North American Oil & Gas Pipelines

FEB 2017

North American Oil & Gas Pipelines covers the news shaping the business of oil and gas pipeline construction and maintenance in North America, including pipeline installation methods, integrity management innovations and managerial strategies.

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T H E O DY S S E Y Pipeline Construction in Trump's America 24 North American Oil & Gas Pipelines | FEBRUARY 2017 napipelines.com A year ago, in our over- view of the pipeline and distribution market we de- scribed that "the U.S. pipeline market will not return until the price of oil moves back above $55; the Canadian pipeline market needs prices closer to $70 … neither of which can happen until a com- bination of global, U.S. and Canadian econom- ic growth accelerates." We stand by this predic- tion, yet Donald Trump will be sworn in as the 45th U.S. president by the time you read this. Like a victorious Odysseus, fresh off the sacking of Troy, he will em- bark on a four-year odyssey … perhaps as chal- lenging as the story of Odysseus' journey home. Like Odysseus and his crew, there is both worry and op- timism as we board the ship of state and set sail. Will our "Con- structor in Chief" build jobs through energy and infra- structure spending or strand us with forgetfulness of the lotus eaters? Strap yourself to the mast because we are in for quite a voyage. The Trump administration inspires optimism in the energy, in- frastructure and construction industries. His American jobs mantra fits perfectly with using energy policy, infrastructure rebuild, etc., as a job creation engine. The pipeline market is not cur- rently cooperating and we see the fol- lowing set of charac- teristics that defined the current market: • Sluggish U.S. general economic growth where quarterly gross domestic product remains below 3 percent. • Sluggish global and specifically Chinese general economic growth results in lower commodity demand. • OPEC production targets that if complied with will slowly drive up global oil prices. • Peak oil price in June 2014 at slightly more than $100, falling below $40 in early 2016 and rising slowly (See Exhibit 1). • Peak U.S. natural gas price in February 2014, falling to $2 in early 2016, and rising slowly (See Exhibit 1). • Peak U.S. rig count in October/November 2014 followed by greater than 60 percent reduction through August 2016 at which point both oil and gas count began to ramp back up. • Peak U.S. crude oil production in April 2015 continuing to trend down until September 2016 at which point it began to slowly ramp back up; in total, it remains 90 percent higher than it was in 2012. "Sing in me, Muse, and through me tell the story of that man skilled in all ways of contending, the wanderer, harried for years on end, after he plundered the stronghold on the proud height of Troy." Opening stanza The Odyssey by Homer E X H I B I T 1 By Mark Bridgers and Dan Campbell

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