U.S. And Russia To Dominate World’s Oil & Gas Pipeline Spending

The U.S. shale boom and the massive Russian expansion of natural gas pipelines will make the United States and Russia the dominant spenders on oil, petroleum products, and natural gas pipelines through 2022, data and analytics company GlobalData says in a new report.

The other big spenders between 2018 and 2022 will be Canada, China, and Nigeria, according to the analytics firm.

The U.S. will be leading the capital expenditure (capex) on oil and gas pipelines, with an estimated US$88.4 billion on new pipelines by 2022, while Russia is seen spending US$78.8 billion.

In the United States, spending on natural gas pipelines will account for around 40 percent of the total planned pipelines by 2022, with crude oil and natural gas liquids (NGL) expected to have 31-percent and 24-percent shares of expenditure, respectively.

In Russia, the spending is mostly focused on natural gas pipelines, which will account for 88 percent of the planned pipelines expected to come online by 2022. Petroleum products pipelines and oil pipelines are the next major planned pipelines with capex share of 7 percent and 4 percent, respectively.

“Booming unconventional oil and gas production is in turn driving the growth of the pipeline network in the US. More and more operators are focusing on connecting growing unconventional production with the Gulf coast for export of oil and gas,” said Soorya Tejomoortula, Oil and Gas Analyst at GlobalData.

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“Russia is further expanding its massive natural gas pipelines network for exports. The country is building pipelines to transport natural gas from its production centres to demand centres such as China, Japan, India and Europe,” Tejomoortula noted.

While U.S. spending on pipelines will surge through 2022, currently, the fastest-growing oil producing region in the United States, the Permian, is nearing the limits of its pipeline takeaway capacity and some producers may be forced to shut in wells within months, according to the chairman of one of the biggest U.S. shale producers, Pioneer Natural Resources.

“Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Sheffield told Bloomberg said last week.

By Tsvetana Paraskova for Oilprice.com

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