Pipeline Industry to 2015 - Energy Demand in Asia Pacific
and Uptake of Unconventional Gas Driving Growth
Reference Code: GBIGE00048MR Publication Date: April 2011
Increasing Development of Gas Shale Plays in the US Boosting Pipeline Network
Expansions in North America
Increased development in Gas pipeline construction is currently booming, as midstream operators develop capacity to
gas shale plays acting as transport natural gas emerging from unconventional plays. This will increase the number of pipeline
a key driver for the construction projects to be completed in the coming year and total capacity. The growth of
pipeline industry unconventional gas will require pipeline investment in the billions over the next decade.
In North America alone, unconventional natural gas is expected to account for a majority of total
natural gas supply. The North American natural gas industry is expected to witness a steady
growth in production from 72.4 Bcf/d in 2008 to 82.1 Bcf/d in 2020, which represents an AAGR of
1.2%. Unconventional natural gas is expected to account for 52% of total production in 2020. In the
US, unconventional natural gas already accounts for approximately 50% of production. By 2020,
this share is expected to increase to 58%. In Canada, unconventional natural gas production is
expected to account for 30% of production in 2002, up from approximately 5% in 2008. This is
expected to drive the growth of natural gas pipelines.
The rise in crude oil prices over the past few years has garnered increased interest in
unconventional crude oil and natural gas reserves like oil sands, shale and coal bed methane. With
oil sands found predominantly only in Alberta, Canada, shales – as a source of crude oil and
natural gas – has captured the imagination of energy companies in the US. The shales are
predominantly organic matter trapped in rocks and unlike conventional resources, they are not
present in reservoirs, but in continuous formations. Huge discoveries of shale gas in North America
will require transportation of gas to different regions which will boost the North American pipeline
industry.
Increasingly sophisticated horizontal drilling techniques and 3D seismic imaging have enabled
companies to pinpoint the best locations and also effectively the drilling path.
It is mainly medium and large independent oil and gas companies who are involved in exploring
shales. These companies are very aggressively acquiring acreages and have planned ambitious
drilling plans.
Barnett shale is one the first shales to attain prominence, with most of the pioneering work done by
Mitchell energy and subsequently acquired by Devon Energy. Other shales that have attracted lots
of activity are Fayetteville, Haynesville, and Woodford and Bakken shales. All are predominantly
gas producing except for Bakken shale.
Increased Global LNG Supply Leading To a Negative Outlook for the Pipeline Industry
The global economic crisis has led to a significant drop in natural gas demand globally. Global
natural gas demand dropped drastically in 2009, which led to a huge slump in natural gas prices.
Excess production made natural gas prices remain low, at an average of $4-4.5 per MMBTU,
despite crude oil prices hovering at around $80 a barrel. LNG demand too has suffered, as a result
of it being interdependent on natural gas demand. LNG prices have dropped significantly recently,
as a result. Prices of spot LNG in Asia for immediate delivery slumped to as low as $3.8 per
MMBTU in May 2010 from about $25 MMBTU in 2008 as the global recession cut demand from
Japan and South Korea.
Natural gas demand in Europe also fell in 2009 by approximately 7%. Demand growth in 2010 is
expected to be marginal, if at all, and will not be sufficient to clear the excess of supplies,
contracted through numerous take-or-pay agreements signed in order to secure supplies over the
past decade. Germany's E.On has estimated that it could be two to three years before consumption
in the region recovers.
Demand in Japan is expected to recover slightly by the end of 2010, driven by recovering industrial
demand in the country. However, power utilities in Japan are seeking a cut in LNG imports for the
fiscal year 2010-2011 by the same amount as in 2009-2010, expecting no major improvement in
demand. While global LNG demand dropped substantially, the supply of LNG improved, with new
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
Page 1
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LNG liquefaction plants becoming operational in Qatar, Yemen, Indonesia and Russia. The newly
planned LNG terminals may further deepen the LNG supply glut. During 2009-2016, approximately
233.5 MMTPA of new LNG liquefaction capacity is expected to come on-stream. The major
contributors to this increase are Australia, Iran, Nigeria and Qatar. Even in the Asia-Pacific region,
where demand in India and China continued to grow, the drop in demand from major consumers
like Japan, Korea and Taiwan, created a slump in the overall LNG demand in the region.
A major part of this increasing liquefaction capacity was intended for the US market, which was at
one point struggling, with decreasing natural gas production. However, with the spurt in production
from shale basins, these new liquefaction terminals will further deepen the global LNG supply glut.
