines towering sometimes 15 or more stories above them like a downtown district. Inside one plant office, an oversized map with intricate red and blue lines outlines the factory’s geography like an urban streetscape.

To my foreign eye, the Chevron Phillips Chemical Co.’s Baytown plant looks like a sprawling maze of pipes, tubes and tanks. But what you can’t see at first glance is the dozens of people sitting several yards away who keep the plant’s machinery humming along safely.

They’re in an air-conditioned “blast-proof” control room behind a wall of computer monitors with moving diagrams and colored lines flashing like an automated game of Tetris. Called process operators, they sit in office chairs for 12-hour shifts tracking the computerized operations of each machine, pipe, tower and tank. They look for any sign of irregularity in temperature, pressure, timing and other minute changes.

They each hold two-year technical degrees — most likely with a fraction of the college debt of the average early career journalist, but with more than double the starting salary. The average plant operator with a two-year degree starts out with an $80,000 salary and usually grows to $100,000 or above, according to the American Chemistry Council, the industry trade group.

Around the industry, they call them “gold-collar workers,” a Chevron Phillips employee murmured to me. It’s not a common term, but one that is sometimes used to describe jobs that don’t fall neatly into the blue-collar or white-collar categories. Gold-collar workers need the “mind of a white-collar worker but the hands of a blue-collar one”, Harvard Business Review noted.

Think of the maintenance technician who repairs aircraft systems at Southwest Airlines; the manufacturing technician at Intel; and the medical technologist who operates laboratory equipment and analyzes test results at Memorial Hermann Cancer Center.

“You can’t just be a great craftsman,” says Peter Rodriguez, economist and dean at Rice University. “You have to understand enough not just to operate the system, but to be creative and solve a problem that’s non-routine.”

Rodriguez estimates these highly paid hourly technical workers make up about 10 percent or less of the workforce in the oil and gas industry, but he expects those numbers to grow, especially in offshore drilling, as fewer people work on the rig itself and more are in control rooms monitoring systems.

These workers fall into what some economists call the “middle-skills gap” — the mounting imbalance in the supply and demand for skilled workers such as welders, truckers, pipe fitters, millwrights, technicians and electricians.

In the Houston area, the industrial construction sector alone could have a shortage of between 5,000 to 10,000 “middle-skill” workers in the next four years, because not enough people are entering these jobs to keep up with the workers retiring, according to data from the Greater Houston Partnership, a business-finance economic development group.

Golden opportunity?

Many young people don’t think of these gold-collar professions when considering their options, notes Bill Gilmer, economist with the University of Houston.

“Aspirations have been set at a different level these days in terms of what you should do coming out of high school, which isn’t necessarily bad,” Gilmer says. “But they don’t explain that alternative of a gold-collar job or even high-paid construction job.”

Manufacturing companies want young people to know that gone are the days when working in a plant meant toiling over greasy machine, says Heather Betancourth, community relations representative for Chevron Phillips Chemical.

“We’re a lot more technologically advanced than people give us credit for,” she says.

The U.S. energy and petrochemical industry has experienced incredible growth over the last decade. The extended period of profitability has caused another surge in downstream investment, but leaders from across the major energy companies have identified one of the most pressing issues as finding qualified and skilled workers vital to the success of future capital projects, Petrochemical Update reported.

The skills gap has reached critical proportions among resourcing the craft labor jobs—technical jobs that require more education and training than a high school diploma, but less than a four-year college degree. Many of these jobs are in construction and manufacturing.

U.S. construction labor demand is expected to outpace labor supply over the next five years, with the total number of unfilled construction jobs growing from 200,000 in 2017 to 856,000 in 2021, according to the U.S. Bureau of Labor Statistics.

According to Forbes magazine, more than 350,000 manufacturing jobs are available now.

