North American Crude Oil Pipeline Spending Tapers Off this Year while Mileage Grows

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industries, like empires, go through periods of great expansion as well as lulls of peace. From 2012 through 2014, North America finished adding or converting over 7,000 miles of crude oil transmission pipe, spending over $14 billion in the process.

This impressive build out was followed by 2015's anomalously high spending, but the year was low in new and converted pipeline mileage where Industrial Info tracked more than $8.6 billion spent on just shy of 2,700 miles of new and converted pipe. This is due in part to the large number of high-mileage pipeline projects that were completed in 2014, but is also part of the natural ebb and flow of project spending. With all the additions, 2015 saw the completion of many capacity expansions through adding pump capacity. The industry seems to be tacking the other direction in 2016, however, as spending has dropped to just over $6.6 billion for over 4,100 miles of pipe.

In 2012, Industrial Info tracked 1,095 miles of new crude oil pipe construction and pipe conversion projects worth $1.73 billion. The following year, construction or conversion of 2,256 miles of pipe was finished, representing $3.71 billion. The year 2014 saw a spike in development that saw just shy of $9.2 billion spent on 4,169 miles of pipe coming into service. While the 2015 numbers seemed strangely lowered, the overbuilt pipeline network took this time to flesh itself out through pump additions, which helped increase the investment costs while keeping new/converted pipe mileage lower.

The increase in crude oil pipe mileage to finish construction or conversion in 2016 up to 4,161 miles can be largely attributed to a few high-mileage megaprojects such as the Dakota Access Pipeline (DAPL) and Energy Transfer Crude Oil Pipeline (ETCO/ETCOP) being spearheaded by Energy Transfer Partners (NYSE:ETP) (Dallas, Texas). These two projects together feature over 1,100 miles of new pipe and conversion of a further 700 miles from natural gas to crude oil service, almost half of the total miles of pipe set to be built or converted this year. The difference in spending can be attributed to multiple factors, including more available labor as development recovers from a slowdown, the need for midstream companies to suppress costs as much as possible during the low oil price environment, and the increase in efficiency from both service providers and operators in how they construct and manage these projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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 https://www.industrialinfo.com/.