Oil & Gas Pipeline Construction in the US Industry Market Research Report from IBISWorld has Been Updated

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Although slowed investment activity during the recession cooled demand for industry's services, pursuit of natural gas has kept business flowing over the past five years. Looking forward, the industry is projected to recover strongly. From 2012, IBISWorld forecasts that continued investment in unconventional domestic energy sources (gas shale and oil sands), pressure to repair and replace aging infrastructure, and recovery in the residential construction markets will support industry performance. For these reasons, industry research firm IBISWorld has updated a report on the Oil & Gas Pipeline Construction industry in its growing industry report collection.

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The Deepwater Horizon spill in 2010 hampered growth, but a rebound is expected in 2012

Pipelines are essential for transporting vital fuel supplies to households and businesses. According to IBISWorld industry analyst Antonio Danova, “During the beginning of the five-year period, the aftermath of global energy price hikes and the opening of natural gas fields led to extraordinary investment growth in domestic energy resource developments, underpinning demand for pipeline and related infrastructure construction.” Today, heavy investment in natural gas and oil infrastructure construction has the Oil and Gas Pipeline Construction industry booming. Hikes in energy prices and advancements in extraction technologies created a significant increase in domestic oil and natural gas production. This higher production also boosted demand for pipeline construction to connect existing infrastructure and markets. As a result, industry revenue is expected to grow at an average annual rate of 3.3% to $40.8 billion over the five years to 2012.

Despite this growth, the industry was susceptible to some volatility over the period. For example, the recession cooled demand for energy infrastructure development from 2009 to 2011 as energy prices slumped and financing became more difficult. “Additionally,” says Danova, “the moratorium on deep-sea drilling in light of the 2010 Deepwater Horizon spill in the Gulf of Mexico – the worst in US history – deferred oil and natural gas pipeline developments in the region and hampered the industry's performance over the past two years.” Nonetheless, IBISWorld estimates that the Oil and Gas Pipeline Construction industry's revenue will increase 4.2% during 2012 as global energy demand boosts domestic investment in energy infrastructure. Like revenue, the industry's profit performance has followed the volatile energy investment trends over the past five years. Industry profit margins grew from 13.2% of total revenue in 2007 to spike at 17.8% in 2008. However, the recession-induced slump will likely bring margins down slightly to 15.8% in 2012.

The Oil and Gas Pipeline Construction industry has a low degree of concentration. The four largest firms account for just over 25.0% of industry revenue in 2012. However, despite the prevalence of many small-scale participants, this industry is considered to be less fragmented than most in the construction sector and contains several very large-scale establishments that contribute a significant share of industry revenue. The fragmented structure of this industry and the prevalence of small-scale firms are evident from the annual survey of County Business Patterns. The survey shows that more than half the enterprises (60.2%) employ fewer than 20 people, and 32.2% of firms employ fewer than five people.

Looking forward, the industry is projected to experience a strong recovery. Over the five years to 2017, IBISWorld forecasts that continued investment in unconventional domestic energy sources (e.g. shale gas and oil sands), along with pressure to repair, replace and expand existing infrastructure and recovery in the residential construction markets, will support industry performance. As a result, the Oil and Gas Pipeline Construction industry is forecast to record strong revenue growth in the five years to 2017.

For more information, visit IBISWorld’s Oil and Gas Pipeline Construction in the US industry report page.

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IBISWorld industry Report Key Topics

This industry comprises contractors who are responsible for the construction of gas and oil pipelines, mains, pumping stations, refineries and storage tanks (i.e. new work, reconstruction and repairs). It also includes construction management firms and special trade contractors that are primarily involved in oil and pipeline construction.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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