The excess of natural gas supplies in the world has led LNG spot prices to new lows. The drop in
spot LNG prices has made buyers rethink long term LNG contracts. Importers can now easily tap
the global market for spot cargoes at lower prices than long-term supply agreements.
Consequently, the LNG industry will be buyer driven until 2011, as supplies continue to exceed
demand, as in 2009. This ‘tough phase’ of the industry could be potentially aggravated by
upcoming additional new LNG facilities. This is in sharp contrast to the supplier-driven LNG market
of 2008. Along with this, the major factor of increasing natural gas supplies from unconventional
sources is expected to adversely affect the industry. These factors have significantly altered the
supply situation, creating a surplus in supply.
Growing Energy Demand in Asia Pacific Encouraging Pipeline Construction
Asia Pacific is the largest crude oil consuming and the third largest natural gas consuming region in
the world. In 2010, the region is estimated to have consumed 23,788,900 barrels of oil per day and
18,049.8 Bcf/day of natural gas. Though the region consumes huge volumes of natural gas, around
75% of its oil demand and 53% of its gas demand comes from four countries: China, Japan, India
and South Korea. This rapid increase in consumption is encouraging pipeline industry to flourish in
the region.
Asia Pacific’s oil and gas industry has been relatively shielded from the recent global economic
recession due to continued growth in demand from China and India. Furthermore, these two
countries are expected to drive the growth in Asia Pacific and the global oil and gas industry in the
next decade.
Rapid increase in consumption of oil and gas in the region is encouraging the import of oil and gas
from regions such as the Middle East which is going to be a boon for the pipeline industry in the
region.
Crude Oil, Historical and Forecast Production and Consumption (Thousand Barrels
Per Day), Asia Pacific, 1996–2020
40,000.00
35,000.00
30,000.00
Thousand Barrels Per Day
25,000.00
20,000.00
15,000.00
10,000.00
5,000.00
0.00
1996 2010 2020
Source: GBI Research
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
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© GBI Research. This is a licensed product and is not to be photocopied
New Offshore Pipeline Technologies Reducing the Cost of Pipeline in Deepwater
Deepwater projects which were previously not viable now have potential with the development of
new offshore pipeline technology which has contributed to lower unit costs. New pipe-laying
technologies are making pipelines to lay down at a depth at a depth of 650m. Offshore pipeline
technology is playing a major factor in utilization of gas resources in the North Sea and the Gulf of
Mexico.
S-lay method is the regularly used method to install pipelines. This process has a quick laying rate
of more than 5km/day. If the depths are high or the pipeline diameter is bigger an alternate to S-Lay
method known as J-lay method is used. An example of J-lay method is the construction of ‘Blue
stream project’ to deliver gas from Russia to Turkey through the Black Sea.
In a difficult seabed installation work corresponds to nearly half of the pipeline overlay cost, but
because of new technologies the unit costs are lowered and allow many projects that were
previously impossible.
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
Page 3
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1 Table of Contents
1 Table of Contents ........................................................................................................................ 4
1.1 List of Tables..................................................................................................................... 7
1.2 List of Figures ................................................................................................................... 8
2 Pipeline Industry to 2015 – Introduction ...................................................................................... 9
2.1 Report Guidance ............................................................................................................... 9
3 Global Pipeline Industry to 2015 – Overview ............................................................................. 10
3.1 Global Pipeline Industry, an Overview ............................................................................ 10
3.2 Global Pipeline Industry, Natural Gas Pipelines, Geographic Analysis ........................... 11
3.3 Global Pipeline Industry, Petroleum Product Pipelines, Geographic Analysis ................ 12
3.4 Global Pipeline Industry, Crude Oil Pipelines, Geographic Analysis ............................... 13
3.5 Pipeline Industry Deal Analysis, Q1 2009–Q4 2011 ....................................................... 14
3.5.1 Major Deals, 2011 ................................................................................................... 16
4 Global Pipeline Industry, Key Trends and Challenges ............................................................... 17
4.1 Growing Energy Demand in Asia Pacific will Drive Pipeline Construction ...................... 17
4.2 Canadian Oil Sands Development Has Led To Expansion in Pipeline Infrastructure in
North America ................................................................................................................. 17
4.3 Increasing Development of Gas Shale Plays in the US Boosting Pipeline Network
Expansions in North America .......................................................................................... 19
4.4 LNG Giving a Tough Competition to Pipeline Industry .................................................... 19
4.5 New Offshore Pipeline Technologies Reducing the Cost of Pipeline in Deepwater ........ 19
5 Pipeline Industry in Asia Pacific to 2015 .................................................................................... 20
5.1 Asia Pacific Pipeline Industry, Overview ......................................................................... 20
5.2 Asia Pacific Pipeline Industry, Key Trends and Challenges ............................................ 21
5.2.1 Growing Energy Demand in Asia Pacific Encouraging Pipeline Construction ......... 21
5.2.2 Strong Demand for LNG Encourages Australia to Invest Heavily in Natural Gas
Production Creating Competition for Pipeline Industry ............................................ 23
