Forecasts Surpass Reality: A Look at Past Crude Oil Pipeline Forecasts

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Researched by Industrial Info Resources (Sugar Land, Texas)--The industrial world is a dynamic place, especially when it comes to crude oil. Market forces, individual companies and even the weather constantly force conditions to change. As conditions change, so must individual plans within that environment, which can result in optimistic short-term plans stretching out over years. The disparity between what is planned to be built and what actually goes forward can also vary by region, depending on that geography's market position. Different market sectors are also impacted at different rates. As such, one year may see only half of a market sector's projected spending actually begin construction, while another may see almost everything start as planned.

For example, at the beginning of 2015, Industrial Info forecasted $47 billion in crude oil pipeline spending between 2015 and 2018. That spending forecast included $10 billion slated to kick off in 2015, $24 billion for 2016, $11 billion for 2017 and $2 billion in 2018. The year 2015 started right on the heels of the oil price crash following OPEC's fourth-quarter 2014 meeting, and the beginning of a lot of reshuffling and changes of plans. Production projects that were economical as a result of $100-per-barrel crude oil prices were no longer feasible, and the effects flowed downstream to pipelines and terminals. For related information, see December 1, 2015, article - Economic Pressure Coming Down the Pipe, Upstream Slowdown Begins Affecting Midstream. Looking at Industrial Info's market data today, a very different picture emerges. While Industrial Info is tracking $42 billion in crude oil pipeline projects that are slated to kick off between 2015 and 2018, the distribution of spending has shifted so that the majority of spending is taking place in the year following the forecast. The largest single catalyst for this shift in expenditures has been the delay of TransCanada Corporation's (NYSE:TRP) (Calgary, Alberta) $12.5 billion Energy East Project from a scheduled kick-off in 2016 to now being scheduled to start work at the end of 2018, with a close second in the same company's $8 billion Keystone XL Project, which was also delayed from 2016 to 2018. See Industrial Info's project reports for Energy East and Keystone XL.

Looking back, 2015 saw roughly 60% of its forecasted $10 billion in project activity start construction, while 2016 saw the start of less than 20% of its forecasted $24 billion, although that $20 billion discrepancy can be traced to the delay of the Energy East and Keystone XL projects. The year 2017 saw $10.6 billion of its forecasted $11 billion in projects kick off as planned and the forecasted value of projects expected to start construction in 2018 ballooned by $20 billion from 2015's forecast to $22 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.