Industrial Info Identifies $4.7 Trillion in Future Projects Worldwide

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Researched by Industrial Info Resources (Sugar Land, Texas)--More than $1 trillion worth of capital projects has been affected by the worldwide economic downturn. Over the past 12 months and nearly 30,000 project updates later, Industrial Info has identified 1,785 capital projects worth $154 billion that were placed on hold or canceled, and 3,138 projects worth $858 billion that have been delayed and moved out to 2010 and beyond. However, there are 15,700 future projects worth $4.7 trillion worldwide. These figures and more were revealed at the recent Market Outlook 2009 Executive Conference sponsored by Industrial Info in Houston, Texas.

Click on the image at right to see a breakdown of industrial projects.

Inventories are at staggering highs while capacity utilization is at an all-time low. Consumer confidence, too, dipped to record lows at the beginning of the year. But despite the all-around negativity, the good news is that energy market could lead the U.S. out of the recession sooner than people think, said Mike Bergen, Industrial Info's Vice President for Marketing.

From 2005 through last year, there has been a steady increase in construction starts in the Power Industry, driven mainly by new generation, including grassroot plants or unit additions at existing plants, as well as environmental compliance projects, said Britt Burt, Industrial Info's Vice President for Power. In the beginning of the decade, the fuel mix in terms of construction starts was largely dominated by natural-gas-fired generation. But in 2005, construction starts for coal-fired and renewable energy combined surpassed that of natural gas. Renewable energy projects, especially wind, are starting to pick up, Mr. Burt said. In 2007 and 2008, investments in wind started to become major factors toward overall project value totals: $6.89 billion 2007 and $15.02 billion in 2008.

Industrial Info's United States Wind Turbine Power Generation Industry - 3rd Edition wall map illustrates opportunities in wind power development. The map provides details on 389 windfarms in operation, representing 27,144 megawatts (MW) of capacity. It also includes more than 99,000 MW in future development represented by 569 windfarms in the early planning and advanced development stages, as well as 46 windfarms under construction.

Government funding could add a large amount of project activity, considering the stimulus spending for renewable energy. Industrial Info is tracking 550 renewable energy projects valued at $113 billion. These include 337 wind projects worth $87.9 billion. "Wind is a big market that's moving forward, and I think we'll see that taking off over the next couple years," Mr. Bergen said. Of course, there is always the possibility of project cancellations, but these projects do have the ability to take advantage of the stimulus package, he said.

New energy resources will be necessary not only to meet future demand but also to replace aging units set for retirement. In the U.S., there are 704 units totaling 204,784 megawatts that have been in operation for 30 years or more. Natural-gas-fired generation continues to be proposed, but it is expected to be a bridge fuel to move forward until other generation types, such as coal or nuclear, come online.

In the Petroleum Refining Industry, investments have been rising for the past six years. Although construction starts for 2009 are expected to decrease by 45% this year compared with last year, there seems to be some optimism for 2010. There are $40.95 billion in active construction starts forecast for 2010, partly because some of the projects that were scheduled for 2009 were delayed until then, said Chris Paschall, Industrial Info's Vice President for Petroleum Refining. It is unrealistic to say that all of the spending will actually occur, and it is likely that some of the spending will be delayed further into 2011 and beyond, he said.

One factor that supports the optimism for 2010 is the forecast for demand of refined products published by the DOE EIA earlier this month, Mr. Paschall said. Demand for gasoline and distillates decreased in 2008 and it appears to bottom out in 2009, but recovery is expected in 2010 and beyond. Gasoline demand is expected to peak in 2011, well above the peak in 2007, and distillates are expected to recover several years later.

The Chemical Processing Industry began to feel the effects of the recession later than most other industries, said Trey Hamblet, Industrial Info's Vice President for Chemical Processing. For the industry, the Gulf Coast region is known to be one of the most integrated, with its pipelines, end markets and infrastructure. The region is also known to have an influence on spending elsewhere in the country, Mr. Hamblet said. Construction starts for the industry in the region used to match -- and sometimes even exceed -- spending elsewhere in the U.S. That changed in the last few years. Spending in the petrochemicals sector has been depressed for the last several years. We've had a minimal amount of major investments in petrochemical plants, and a lot of the industry's growth came from some niche markets elsewhere outside of the Gulf Coast, he said.

For the rest of this year and looking at a quarter-by-quarter basis, construction starts will continue to be burdened by the rest of the economy, Mr. Hamblet said. Based on proposed construction starts Industrial Info is surveying for the Chemical Processing Industry for 2009-10 -- 980 projects worth $14 billion -- there are indications that the industry can rebound and go back to healthy levels of spending in early 2010. Future projects from 2009 and beyond total 559 valued at $38.8 billion.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.