North American Oil & Gas Pipeline Sector Sets Banner 2008 with $22 Billion in Projects Planned

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Researched by Industrial Info Resources (Sugar Land, Texas)--This year, some major projects went into the construction phase, including the Rockies Express Pipeline to export natural gas from the Rocky Mountains to the Midwest, the Southeast Supply Header project and the Southeast Expansion in the Gulf Coast region. The pipeline sector looks to continue to pick up momentum from the sector turnaround that seemed to occur in 2005. In 2008, capital spending in the sector will continue to increase in the number of projects and the total capital value of the projects.

Currently, 226 projects are planned with a 2008 construction start-up across the natural gas, crude oil and refined-products pipeline industries. These projects total more than $22 billion in planned capital spending and will set in motion the 2007-08 back-to-back banner years in the pipeline sector. The average capital value of these projects is approximately $97.3 million and range from the major $1 billion Canadian crude oil pipelines to the smaller $4.6 million compressor station expansions. If one includes projects in 2008 and beyond, the number of planned projects increases to 362, representing a total capital value of more than $85 billion. The large increase in capital expenditure is dependent upon the $20 billion Alaskan gas pipeline finally moving forward.

Click on the image at right to view a chart showing the breakdown of Transmission Industry projects by market region for 2008.

The U.S. and Canada will have the lion’s share of new capital expenditures in 2008. In the U.S., there are 182 proposed projects with a capital value of approximately $14.2 billion, and Canada has 43 planned projects with a combined capital value of $8.3 billion. The remainder of the projects and capital to be spent will reside in Mexico.

In descending order of capital to be spent, the market regions of western Canada and the U.S. regions of the Southwest, Great Lakes, Midwest and the Rocky Mountains will see the most activity. In related descending order, the capital amounts to be expended in these regions in billions of dollars are $8.2, $4.4, $3.5, $2.4 and $1.8 billion. The number of projects in these regions is 39 in western Canada, and in the U.S. there are 53 projects in the Southwest, 23 in the Great Lakes, 34 in the Midwest and 26 in the Rocky Mountains.

Included in this list of projects that Industrial Info is tracking are many long dormant pipeline schemes like the Maritimes expansion, which is now back on the table and proceeding through the Federal Energy Regulatory Commission. Given even a somewhat steady economic environment, 2007-12 should see a boom in the once post-Enron-bust pipeline sector.

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