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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multiple drivers depending on the commodity, ge- ography, and nature of the assets. That being said, U.S. pipeline contractors are still suffering. The 2016 slow rise in the price of oil, the OPEC production agreements, support from Trump for energy infra- structure, and a more aggressive and hopefully long- term energy policy will improve the gas/liquid pipe- line market. The improvement, however, will not be realized until 2018/2019 due to the engineering, planning, land acquisition and permitting timeline associated with pipeline infrastructure. In Exhibit 3, our 2015 and 2016 spending fore- cast for pipeline and distribution activity has seen a reduction of approximately 12 percent giving back much of the 2013-2014 gain that was achieved dur- ing the peak in commodity prices. The typical U.S. pipeline contractor saw revenues fall between 40 per- cent and 60 percent since the 2013-2014 peak. Sta- tion and maintenance contractors are less affected by these changes. The distribution markets remain strong and we anticipate continue growth in 2017 and beyond with a peak in 2018. One caveat: the general economy has expanded since 2010 and we are approaching the 7th year of this expansion where the typical business cycle runs 5-7 years. All cycles end with a recession, the only question is when. We are currently forecasting a short and shallow reces- sion in late 2018 that will dampen 2019 growth but not stop it. Beyond 2019, the pipeline market will continue to exhibit periodic volatility and we remain very bullish over the next 15-20 years of opportuni- ties in both the distribution and pipeline space. Looking forward, we see shifts in the nature of the work that is occurring from broad accelerated 26 North American Oil & Gas Pipelines | FEBRUARY 2017 napipelines.com E X H I B I T 3 E X H I B I T 2

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