Onshore pipeline capital expenditure is expected to grow modestly to $220 billion between 2015 and 2019, according to a new Douglas-Westwood market forecast.
The author, Matt Loffman, said, “This represents a 14% increase on the previous five-year period. The substantial fall in oil prices has weakened the onshore market, causing project delays and a focus on reducing costs for pipeline owners. Despite this, the delays we have observed have a different complexion to other oilfield sectors and have been limited in large part to the North America region.
“In general, the onshore pipeline construction market is fairly insulated from commodity price fluctuations when taking a global perspective. There are delays relating to a reduction in the rate of growth in major non-OECD economies in addition to falling US unconventional production figures. However, these are offset to a large extent by major transmission lines and demand growth in the Middle East and Latin America.”
Hannah Lewendon, research team leader, concluded, “The team has performed a full refresh of the market model with the latest DW data. The methodology has been revised and sense-checked through extensive consultation with industry in each global region. On a regional basis, the Middle East continues to be a bright spot where solid growth is anticipated. As other developing regions increase their infrastructure footprint, we expect pipeline construction to remain important.
“Other observable trends include a shifting toward large-diameter lines over the past three years,” she added. “This is expected to continue to 2016, but, in 2017 and beyond, smaller-diameter pipelines are expected to gain relative market share, driven by maturing networks within population centers of non-OECD countries and a return of US onshore production growth. Investment in LNG infrastructure and a move toward gas as a power source are also key factors in future pipeline construction. We anticipate 66% of installed lines between now and 2019 to transport natural gas.”