The prospects for the onshore oil and natural gas pipelines construction business have been stung by the decline in commodity prices, but most of the project delays announced to date are almost exclusively in North America, according to Douglas-Westwood (DW).
In the eighth World Onshore Pipelines Market Forecast for 2015-2019, the UK-based researchers said the global pipeline market overall is "well-cushioned from short-term commodity price fluctuations with projects typically responsive to long-term demand and supply trends, both within and between regions."
Over the next four years, however, onshore pipeline spending is forecast to be "modest," increasing 14% to $220 billion, versus $193 billion in the preceding five-year period.
"An increasing volume of pipeline installations is expected in most regions, supported by continued product demand growth in both new and existing population centers, new and increasing hydrocarbon supply, and a shift in energy demand preferences toward gas," researchers said.
North America and Asia are forecast to remain the highest volume markets, and together they are expected to account for about 45% of global capital spending. However, the fastest growth is anticipated in the Middle East. In total, DW expects almost 309,000 kilometers, or 192,000 miles, of line pipe to be installed, representing an increase of 11% compared to the previous five-year period.
Global energy demand is seen increasing by 35% between 2010 and 2050, and natural gas should become a significantly bigger share of the energy mix, growing by around 65% over that period, DW noted.
"This trend, observable in our previous edition of this report, is progressing as expected," driven mostly by undeveloped countries and because of technology advancements, including in liquefied natural gas (LNG).
"Investment in new infrastructure to support LNG and unconventional gas developments will be a major factor shaping future demand for pipelines," DW's researchers said. "Outside the major oil province of the Middle East, gas pipelines accounted for 62% of kilometers installed over the past five years, with this figure expected to increase to 66% for the 2015-2019 period.
Researchers noted that lower steel prices and more manufacturing capacity has become available.
"Lower levels of near-term activity among tubular goods providers have released manufacturing capacity for line pipes. Lower than expected economic growth in Asia and reduced activity in North American unconventional production is expected to support this scenario in the short-term."