Oil & Gas Pipeline Construction in Canada Industry Market Research Report Now Available from IBISWorld

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The industry grew strongly over the past five years as a result of strong oil production growth in Canada. For this reason, industry research firm IBISWorld has added a report on the Oil & Gas Pipeline Construction industry to its growing industry report collection.

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Advances in drilling technology have spurred demand for gas transportation pipelines

The Oil and Gas Pipeline Construction industry grew strongly over the past five years, a result of strong oil production growth in Canada. Oil sand reserves in Alberta were the primary driver of oil production growth. According to the Canadian Association of Petroleum Producers (CAPP), oil sand production increased at an annualized rate of 10.6% over the past five years. Total crude oil production is anticipated to grow every year over the period. Canadian crude oil is typically transported via pipeline to refineries located in Eastern Canada and the Gulf Coast. Rapid production growth overloaded existing pipeline capacity, resulting in a glut of landlocked crude oil. Consequently, oil extractors increased capital investments in pipelines, pumping facilities and other oil transportation infrastructure. Therefore, IBISWorld expects industry revenue to grow in the five years to 2013.

According to IBISWorld Industry Analyst David Yang, “In addition to crude oil, natural gas production also experienced strong growth in recent years.” Advances in drilling technology, such as hydraulic fracturing and directional drilling, have allowed gas extractors to easily access gas stored in shale rock formations. As gas production increased, demand for gas transportation pipelines, processing facilities and storage tanks also increased. Industry revenue is anticipated to increase significantly in 2013, due to strong investments in gas infrastructure. Moreover, strong demand and favourable commodity prices have bolstered industry profit margins in recent years. Nonresidential construction investments also grew each year since 2008, which allowed industry operators to hike fees. Steel prices however, steadily declined over the past five years, lowering raw material costs. As a result, “profit is expected to increase in the five years to 2018,” says Yang.

The Oil and Gas Pipeline Construction industry is highly fragmented. In 2013, the four largest firms (which includes Fluor Canada Ltd., Aecon and URS Corporation) are expected to account for less than 40.0% of industry revenue (see IBISWorld report 23712CA for major player market shares). Industry operators are highly dependent on reputation and specialized expertise, which favours smaller firms. Local operators can more easily navigate the regional terrain and regulatory landscape, providing them with a competitive advantage over other firms. Therefore, large firms often subcontract out work to local firms, which contributes to low market share concentration. Market share concentration has remained relatively stable over the past five years, because industry firms do not gain from economies of scale. Although construction equipment and machinery is capital intensive, smaller firms can easily rent equipment at considerably lower cost.

The industry is projected to expand over the next five years, buoyed by sustained oil sand production. CAPP forecasts that oil sand production will increase each year in the five years to 2018, causing total crude oil production to increase per year. Crude oil production will fuel pipeline construction. Domestic oil and gas prices are also projected to increase, stimulating capital investments in refineries, distribution facilities and storage tanks. Consequently, IBISWorld forecasts that revenue will grow in the five years to 2018.

For more information, visit IBISWorld’s Oil & Gas Pipeline Construction in Canada industry report page.

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IBISWorld industry Report Key Topics

The Oil & Gas Pipeline Construction industry constructs gas and oil pipelines, mains, pumping stations, refineries, storage tanks and other related structures.

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 and Canadian 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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Gavin Smith
IBISWorld Inc.
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