5.3 Asia Pacific Pipeline Industry, Major Natural Gas Pipelines............................................ 23
5.4 Asia Pacific Pipeline Industry, Major Crude Oil Pipelines ............................................... 23
5.5 Asia Pacific Pipeline Industry, Major Petroleum Product Pipelines ................................. 24
5.6 Asia Pacific, Market Structure and Competitive Snapshot of Major Pipeline Operators,
2011 ................................................................................................................................ 25
5.6.1 Key Pipeline Companies, Natural Gas Pipelines, Asia Pacific................................. 25
5.6.2 Key Pipeline Companies, Crude Oil Pipelines, Asia Pacific .................................... 26
5.6.3 Key Pipeline Companies, Petroleum Product Pipelines, Asia Pacific ...................... 27
5.7 Profile of major companies.............................................................................................. 28
5.7.1 Petrochina ............................................................................................................... 28
5.7.2 GAIL India ............................................................................................................... 28
5.7.3 Kaztransoil ............................................................................................................... 28
5.7.4 China Petroleum & Chemical Corporation ............................................................... 29
5.7.5 Indian Oil Corporation Limited ................................................................................. 29
6 Pipeline Industry in Europe to 2015 ........................................................................................... 30
6.1 Europe Pipeline Industry, Overview ................................................................................ 30
6.2 Europe Pipeline Industry, Key Trends and Challenges ................................................... 31
6.2.1 Increasing Pipeline Transmission Capacity ............................................................. 31
6.2.2 Russia and Kazakhstan Will Be the Leading Crude Oil Producers in the Region In
2020 ........................................................................................................................ 31
6.3 Europe Pipeline Industry, Major Natural Gas Pipelines .................................................. 32
6.4 Europe Pipeline Industry, Major Crude Oil Pipelines ...................................................... 32
6.5 Europe Pipeline Industry, Major Petroleum Product Pipelines ........................................ 33
6.6 Europe, Market Structure and Competitive Snapshot of Major Pipeline Operators, 2011
........................................................................................................................................ 34
6.6.1 Key Pipeline Companies, Natural Gas Pipelines, Europe ....................................... 34
6.6.2 Key Pipeline Companies, Crude Oil Pipelines, Europe ........................................... 35
6.6.3 Key Pipeline Companies, Petroleum Product Pipelines, Europe ............................. 36
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
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6.7 Profile of major Companies ............................................................................................. 37
6.7.1 OAO Gazprom ......................................................................................................... 37
6.7.2 Naftogaz of Ukraine NJSC ...................................................................................... 37
6.7.3 OAO AK Transneft................................................................................................... 37
6.7.4 BOTAS – Petroleum Pipeline Corporation ............................................................... 37
7 Pipeline Industry in Middle East and Africa to 2015................................................................... 38
7.1 Middle East and Africa Pipeline Industry, Overview ........................................................ 38
7.2 Middle East and Africa Pipeline Industry, Key Trends and Challenges ........................... 39
7.2.1 Increase In Crude Oil and Natural Gas Production Leading To Growth Of Pipeline
Industry .................................................................................................................... 39
7.2.2 Saudi Arabia and Iran will be the Leading Crude Oil Producers in the Middle East
and Africa in 2020.................................................................................................... 43
7.3 Middle East and Africa Pipeline Industry, Major Natural Gas Pipelines .......................... 43
7.4 Middle East and Africa Pipeline Industry, Major Crude Oil Pipelines .............................. 43
7.5 Middle East and Africa Pipeline Industry, Major Petroleum Product Pipelines ................ 44
7.6 Middle East and Africa, Market Structure and Competitive Snapshot of Major Pipeline
Operators, 2011 .............................................................................................................. 45
7.6.1 Key Pipeline Companies, Natural Gas Pipelines, Middle East and Africa ............... 45
7.6.2 Key Pipeline Companies, Crude Oil Pipelines, Middle East and Africa ................... 46
7.6.3 Key Pipeline Companies, Petroleum Product Pipelines, Middle East and Africa ..... 47
7.7 Profile of major companies.............................................................................................. 48
7.7.1 Sonatrach ................................................................................................................ 48
7.7.2 Egyptian Natural Gas Company .............................................................................. 48
7.7.3 National Iranian Oil Refining and Distribution Company .......................................... 48
7.7.4 Nigerian National Petroleum Corporation ................................................................ 48
8 Pipeline Industry in North America to 2015 ............................................................................... 49
8.1 North America Pipeline Industry, Overview ..................................................................... 49
8.2 North America, Key Trends and Challenges ................................................................... 50
