A $180 billion market for Onshore Pipelines Projects through to 2012

John Westwood, Douglas-Westwood MD commented that “currently there are almost two million kilometres of oil, gas & product pipelines installed globally, with 65% located in North America and Eastern Europe & the FSU (Former Soviet Union) with gas pipelines making up the majority.

“With oil & 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.

“Although the LNG market is continuing to experience strong growth and is expected to increase it 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 underway, both upstream and downstream projects are exerting an upward pressure on levels of pipeline construction.

“The World Onshore Pipelines Report from Douglas-Westwood forecasts a 16% increase in kilometres of pipelines installed 2008-2012, compared to the historic five year period 2003-2007. Nearly 75% of this expenditure is expected to be spent in Asia, Eastern Europe & the FSU and North America. Almost 70% of this expenditure is expected to be spent on gas pipelines. Asia stands out as the largest forecast market – by length of pipeline construction – accounting for $42 billion of forecast capital expenditure.

“The status of forecast pipeline projects shows a split between planning (47%), under construction or ordered (40%) and approved (13%). Inevitably some of the projects in the planning phase will slip to the ‘right’ or not go ahead at all. Analysis on a project-by-project basis has resulted in more than 90 thousand kilometres of announced pipeline projects being ‘slipped out’ of the forecast period. Likewise some new projects will certainly come to fruition over the forecast period – compensating somewhat for project slippage.

“In light of the strength of market drivers and the volume of announced projects, Douglas-Westwood expects the onshore pipelines industry to experience substantial and sustained growth over the forecast period.”