Petrochemical Update brought together a group of project management, business development, operations, maintenance, reliability, technology, procurement, and strategy experts from refining, petrochemical and liquified natural gas (LNG) sectors to discuss and debate the role of resourcing, recruitment and developing the next generation of workers in the industry.

BASF, SABIC, Fluor, Chevron, Ineos, DowDupont, Wood, Jacobs, Audobon, Kiewit, Bechtel, Sandpiper Chemicals, Covestro, Shell New Energies, and LyondellBasell, were among the executives brainstorming at the roundtable hosted by the 2019 Downstream Engineering, Construction and Maintenance Conference and Exhibition (DECM). These executives make up the 2019 DECM conference advisory board. 

“This group of major business leaders from across the spectrum of capital projects, reliability, maintenance, and process engineering have the unique opportunity to reflect on the challenges, share valuable insight and strategies, best practices and lessons learned together while meeting and planning the 2019 event,” said Jonny Witherspoon, DECM Project Director.

With more than 80% of project and maintenance executives citing resourcing as their most immediate challenge, the DECM 2019 team has decided to make workforce development the cornerstone of the 2019 program, and a central theme of the work of the full conference advisory board.

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Treating the problem

Glenn Johnson, Director of Workforce Development for BASF, says that if the industry wants to treat the issue, it must treat the symptom and communities must change thinking about these jobs.

“In this country we have allowed a narrative to develop that the “best” jobs are no longer in manufacturing, but in white-collar, office settings – although these jobs are also essential to manufacturing,” Johnson said.

“Simply put, the way everyone from actual parents and teachers to fictional characters portrayed in movies and television talk about certain careers has led to a lack of interest in these careers. Furthermore, we compound the problem by leaving information out during counseling,” Johnson added.

Industry Gaps

The U.S. workforce problem is a mix of demographic trends and awareness issues as an aging workforce retires every day. The first baby boomers turned 70 in 2016. 

Millennial workers are now replacing the Baby Boomers, who are retiring at the rate of 10,000 a day, according to the Pew Research Center. However, the millennial generation is less interested in jobs in the downstream industry in favor of what they consider more tech-savvy jobs.

“We are dealing with a people gap. Businesses can’t find the workers they need, when and where they need them,” said Peter Beard, Senior Vice President Regional Workforce Development for the Greater Houston Partnership.

“We are dealing with a skills gap. People lack the skills and credentials they need to compete for 21st century jobs,” Beard added.

Combined with record investments in the U.S. over the next decade, manufacturing will have 3.5 million job vacancies and the skills gap is expected to result in two million of those jobs being unfilled, according to Deloitte.

Additionally, every job in manufacturing creates another 2.5 jobs in local goods and services, according to the U.S. Department of Commerce. That is seven million jobs projected to go unfiled if the jobs gap is ignored.

Skills Gap

The industry is concerned about the quantity, but also the overall quality in the talent pipeline as well, Beard said.

UpSkills Houston, through Greater Houston Partnership, is one group that has put together a team to solve the skills problems before they become too big to handle projects.

A team, which consists of energy executives, educational institutions and community associations, has begun mapping competencies for priority industrial crafts to ensure career progression, stickability and transportability.

Competency maps for key craft jobs identify the related National Center for Construction Education and Research (NCCER) credentials for career progression.

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“It is essential to develop an approach for performance verification—the ability to validate that a person can perform the task or tasks related to the credentials,” Beard said. “Performance verification is expected to improve overall quality.” 

UpSkill Houston

UpSkill Houston consists of an active employer-led petrochemical sector council of ExxonMobil, Shell, LyondellBasell, Dow, BASF, and ChevronPhillips working in collaboration with the East Harris County Manufacturers Association (EHCMA) and Associated Builders and Contractors. 

Also participating: community-based organizations, the Community College Petrochemical Initiative (CCPI), and Gulf Coast Workforce Solutions. The council focuses on the skilled talent pipeline for plants coming on line soon.

