An estimated $180 billion will be spent on onshore pipeline projects worldwide through 2012, says Douglas-Westwood analysts in a new study, “The World Onshore Pipelines Report 2008-12.”
Based on strong market drivers and the volume of announced projects, the analysts expect the onshore pipelines industry to experience “substantial and sustained growth over the forecast period.”
Analyst John Westwood, speaking at Brazil’s Rio Pipeline 2007, said: “With oil and gas demand set to continue growing, production increases are forecast, leading to greater need for the transportation of products to market. Increasing demand for gas to be transported vast distances from source to market in places such as the USA and Australia, coupled with previous underinvestment in Russia, for example, and aging infrastructure set the stage for an increase in onshore pipeline project investment over the forecast period.”
According to Westwood, “Currently, there are almost 2 million km of oil, gas, and product pipelines installed globally, with 65% located in North America and Eastern Europe and the FSU (Former Soviet Union), with gas pipelines making up the majority.”
The Douglas-Westwood report forecasts a 16% increase in kilometers of pipelines installed during 2008-12, compared with the historic 5-year period of 2003-07. Nearly 75% of this expenditure is expected to be spent in Asia, Eastern Europe and the FSU, and North America. Almost 70% of this expenditure is expected to be allocated for gas pipelines.
Asia stands out as the largest forecast market based on the length of pipeline construction. The region accounts for $42 billion of forecast capital expenditure.
The status of forecast pipeline projects shows that about 47% are in the planning stage, 40% are under construction or have been ordered, and 13% have been approved. Analysis on a project-by-project basis has resulted in more than 90,000 km of announced pipeline projects being ‘slipped out’ of the forecast period. However, new projects that will be commissioned over the forecast period will compensate somewhat for project slippage.
Pertaining to the future of the LNG market, the report predicts that “although the LNG market is continuing to experience strong growth and is expected to increase its share of gas transportation from around 7% in 2003 to 26% by 2025, piped gas will remain the main method of gas transportation, carrying over 30% more gas (by volume) in 2025 than in 2007. With an onshore activity boom under way, both upstream and downstream projects are exerting an upward pressure on levels of pipeline construction.