8.2.1 North American Oil and Gas Production to Increase Leading to Increase in Pipeline
Network ................................................................................................................... 50
8.2.2 North America, Shale Gas Boosting Pipeline Industry ............................................. 50
8.3 North America Pipeline Industry, Major Natural Gas Pipelines ....................................... 50
8.4 North America Pipeline Industry, Major Crude Oil Pipelines ........................................... 51
8.5 North America Pipeline Industry, Major Petroleum Product Pipelines ............................. 51
8.6 North America, Market Structure and Competitive Snapshot of Major Pipeline Operators,
2011 ................................................................................................................................ 52
8.6.1 Key Pipeline Companies, Natural Gas Pipelines, North America ............................ 52
8.6.2 Key Pipeline Companies, Crude Oil Pipelines, North America ................................ 53
8.6.3 Key Pipeline Companies, Petroleum Product Pipelines, North America .................. 54
8.7 Profile of Major Companies ............................................................................................. 55
8.7.1 Exxon Mobil Corporation ......................................................................................... 55
8.7.2 Chevron Corporation ............................................................................................... 55
8.7.3 El Paso Corporation ................................................................................................ 55
8.7.4 Spectra Energy Corp ............................................................................................... 55
8.7.5 ConocoPhillips ......................................................................................................... 56
8.7.6 BP p.l.c .................................................................................................................... 56
8.7.7 Enbridge Inc ............................................................................................................ 56
8.7.8 Sunoco Logistics Partners ....................................................................................... 56
9 Pipeline Industry in South and Central America to 2015 ........................................................... 57
9.1 South and Central America Pipeline, Overview .............................................................. 57
9.2 South and Central America Pipeline Industry, Key Trends and Challenges ................... 58
9.2.1 Brazil to Emerge as the Leading Crude Oil Producer in South and Central America,
Surpassing Venezuela and Mexico Driving the Growth in Pipeline Industry ............ 58
9.2.2 Strong Growth in Natural Gas Demand Forces Mexico to Invest in the Construction
of Three New LNG Regasification Terminals Creating Competition in the Pipeline
Infrastructure ........................................................................................................... 58
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
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9.2.3 Need for Greater Pipeline Transmission Capacities ................................................ 58
9.2.4 High Demand for Natural Gas Boosting Pipeline Infrastructure ............................... 58
9.3 South and Central America Pipeline Industry, Major Natural Gas Pipelines ................... 59
9.4 South and Central America Pipeline Industry, Major Crude Oil Pipelines ....................... 59
9.5 South and Central America Pipeline Industry, Major Petroleum Product Pipelines......... 60
9.6 South and Central America, Market Structure and Competitive Snapshot of Major
Pipeline Operators, 2011 ................................................................................................ 61
9.6.1 Key Pipeline Companies, Natural Gas Pipelines, South and Central America ........ 61
9.6.2 Key Pipeline Companies, Crude Oil Pipelines, South and Central America ............ 62
9.6.3 Key Pipeline Companies, Petroleum Product Pipelines, South and Central America
................................................................................................................................ 63
9.7 Profile of Major companies.............................................................................................. 64
9.7.1 Petroleos Mexicanos ............................................................................................... 64
9.7.2 Total ........................................................................................................................ 64
9.7.3 Ecopetrol S.A........................................................................................................... 64
9.7.4 Empresa Nacional del Petroleo ............................................................................... 64
9.7.5 Energia Argentina .................................................................................................... 64
9.7.6 GDF SUEZ Energy International ............................................................................. 65
9.7.7 Transredes S.A........................................................................................................ 65
9.7.8 Repsol YPF, S.A...................................................................................................... 65
10 Global Pipeline Projects ............................................................................................................ 66
10.1 Planned Pipelines, Key Statistics, 2010 .......................................................................... 66
10.2 Major Pipelines ............................................................................................................... 67
10.2.1 Blue Stream Pipeline ............................................................................................... 67
10.2.2 GreenStream ........................................................................................................... 67
10.2.3 Langeled .................................................................................................................. 67
10.2.4 Nord Stream ............................................................................................................ 67