The council has helped significantly increase enrollment in petrochemical courses at community colleges and raise completion rates for degrees and credit and non-credit certificates for technical programs.

Through these initiatives, UpSkill Houston is hoping to bridge both the skills gap and the people gap.

Fluor Craft Training Center

Energy, Procurement and Construction (EPC) service provider Fluor launched its Craft Education Initiative to invest resources in targeted colleges, schools and programs throughout the U.S. to get more students to pursue and complete high-value construction industry certifications. 

In addition to collaborations with colleges and contractor associations, Fluor offers free training programs for entry-level craft, welder upgrade training, craft certification and supervisory training.

Trainees receive industry-recognized entry-level credentials in the NCCER Core Curriculum in either electrical, instrumentation, millwright or pipefitting.

Fluor also offers 14-16-week, four-day-a-week welder training programs in Houston for experienced welders who want to hone their skills or advance to the next level.

Welders would train from Monday through Thursday and get paid to work on outages and other projects on weekends. 

Fluor has also opened a regional craft training center in La Porte, Texas, for both entry-level and welder upgrade training. 

WANT TO HAVE THE LATE

If Texas were a country and Texans like to think of it that way, it would be the third largest energy producing country in the world behind Saudi Arabia and Russia, Texas Railroad Commissioner Ryan Sitton said, Petrochemical Update reported.

Commissioner Sitton was speaking at Petrochemical Update’s Supply Chain and Logistics conference in Houston.

U.S. crude oil production and subsequently petrochemical production has increased significantly during the past ten years, driven mainly by production from tight oil formations using horizontal drilling and hydraulic fracturing.

At this rate, many analysts are predicting that Texas will surpass Iraq and Iran and pave the way for the U.S. to become the world’s leader in oil production.

Most recently, U.S. crude oil production reached 11.3 million barrels per day (b/d) in August 2018, according to the U.S. Energy Information Administration’s (EIA) latest Petroleum Supply Monthly in November, up from 10.9 million b/d in July.

This is the first time that monthly U.S. production levels surpassed 11 million b/d.

U.S. crude oil production exceeded the Russian Ministry of Energy’s estimated August production of 11.2 million b/d, making the U.S. the leading crude oil producer in the world.

Texas had the highest production of U.S. states at 4.6 million b/d.

The Permian Basin region accounts for about 63% of total Texas crude oil. From January 2018 to August 2018, Texas crude oil production increased by 683,000 b/d, the EIA said.

The growth in the Permian Region since the start of 2018 surpassed the EIA’s previous expectations, which assumed that pipeline capacity constraints in the Permian region would dampen production growth.

However, industry efficiencies in pipeline utilization and increased trucking and rail transport in the region have allowed crude oil production to continue to grow at a higher rate than the agency expected.

Economic Impact

The oil and gas industry are around 15% of the state’s economy, but several industries support the sector making that number higher.

“Consider the ancillary industries that support the industry. Consider a guy who owns a hotel in south Texas but 90% of his guests are staying there working on an oil project, so we can say that it is nearly 1/3 of the state’s economy,” Sitton said.

While the economy goes through cycles, and technology and other industries are changing quicker than ever, one thing that does not change is the world’s need for energy.

“As the population of the world grows, the hunger for basic products such as energy, water and commodities never go down. It only goes up,” Sitton said. “Everything from oil to natural gas to petrochemicals like polyvinyl chloride (PVC) to wood. All these things have gone up for the last 50 years with only two years where they were level and never dropped.”

Surging Production

Texas oil production has grown from 1 million b/d to more than 4.5 million b/d, according to the EIA.

Texas now refines 6 million b/d of crude oil. The Port of Corpus Christi exports 1 million b/d of oil, more than all the other ports in the country combined, Sitton said.

Murray Energy Corporation (“Murray Energy”) is extremely disappointed that the Federal Energy Regulatory Commission (“FERC”) has failed to enact the immediate reforms necessary to ensure the reliability, resiliency, and fuel security of our Nation’s electric power grids and, instead, dodged the decision. 

