NEWS

WIRES

OTHER

Positive Outlook for the Oil & Gas Pipeline Industry for 2010, a "Navigating the Currents of Change" Webcast on Industrialinfo.com

Researched by Industrial Info Resources (Sugar Land, Texas) -- The impact of the global economic recession on the oil & gas industry has resulted in a decline in project spending in the past few years. This year has begun on a positive note, as the Pipeline Industry seems to be slowly bouncing back, with capital projects and expenditures on the rise, and an unprecedented wave of capital spending on grassroot projects, loops, laterals and expansions.

Although there has been an increase in demand for energy and a fluctuation in the price of natural gas, companies that use natural gas as a major source of energy are seeing higher-than-expected margins because of the lower input costs. In order to help make future grassroot projects feasible in today's market, companies are taking a closer look at how they can reduce costs by standardizing designs and re-examining relationships between owners and suppliers.

Within the natural gas sector, there has been a period of high investment spending on exploration activity, which has been driven by the increase in natural gas demand and prices. Companies are moving forward with the construction of natural gas pipeline projects that will transport gas from wells drilled in the shale play areas to various hubs around the country. Shales such as the Barnett Shale in Texas, the Haynesville Shale in Louisiana, and the Marcellus Shale in Pennsylvania, have seen an increase of more than 50% in drilling activities in the past year, with production peaking at more than 4 billion cubic feet per day of natural gas.

In order to stay in tune with current market conditions, companies are maintaining increased levels of natural gas production by increasing the number of wells drilled, consequently creating the need for construction of grassroot pipelines or loops and laterals.

Billions of dollars of pipeline projects were shelved or placed on hold in 2009. The credit market for the oil & gas industry is moving at a somewhat morbid pace, following the financial crisis of 2008 and 2009, in which gas companies were hard-pressed to find lenders and lock in shipping commitments. This created massive roadblocks for future pipeline projects. Because of these activities, companies have shifted focus and are pushing environmental permitting agencies to give them the green light to proceed with major construction projects in which capital spending could reach an estimated $10.5 billion in the next two years between the U.S. and Canada.

Some of the most active areas for new natural gas pipeline construction will be in the mid-continent area, which will essentially link natural gas supply from the shales (Barnett, Haynesville and Woodford) to the Gulf Coast supply hubs, in turn feeding major pipeline markets that serve the Southwest region.

Several energy giants, including Dominion Transmission, Enbridge Pipelines and El Paso Corporation, are developing grassroot pipeline projects in the Midwest, Rockies and East Coast regions with a kickoff date of late 2010 and an in-service date of 2012-13. These pipelines are originating from fields in the Marcellus Shale Play area.

There are also numerous pipeline construction projects of varying sizes under way in Canada, with several major projects scheduled for completion in the coming months. Several more major projects are geared to begin construction in mid-2010, with many others on track for 2011-13 if the necessary permit approvals are obtained. Expansion projects are also expected to show a significant increase between 2010 and 2012 because of the completion of previous pipeline projects that may need loop or lateral additions in the future to help increase capacity on gas lines. The construction of these future projects will help stabilize the oil & gas industry and also meet the future energy demands needed to increase growth within the industry.

Click here to join Ilna Penny, researcher for the oil & gas industry at Industrial Info, for a discussion of what the coming year has in store for the Oil & Gas Transmission Industry.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news. For information send inquiries to oilandgastransmissiongroup@industrialinfo.com or visit us at www.industrialinfo.com.