10.2.5 Alaska Gas Pipeline ................................................................................................ 67
10.2.6 Rockies Express Pipeline ........................................................................................ 67
10.2.7 West East gas pipeline ............................................................................................ 67
10.2.8 Dolphin Project ........................................................................................................ 67
10.2.9 West African Gas Pipeline ....................................................................................... 68
10.2.10 Hugo Pipeline .......................................................................................................... 68
10.2.11 Trans Saharan Gas pipeline .................................................................................... 68
10.2.12 Nabucco Gas pipeline ............................................................................................. 68
10.2.13 South Stream........................................................................................................... 69
10.2.14 TAPI Gas pipeline.................................................................................................... 69
10.2.15 Galsi Pipeline........................................................................................................... 69
11 Appendix ................................................................................................................................... 70
11.1 Methodology ................................................................................................................... 70
11.1.1 Coverage ................................................................................................................. 70
11.1.2 Secondary Research ............................................................................................... 70
11.1.3 Primary Research .................................................................................................... 71
11.1.4 Expert Panel Validation ........................................................................................... 71
11.2 Abbreviations .................................................................................................................. 71
11.3 Contact Us ...................................................................................................................... 72
11.4 About GBI Research ....................................................................................................... 72
11.5 Disclaimer ....................................................................................................................... 72
Pipeline Industry to 2015 - Energy Demand in Asia Pacific GBIGE00048MR /Published APR 2011
and Uptake of Unconventional Gas Driving Growth
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1.1 List of Tables
Table 1: Key Pipeline Statistics, Global, 2010.............................................................................. 10
Table 2: Natural Gas Pipelines, Percentage Pipeline Share by Region, 2010 ............................. 11
Table 3: Petroleum Product Pipelines, Percentage Pipeline Share by Region, 2010 .................. 12
Table 4: Crude Oil Pipelines, Percentage Pipeline Share by Region, 2010 ................................. 13
Table 5: Pipeline Industry, Number of Deals, Global, Q1 2009- Q4 2010 .................................... 14
Table 6: Pipeline Industry, Deal Value , Global, ($m) 2010.......................................................... 15
Table 7: Pipeline Industry, Major Deals, Q1 2009–Q1 2011 ........................................................ 16
Table 8: Key Pipeline Statistics, Asia Pacific, 2010 ..................................................................... 20
Table 9: Pipeline Industry, Top five Countries, Asia Pacific , Length (km) 2010 .......................... 20
Table 10: Crude Oil, Historical and Forecast Production and Consumption (Thousand Barrels Per
Day), Asia Pacific, 1996–2020 ....................................................................................... 22
Table 11: Major Natural Gas Pipelines, Asia Pacific, 2010 ............................................................ 23
Table 12: Major Crude Oil Pipelines, Asia Pacific, 2010 ................................................................ 23
Table 13: Major Petroleum Product Pipelines, Asia Pacific, 2010 .................................................. 24
Table 14: Natural Gas Pipelines, Key Pipeline Companies, Asia Pacific, 2010 ............................. 25
Table 15: Crude Oil Pipelines, Key Pipeline Companies, Asia Pacific, 2010 ................................. 26
Table 16: Petroleum Product Pipelines, Key Pipeline Companies, Asia Pacific, 2010 ................... 27
Table 17: Pipeline Key Statistics, Europe, 2010 ............................................................................ 30
Table 18: Pipeline Industry, Top five Countries, Europe ,Pipeline Length (km) 2010 .................... 30
Table 19: Major Natural Gas Pipelines, Europe, 2010 ................................................................... 32
Table 20: Major Crude Oil Pipelines, Europe, 2010 ....................................................................... 32
Table 21: Major Petroleum Product Pipelines, Europe, 2010......................................................... 33
Table 22: Natural Gas Pipelines, Key Pipeline Companies, Europe, 2010 .................................... 34
Table 23: Crude oil Pipelines, Key Pipeline Companies, Europe, 2010 ......................................... 35
Table 24: Petroleum Product Pipelines, Key Pipeline Companies, Europe, 2010.......................... 36
Table 25: Pipeline Key Statistics, Middle East and Africa, 2010 .................................................... 38
Table 26: Pipeline Industry, Top five Countries, Middle East and Africa , Length (km) 2010 ......... 38
Table 27: Crude Oil Market, Middle East and Africa, Historical and Forecast Production and
Consumption of Crude Oil (Thousand bpd), 1996–2020 ................................................ 40
Table 28: Natural Gas Market, Middle East and Africa, Historic and Forecast Production and
Consumption of Natural Gas (bcf), 1996–2020 .............................................................. 42
Table 29: Major Natural Gas P