Full Pipeline of Business for North American Oil & Gas Transmission Industry

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--So far in 2013, business has been good for the North American Oil, Gas & Refined Products Transmission Industry, and developers have scheduled a large number of projects to start during the next 12 months, according to Industrial Info's North American Industrial Project Database. But this industry also cancelled or placed on hold dozens of projects that were scheduled to kick off during the next 12 months.

Through May, ground was broken at 80 pipeline projects across North America that carried a total investment value (TIV) of $4.7 billion. By contrast, for the first five months of 2012, work began at 57 pipeline projects valued at $2.7 billion.

Looking forward, about 276 pipeline projects are scheduled to kick off across North America over the next 12 months. These projects have a TIV of $22.1 billion. Most of those projects--239--are scheduled to be built in the U.S.; these projects carry a TIV of $17.1 billion, according to Industrial Info's database.

Click on the image at right to see a country breakdown of scheduled pipeline spending over the next 12 months.

In Mexico, rising demand for gas-powered electricity generation has led to the announcement of more than $4 billion of new gas pipeline projects, swelling the value of North American project activity, said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Terminals and Transmission industries.

Sustained high prices for crude oil continue to brighten the outlook for crude oil pipelines, Davis said. More than $2 billion of projects tied to the Keystone XL pipeline are scheduled to kick off within the next year, assuming the Obama administration grants that project a license. At least $1.7 billion in project activity tied to the Flanagan South pipeline is scheduled to begin turning dirt over the next 12 months.

Not all pipeline projects under development will kick off as scheduled. Indeed, Industrial Info data shows that 66 North American pipeline projects scheduled to kick off between June 2013 and May 2014 have been cancelled or placed on hold. The value of these projects is approximately $9.4 billion, and most are in the U.S.

Click on the image at right to see a country breakdown of pipeline projects that have been cancelled or placed on hold.

Natural gas pipeline projects account for more than two dozen of the cancelled or on-hold projects. More than 20 other cancelled or on-hold projects are crude oil pipelines. Seven ethanol pipeline projects with a TIV of about $2.7 billion have been cancelled or put on hold. A handful of carbon dioxide (CO2) or natural gas liquids (NGL) pipeline projects also have been cancelled or placed on hold.

"Relatively low natural gas prices are the most important reason for cancelled or delayed gas pipeline projects," Davis said. "Gas production from shale wells continues to rise, outstripping demand and leading to relatively weak prices. Pipeline companies see this trend and have become a little more cautious about capital spending in the U.S."

David said that the collapse of the ethanol industry was the main reason several of those pipeline projects have been cancelled or stalled. For more on the economic difficulties confronting ethanol producers, see the April 9, 2013, article - U.S. Ethanol Outlook: Plenty of Supply and Demand, But Profits Elude Producers.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.