IPLOCA: New world order will challenge pipeline contractors

Sept. 26, 2002
Despite the current dearth of pipeline construction worldwide, coming years promise more work as nations and companies come to grips with realities that have emerged since Sept. 11, 2001.

Warren R. True
Chief Technology Editor—Pipelines/Gas Processing

BERMUDA, Sept. 26 -- Despite the current dearth of pipeline construction worldwide, coming years promise more work as nations and companies come to grips with new economic, social, and political realities that have emerged in the year since the terrorist attacks of Sept. 11, 2001.

This was the message delivered today to the opening general session of the 2002 International Pipe Line & Offshore Contractors (IPLOCA) convention in Bermuda by Techint SA's Daniel Sammartino, current IPLOCA president.

In the midterm, said Sammartino, pipeliners will "still be laying mostly cross-border pipeline in different parts of the world under difficult legal and contractual frameworks."

Sammartino sees several forces driving pipeline construction activity.

Chief among these is what he calls a "new world order" evident in the past 12 months and characterized by a need for diversification of energy sources and heightened security along the links between those sources and their markets.

"A year after (the Sept. 11, 2001, attacks), countries are more sensitive to the consequences of relying on a few sources of energy. Linking existing reserves to new markets and new reserves to existing markets should create a demand for pipeline infrastructure," he said.

Among the newly important sources of energy, Russia ranks at the top, Sammartino said. The pipeline industry will see several projects to bring that country's oil and natural gas production to markets. He also pointed out that recent discoveries in Central Asia will trigger a demand for more pipelines.

Sammartino said that new geopolitical situations were shaping relationships among countries even before Sept. 11, 2001, and will influence how markets and oil and gas research are linked.

"Every day we see countries with long-standing disputes signing agreements to jointly develop oil and gas licenses. Although the involvement of governments is key, I think it is the economic pressures rather than the political pressures that are now driving the relationships among these countries. This gives the pipeline industry a broader market," he said.

The price of oil is the second major force driving pipeline construction, said Sammartino. Several oil exporters outside the Organization of Petroleum Exporting Countries are ramping up production just at a time when major economies appear to be emerging from the economic downturn that began in 2001. This is pressuring many countries to find ways to meet growing energy demand.

Finally, he said the pipeline industry will be subject to current energy market trends, especially the new technologies to deliver natural gas from remote areas to markets thirsty for a cleaner energy alternative. Sammartino specifically cited developments that have reduced costs of liquefying and moving gas over great distances.

Security concerns
He noted that added needs for security along pipeline construction rights-of-way have been created by, on the one hand, the specter of personal terrorism represented by Osama bin Laden and, on the other hand, the threat of war created by US President George W. Bush's "loose and unstable" alliance against Iraq.

Pipeline contractors must also be aware of a greater need to protect the varied environments through which their construction spreads pass and must solve the added burdens of project financing schemes that require greater bonding securities.

But new technological developments may help the contractor, said Sammartino. He specifically mentioned the advance of X-100 steel in line pipe that is 25% stronger than steels currently in wide use. And he noted the research into the use of composite materials that can add strength and lower costs of line pipe.