What does the future hold for pipeline projects?
In this blog post we focus on global pipeline projects, including how the state of the oil and gas sector will drive future activity and the potential areas for growth.
The Global Outlook for the Oil and Gas Sector
We took a quick look at the recent World Oil and Gas Review produced by Energy company ‘Eni’, which provides an in-depth analysis of the statistics from 2014. Some notable highlights included;
- World oil production saw the biggest increase in the last 10 years up 2.2%, with the largest growth concentrated in non OPEC countries.
- The US overtook Saudi Arabia and Russia with record growth of 15.4%
- The growth in global oil demand halved to 0.7%. (US demand up 0.4%, European countries down -1.4%, China up 3%).
- Global refining capacity grew by 4Mb/d, with Asia contributing 3M/d.
- European refining capacity curbed due to foreign competition and falling domestic demand.
- Gas production increase was led by the US due to shale gas resources. Production in Russia fell by 6.1%.
- Gas consumption saw an overall decrease of 0.4%. Europe and Russia saw falls but the US, Middle East and Asia saw increases.
The Outlook for Pipeline Projects
As you might expect, the state of the oil and gas sector as described above has a huge impact upon pipeline construction projects. In September this year, Audrey Leon from oedigtital.com spoke with Infield Systems’ analysts James Hall and Wei Liu to get their assessment of what the future may hold. Below is a snapshot of their views;
- The offshore pipeline installation market over the next 12 months will be “challenging”.
- Infield has downgraded its three-year forecast for pipeline installation capex by approximately 25% and spending for the period is now anticipated to be about 10% lower than in the 2012-14 period.
- North America is likely see pipe laying demand shrink in the coming years, as shallow water activity in the Gulf of Mexico has been negatively affected by the onshore shale boom.
- European pipe laying activity through 2015-17 will be moderate, with an annual installation of 1200km. (A 50% drop from forecasts a year ago).
- Hal and Liu then suggested that that countries driving pipe laying demand growth may include Africa, but with the risk that continued low oil prices may end up delaying large scale projects in Angola, Egypt, and Nigeria.
- Moderate growth is expected in Latin America and by the end of the decade, Australasia demand will be driven by expansion of the Darwin LNG projects.
- Some recovery will be felt in 2H 2017, although a 6-12 month lag will experienced by the pipe laying fleet.
How much offshore pipeline is in use at the moment?
According to statistics published by OE magazine, the length of operational and planned pipelines is falling as the table below shows.
Offshore Pipelines (operational and 2015 onwards)
|Pipe Diameter < 8 inch|
|(km)||(km last month)|
|Pipe Diameter 8 to 16 inch|
|Pipe Diameter > 16 inch|
Source: OE magazine November 2015
Summary: The outlook for Project Engineers
As you might expect, what the future holds really depends upon where you're located, or which countries you want to operate in. Accurate predictions are difficult in such volatile times, but what is clear is that the emphasis in Europe (especially the UKCS) has shifted away from construction towards decommissioning.
If construction is your area of expertise then Africa, Latin America and Australia shows more promise for project opportunities.
The difficult economic climate and the maturity of installations is making many companies look towards extending the lifetime of their assets.
This is good news for those looking to work on maintenance projects. In places such as the Arabian Gulf where the extreme environment includes high humidity, temperatures 20 degrees above global average, and salinity levels higher than anywhere else in the world, facility owners here are said to be looking for a service life beyond original design.
Looking at the US, many offshore pipelines are more than 40 years old. One incident illustrating the importance of maintaining pipeline integrity is the onshore Plains All American pipeline, which leaked more than 100,000 gallons of heavy crude oil onto the California coast killing hundreds of animals, including dolphins and sea lions, and polluted beaches for nearly 100 miles.
Working on such maintenance demands robust and reliable equipment that performs efficiently and quickly. The Mirage range of machines can help project engineers meet the challenges so why not take a look at and get yourself equipped for your next project.
New branches and tie ins into existing plant and infrastructure also requires specialist skills and equipment to complete the project without losing production, environmental / health and safety risks of product leakage, health and supply to clients.