Douglas-Westwood Research has just released its World Onshore Pipelines Market Forecast 2015–2019, which looks at the prospects for the onshore pipelines construction business and values the future markets through to 2019 by key component, region, pipeline type, and diameter. In general, modest growth is expected due to the negative impact the significant fall in oil prices has had on the onshore pipeline market, although most project delays are in North America.
The pipeline market itself is well-cushioned from short-term commodity price fluctuations with projects typically responsive to long-term demand and supply trends, both within and between regions, according to the report.
Douglas-Westwood expects onshore pipeline expenditure to grow modestly to US$220 billion between 2015 and 2019, an increase of 14% compared with $193 billion over the preceding five-year period. An increasing volume of pipeline installations is expected in most regions, supported by continued product demand growth in both new and existing population centers, new and increasing hydrocarbon supply, and a shift in energy demand preferences toward gas.
North America and Asia remain the highest volume markets, together accounting for about 45% of global CAPEX. However, substantial growth is anticipated in the Middle East. In total, DW expects almost 309,000 kilometers (about 192,000 miles) of line pipe to be installed. This represents an increase of 11% compared to the previous five-year period.
With an anticipated 35% increase in global energy demand between 2010 and 2040, natural gas is expected to significantly increase its share of the energy mix – growing by 65% over the same period. This trend is progressing as expected, driven in large part by non-OECD demand growth and technology advancements, including in liquefied natural gas.
Investment in new infrastructure to support LNG and unconventional gas developments will be a major factor shaping future demand for pipelines. Outside the major oil province of the Middle East, gas pipelines accounted for 62% of kilometers installed over the past five years with this figure expected to increase to 66% for the 2015–2019 period.
The Douglas-Westwood report notes that lower steel prices and greater manufacturing capacity have become available. Lower levels of near-term activity among tubular goods providers have released manufacturing capacity for line pipes. Lower-than-expected economic growth in Asia and reduced activity in North American unconventional production is expected to support this scenario in the short term.