A Post Shale Oil/Gas US: What is the source of the next pipeline construction wave?

Mark Bridgers spoke on Tuesday, March 24 in Houston at the Pipeline Opportunities Conference, sponsored by Oildom Publishing. This speech focused on the outlook for pipeline construction through 2035. Continuum has identified three waves of pipeline construction: one that is concluding, and two waves that will occur over the next 20+ years.

The first wave of construction has led to a very strong pipeline construction market. Upcoming waves will reinforce this market creating both opportunities and challenges for industry participants over the next 20 years. By late in the next decade the pipeline market is likely to approach $80 billion dollars annually – this is quite a bit of growth for a market that was less than $10 billion as recently at 2003.

Another highlight of the conference was the release of the INGAA Foundation’s updated 2035 Infrastructure Outlook Study. This comprehensive report was first completed in 2011 and contains a wealth of information for industry participants who are seeking data to help them plan strategically for the future. One of many examples of great data, which also supports Continuum’s outlook on the next wave of pipeline spending growth, was the INGAA forecast for natural gas demand growth.

The graph at the left from the INGAA report shows forecast gas consumption through 2035. Seventy-five percent of this growth comes from the power sector (much of this in the southeast). The bulk of the remaining growth comes from industrial markets.

As noted above, supplying gas to these new power and industrial facilities will be a significant driver of pipeline spending in the next several years.

These waves of construction activity Continuum is forecasting and the consumption growth anticipated by INGAA will create opportunities and challenges for pipeline operators and utilities as well as their service providers. In response, Continuum has outlined a series of strategies and actions that pipeline operators, utilities, contractors, engineers and service providers can take to overcome the challenges and seize the opportunities created by each upcoming wave of pipeline construction. Examples of some of these strategies are listed below:

For pipeline operators & utilities

• Upgrade Service Providers: Lock in effective and efficient service provider resources with 5-7 year contracts
• Project Delivery: Develop a structured project delivery system selection for type, geography, and pace of work
• Upgrade Skills: Improve talent acquisition and retention for the replacement of baby boom generation
• LEAN Construction: Develop partnering, collaboration, and integration skills with service providers to drive out waste

For contractors, engineers and service providers

• Differentiate: Increase business development and differentiation capabilities versus competitors to secure more numerous, diverse, one-off, and potentially smaller projects across a range of industries
• Integrated Project Delivery:  Build capability to delivery under multiple sourcing strategies and among various project delivery systems
• Invest in Training:   1) Technical – To sharpen skills and meet quality specifications; 2) Management – To drive production improvement and waste elimination; 3) Cross Functional – To thrive in an environment that demands more than simply construction
• Language of LEAN: Learn the language of LEAN construction and apply the concepts through partnering, collaboration, and integration with customers to drive out waste
• Embrace Innovation, Disruption, and Scarcity: Focus on thriving with change in regulation, resource scarcity, etc

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View or download a PDF of Mark’s presentation here: A Post Shale Oil/Gas US

Continuum’s staff has years of experience in helping pipeline operators & utilities, as well as their contractors, engineers and service providers in adapting to a dynamic environment like the pipeline energy and utility space. Contact Mark Bridgers at Continuum to learn more about how he can help your organization navigate the waves of the pipeline market to achieve success.

 

Mark can be reached via:

            

Phone  919.345.0403  |  Skype  mark.bridgers.continuum