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Douglas-Westwood releases onshore pipeline forecast

Published by
World Pipelines,

Douglas-Westwood (DW) has launched its 6th edition of the World Onshore Pipelines Market Forecast, which includes new operations expenditure (OPEX) forecasts.

The report considers the prospects for the onshore pipelines construction business and values the future capital expenditure (CAPEX) and OPEX markets through to 2021 by key component/segment, region, pipeline product and diameter.

The recent low oil price environment has had a negative impact on the sector. As a result, onshore pipelines construction has seen reduced investment in early feasibility, while front-end engineering and design (FEED) work is expected to impact the latter years of the forecast period.

Overall expenditure is expected to be strengthened by greater installation activity in the short term due to projects that were sanctioned prior to the downturn.

The author of the report, Katy Smith, has commented, stating that the DW report predicts the following:

DW expects total onshore pipeline CAPEX over the forecast period to increase to US$203 billion, a rise of 5% compared with US$194 billion over the preceding five year period.

Smith added that DW predicts that while pipeline additions will increase overall, many regions will see declines during the forecast. Moreover, global installed kilometres over the forecast will total over 276 000km, representing an increase of 2% compared to the previous five year period.

North America and Asia remain the highest volume markets, accounting for approximately 53% of global CAPEX over the forecast period. Australasia has seen a significant increase in installations over recent years due to the number of LNG projects in the area. Therefore, the region is expected to see a significant decline in CAPEX since many of these projects begin operations mid-forecast.

Eastern Europe and the former Soviet Union is expected to be the most resilient pipeline market, with 2021 expenditure of around US$5.6 billion, owing to key pipeline projects such as Power of Siberia 1 and 2.

Smith noted that the operations and maintenance market has a more positive outlook. Most regions already possess a large installed base of pipeline. Total OPEX is expected to be approximately US$132 billion over the 2017 - 2021 period, compared to US$114 billion in the preceding five years. This represents a 16% increase.

Finally, DW predicts that North America will see the greatest operations and maintenance expenditure due to the region having the largest installed base. Over half of the US$10.5 billion OPEX expenditure in North America will be pipeline operation costs (routine expenditure for the day-to-day operation of pipeline facilities, including monitoring, routine pigging and cleaning), due to ageing infrastructure and more stringent pipeline regulations.

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