Pipeline Outlook: Studies Indicate Strong Years Ahead

January 2011 Vol. 66 No. 1

While oil and gas transmission pipeline construction has slowed compared to 2008, projections from two different studies still predict a solid market for the next few years and continued growth in natural gas and consumption through 2030.

Report from Douglas-Westwood
It is forecast that $193 billion will be spent on onshore pipeline projects worldwide through to 2015, according to data in energy business analysts Douglas-Westwood’s third edition of The World Onshore Pipelines Report 2011-2015.

The report notes that in recent years, levels of activity in the onshore pipelines market have been affected by what can be considered, in relative terms, short-term macroeconomic factors.

This has particularly been the case in developed regions such as North America whose economies have been most affected, but less so in developing regions such as Asia, where strong economic growth has been maintained.

In these developed economies, the report says, the global economic downturn had the dual effect of both destroying energy demand as well as reducing the availability of credit.

This combination led to many proposed pipeline projects either being delayed or in some cases cancelled altogether, which is highlighted by the trend of declining annual expenditure – a trend set to produce a significantly reduced annual industry expenditure in 2012.

However, over the forecast period 2011-2015, these short-term factors will ultimately begin to once again give way to more long-term and industry specific drivers.

Beyond 2012, the report notes that continued growth in global oil and gas demand and the associated production increases (fundamental long-term drivers of activity), will require significant investment in pipeline infrastructure.

In North America, increasing investment in the development of unconventional energy sources, such as shale gas and oil sands, is set to create a shift in the location concentrations of production and will require major investment in new pipeline projects to link the new energy sources with existing pipeline networks and new markets.

Meanwhile, in Asia, soaring energy demand is set to continue to support strong levels of investment in domestic pipeline networks, as well as many trans-national and trans-regional projects designed to help meet long-term energy requirements.

In Europe, the desire to create greater energy security through supply diversification and greater regional network integration is set to drive investment in a number of regional and trans-regional projects.