Mr. Robert E. Murray, the Chairman, President and Chief Executive Officer of Murray Energy stated that “This is a bureaucratic cop-out, whereby these FERC Commissioners have totally avoided making a decision regarding the very urgent situation relative to the lack of reliability, resiliency, and security in our electric power grids in our Country.”  “It also adds to the cost of electricity,” he added. 

“I fear that we will now immediately observe the announcement of further decommissioning of nuclear and coal-fired electricity generation that will further exacerbate this critical situation,” Mr. Murray added. 

“Indeed, the recent moderately cold weather period has further demonstrated the need for immediate action to ensure the reliability and resiliency of our electric power grids, and to hold down the cost of electricity, as natural gas prices have peaked at $175 per million BTU, which is sixty (60) times their normal levels, and the cost of electric power in some parts of our Country peaked at over $500 per megawatt-hour, up from less than $30 per megawatt-hour,” stated Mr. Murray.  “Further, at least 37,000 megawatts of supposedly natural gas-powered electricity were entirely unavailable due to the priority for home heating use and the inability of natural gas to flow at cold temperatures.  Additionally, power users in South Carolina were asked to voluntarily cut back on their electricity usage because of critical margins in the electric power grid.”

“If it were not for the electricity generated by our Nation’s coal-fired and nuclear power plants, we would be experiencing massive brownouts and blackouts in this Country.  During these critical times, coal has far outperformed all other fuel sources, including natural gas, dispatching at over twice the level of gas plants and over fifteen (15) times the output from windmills and solar panels,” Mr. Murray said.

“While FERC Commissioners Kevin J. McIntyre, Robert F. Powelson, Richard Glick and Cheryl A. LaFleur sit on their hands and refuse to take the action directed by Energy Secretary Rick Perry and President Donald Trump, the decommissioning of more coal-fired and nuclear plants could result, further jeopardizing the reliability, resiliency, and security of America’s electric power grids even further.  It will also raise the cost of electricity for all Americans, including those on fixed incomes, single mothers, and manufacturers of products for the global marketplace,” Mr. Murray concluded.  

When the administration of U.S. President Donald Trump proposed new subsidies for coal and nuclear plants, it seemed like an obvious way to deliver on campaign promises to boost the nation’s energy industry, reports Reuters.

And yet the plan, announced in September, set off sharp criticism from other sectors that Trump has also vowed to help, such as natural gas and utilities.

“Subsidies don’t make you competitive – and don’t make you great again,” said Robert Flexon, the president and chief executive of Dynegy Inc, a Houston-based utility that owns both coal- and gas-fired power plants.

The U.S. energy industry is facing a massive test of its infrastructure as an intense winter storm roars up the Atlantic Coast, threatening power outages, refinery shutdowns and spikes in heating prices, reports Reuters.

The storm swept up the U.S. Southeast toward New England on Wednesday, bringing snow, freezing rain and strong winds to a record-shattering cold already affecting much of the eastern United States. Temperatures are expected to keep dropping throughout the weekend, according to AccuWeather forecasts.

Prices for heating oil and natural gas in the U.S. Northeast are at their highest levels in several years on the back of near-record heating demand.

The extreme cold has stoked fears that a significant disruption could lead to a heating oil shortage, as inventories of distillate products, including heating oil, in the New England and Mid-Atlantic regions are at their lowest levels for this time of year since 2015. A number of tankers carrying diesel and heating oil from Europe are bound for the United States to address supply worries.

The U.S. Coast Guard in the key ports of Boston, the New York Harbor and Philadelphia have deployed ice-breaking ships to help keep trade traffic moving, but delays are expected.

Gasoline and diesel futures have climbed above five-year highs for this time of year, boosting key refining margins CL321-1=R to a five-year high for this time of year.

