Pipeline Transportation Services

Pipeline Transportation Services Global Market Outlook

• The global pipeline transportation service market is estimated at around $265 billion in 2023, and the market is expected to grow at a CAGR of 7.7 percent between 2022 and 2026. The high growth of the industry is traced to the increasing oil & gas trade across the nations

• Transportation of crude by pipeline than by rail or by truck is cheaper and quicker. However, rail is more flexible and covers and connect more area in the US compared to crude oil pipelines

• Due to an increase in exports to the US, Mexico's state power provider has more than doubled the utilization rate of its natural gas pipelines compared to its 2018 rates

• The lack of pipeline capacity, amid the North American energy boom, crude oil shipping on rail has been steadily increasing

• Oil and gas pipelines can vary a lot according to many different factors. This includes the ‘product’ that is being transported, the delivery stage, and whether the pipeline is used for the upstream, midstream, or downstream sector

• Advantages of pipeline transportation include flexibility, complete automation of loading and unloading operations, low operating costs, etc.

• APAC is expected to report the highest demand market for pipeline transportation, followed by North America

Pipeline Transportation Services: Drivers and Constraints

• Growing the oil & gas industry and recovering shale gas production will drive the demand for pipelines globally.

Drivers

Market growth

• Large-scale inter-regional oil & gas projects will drive the demand for high-performance corrosion-resistant steel and plastic pipes and pipeline transportation

• Replacement of old pipelines and building new ones, thereby reducing the stress on each line drive the market in the developed regions

• An increase in the production of offshore production such as deep-water and ultra-deep-water production and development is another driver for pipeline transportation globally

Stringent environmental and safety regulations

• Environmental, health, and safety regulations, such as VOC limitations, require end-user industries to upgrade to newer and better pipelines

Constraints

• Recent oil spills: Recent oil spills across various parts of the globe have raised the concerns on the safety side of the pipeline transportation. Due to failure in Pipeline projects, Canada is investing in more rail transport

• Labor disturbance: The labor market in emerging countries is mostly unorganized, and there are increasing occurrences of shutdowns, leading to loss of productivity

• Renewable sources: Global shift toward renewable sources for electricity generation poses a huge threat to the oil and gas pipeline demand

• High capital investment: The construction of pipelines, gas stations, and oil storage device has huge investment which yields high targets of break-even points

Pipeline Transportation Services: Cost Structure

• Labor costs have increased in many developed economies, where high engineered castings are made, owing to skilled labor shortages

• Raw material prices are sensitive, and any upward movement of price is transferred to the buyers, as future trading or hedging of essential raw material is a rare practice among pipeline manufacturers.

• Material is the major cost driver of pipelines, and it accounts for approx. 65–70 percent of the total cost. The application of pipelines determines which material should be used, as different materials have their own unique properties.

• Based on the application of pipelines, the following factors determine the cost:

• –Material of body and trim

• –Size of pipelines

• –Pressure rating

• –Temperature rating