Oil and Gas Sector Still Poised for Growth in 2002

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The following is an Advisory by Industrialinfo.com (Industrial Information Resources, Incorporated: Houston, Texas). During 2001, the majority of the capital & maintenance spending in the oil & gas sector concentrated on natural gas pipeline construction. Major projects such as Gulfstream, Sundance, South Expansion, and Medicine Bow among others went to construction during 2001. The majority of the work concentrated on looping and compression additions to obtain additional capacity for these pipeline systems. In the crude oil & refined products sector, Centennial Pipeline went to construction and several others continued with permitting.

According to the recently released 2002 Industrial Outlook, certain sectors of the oil & gas industry will continue to expand during 2002. This expansion is being driven by demand factors outside the industry and in some cases the price of natural gas itself. Demand factors such as electric power generation, population movements, and commercial use of natural gas will continue to draw upon supplies and hence create an atmosphere of expansion.

New England is a good example of how power generation will continue to promote pipeline expansions. Forty-six units representing 7,971 mega-watts of natural gas fired base-load electric power generation are under development for completion by the third quarter of 2003. If these units are constructed, this would represent an increase of 1.2+ billion cubic feet per day of additional gas demand in New England for power generation alone.

The majority of the planned expansions through 2003 will proceed as planned in the pipeline sector. The increase in the storage sector will manifest itself in underground gas storage projects to insure supply during swing periods in demand caused by peak electrical usage. The larger Alaskan pipeline projects have again come under scrutiny due to the price of natural gas and the problem of introducing 4.5 billion cubic feet per day into a market that has become accustom to incremental increases in supply.