“I think we’ll see a big bang and price response but I don’t expect the impact and price response to be as long lasting as what you saw during Hurricane Harvey. Markets tend to over react,” said John Auers, executive vice president at consultancy Turner, Mason & Co. in Dallas.

Refiners along the U.S. East Coast were bracing for difficulties in the next few days. So far, the five refineries along the East Coast are dealing with frozen pipes and other challenges, but have not experienced any significant outages, according to sources at the plants.

“We’ve had a lot of freeze up but haven’t lost any units. This weekend will be bad,” said a source at Monroe Energy’s 185,000 barrel-per-day refinery outside Philadelphia.

Monroe Energy did not immediately respond to a request for comment.

Although most refineries, particularly those in northern climates, are designed to operate throughout the winter, increasingly extreme weather conditions in recent years have tested their capabilities. In 2015, more than a third of the U.S. East Coast’s capacity was abruptly shut down due to glitches.

Philadelphia Energy Solutions delayed a planned shutdown of 50,000 bpd hydrotreater and a benzene unit at the Girard Point section of the Philadelphia refinery complex due to severe weather conditions, a source told Reuters Wednesday.

U.S. natural gas demand was expected to remain near record highs this week due to the frigid weather. Natural gas is the major fuel for residential and commercial heating in the U.S. Northeast and is also widely used by power plants.

Total gas consumption in the lower 48 U.S. states peaked at 141.9 billion cubic feet per day on Monday, New Year’s Day, and was expected to remain near that level all week, according to Thomson Reuters analysts.

One bcfd of gas is enough to fuel about five million U.S. homes.

Natural gas prices in New England NG-CG-BS-SNL last week jumped to $53.50 per million British thermal units, highest since January 2014. The average price for gas in New England in 2017 was $3.80/mmBtu.

Oil prices posted their strongest start to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia, reports Reuters.

U.S. West Texas Intermediate (WTI) crude futures CLc1 traded broadly flat at around $60.40 a barrel by 1425 GMT after hitting $60.74 earlier in the day, their highest since June 2015.

Brent crude futures LCOc1, the international benchmark, were also flat at around $66.80 a barrel after hitting a May 2015 high of $67.29 earlier in the day.

It was the first time since January 2014 that the two crude oil benchmarks opened the year above $60 per barrel.

“Growing unrest in Iran set the table for a bullish start to 2018,” the U.S.-based Schork Report said in a note to clients on Tuesday.

Iran’s Supreme Leader on Tuesday accused the country’s enemies of stirring unrest as the death toll from anti-government demonstrations that began last week rose to 21.

Iran is OPEC’s third largest crude producer. Iranian oil industry and shipping sources said protests have had no impact on oil production or exports so far.

“Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014,” Bjarne Schieldrop, chief commodities analyst at SEB, said, also citing Kurdistan and Libya.

Even without the unrest in Iran, which is a major oil exporter, market sentiment was bullish.

“Falling inventories globally and strong economic growth offset the restart of the Forties pipeline and the resumption of production following a pipeline outage in Libya,” said Jeffrey Halley, senior market analyst at futures brokerage Oanda in Singapore.

The 450,000 barrel per day (bpd) capacity Forties pipeline system in the North Sea returned to full operations on Dec. 30 after an unplanned shutdown.

Oil markets have been supported by a year of production cuts led by the Middle East-dominated Organization of the Petroleum Exporting Countries and Russia. The cuts started in January 2017 and are scheduled to cover all of 2018.

U.S. commercial crude oil inventories have fallen by almost 20 percent from their historic highs last March, to 431.9 million barrels.

Strong demand growth, especially from China, has also been supporting crude.

However, rising U.S. production, which is on the verge of breaking through 10 million bpd, is somewhat hampering the outlook into 2018.

“We think U.S. tight oil production growth warrants close monitoring as it could spoil OPEC’s market-balancing efforts, pushing the market into surplus in 2018,” Barclays bank said.

U.S. oil production C-OUT-T-EIA, driven largely by onshore tight shale oil fields, has risen by almost 16 percent since mid-2016, to 9.75 million bpd at the end of last year.

• Collaboration leads to discovery of a new material able to separate ethylene from ethane
• Targeting up to a 25 percent reduction in both process energy needs and carbon dioxide emissions
• Research published in nation’s leading peer-reviewed journal Science

Scientists from ExxonMobil and the Instituto de Tecnologia Quimica in Valencia, Spain have discovered a potentially revolutionary new material that could significantly reduce the amount of energy and emissions associated with the production of ethylene. Depending on the application, use of the new material, in conjunction with other novel separation processes, could result in up to a 25 percent reduction in both the energy needed for ethylene separation, as well as the associated carbon dioxide emissions. Results of the research have been published in the peer-reviewed journal Science .

ExxonMobil and ITQ researchers found that the new material, composed of a uniquely structured silica zeolite, can be used in gas separation processes, such as the recovery of ethylene from ethane, with an unprecedented degree of selectivity at ambient temperature. The new material could provide insights into the design of additional materials to be used as adsorbents or membranes in a variety of different gas separation applications associated with chemical manufacturing. Zeolites are porous materials frequently used as adsorbents and catalysts in chemical processes.

“Cryogenic distillation, the current commercial-scale process used for ethylene separation, is an energy-intensive process,” said Vijay Swarup, vice president of research and development at ExxonMobil Research and Engineering Company. “If advanced to commercial scale, use of this new material could significantly reduce the amount of energy and emissions associated with ethylene production. This is another great example of collaboration between industry and a university that is focused on driving solutions for improving energy efficiency and reducing carbon emissions from industrial processes.”

Ethylene is a critical component in producing chemicals and plastics. Finding alternative, low-energy technologies to separate ethylene from ethane has been a longstanding challenge due to their similar properties. While chemical manufacturers have evaluated a number of alternatives to cryogenic distillation, including new adsorbents and separation processes, many of these technologies are hindered by low selectivity and an inability to regenerate when exposed to contaminants.

The patented new material, ITQ-55, is able to selectively adsorb ethylene over ethane as a result of its unique flexible pore structure. Built from heart-shaped cages interconnected by flexible elongated pore openings, the material allows the diffusion of the flatter ethylene molecules as opposed to the more cylindrical-shaped ethane molecules. The new material acts as a flexible molecular sieve.

“ITQ-55 is a very interesting material whose unique combination of pore dimension, topology, flexibility and chemical composition results in a highly stable and inert material that is able to adsorb ethylene and filter out ethane,” said Professor Avelino Corma of the Instituto de Tecnologia Quimica and co-author of the research. “We are excited about this discovery and look forward to continuing our fruitful collaboration with ExxonMobil.”

Additional research must be conducted before the material can be considered for larger-scale demonstration and commercialization. Fundamental research will continue focusing on incorporating the material into a membrane and developing additional novel materials for gas separation.

“Our ultimate goal of actually replacing cryogenic distillation is a long-term challenge that will require many more years of research and testing, in and out of the lab,” said Gary Casty, section head for catalysis at ExxonMobil Research and Engineering Company. “Our next steps will focus on better understanding the full potential of this new zeolite material.”

Chemical plants account for about eight percent of global energy demand and about 15 percent of the projected growth in demand to 2040. As global populations and living standards continue to rise, demand for auto parts, housing materials, electronics and other products made from plastics and other petrochemicals will continue to grow. Improving industrial efficiency is part of ExxonMobil’s mission to meet the world’s growing need for energy while minimizing environmental impacts.

ExxonMobil works with about 80 universities around the world to explore next-generation energy technologies. In 2016, ExxonMobil and the Georgia Institute of Technology announced the development of a potential new material focusing on liquids separation that could also reduce the amount of energy and emissions associated with manufacturing plastics. The results of this joint research were published by Science, as well.