This is a great time to be in the valve business, as a manufacturer, distributor, or contractor, if your markets include the upstream global oil and gas industry.
According to a report from market research company McIlvaine, titled “Industrial Valves: World Markets,” the international oil and gas industry is on track to spend more than $19 billion in 2015 for new valves, repair parts, and related services.
Here is how McIlvaine, which is based in Northfield, Ill., breaks down the predicted expenditures:
- $10.3 billion will be spent in key markets around the world on new valves — a record high for valve purchases in a single year by the oil and gas industry.
- $6 billion is being spent on valves and related equipment that will minimize operational problems and maintenance.
- $3 billion is going toward spare parts.
The Middle East will continue to lead valve purchases in 2015, with about $2.8 billion. Two other regions, however, will show growing demand: Asia and North America.
In Asia, $2.2 billion will be spent in total, with 50 percent of that going toward repair parts and service.
North America, which is experiencing what one consultant terms a “once-in-a-century opportunity” from the shale gas revolution in the United States and Canada, will invest $1.8 billion in equipment next year, with half of that for repair parts and services.
Other regions of investment include Europe, at $1.2 billion, and Africa, at $800 million. Both will allocate 50 percent of their total expenditures for repair parts and service.
Business with oil and gas companies will, as always, require equipment and expertise that match the formidable operating challenges of the industry, McIlvaine advises. “Process changes and developments require new approaches and more reliance on third parties with the knowledge to address new situations,” the company said.
Chief among the challenges that affect valve design, operation, and maintenance are the pumping, processing, and distribution of liquid natural gas (LNG), gas-to-liquids, shale gas, and subsea extraction (which also includes shale-gas deposits).
Extraction by hydraulic fracturing (or “fracking”), for one, involves the use of more valves, and more sophisticated valves, owing to the large amounts of water and chemicals used in shale-gas extraction, and the need to divert waste liquids into safe collection areas away from groundwater deposits, rivers, and other water supplies.
The growth of LNG, gas-to-liquids operations, and shale gas is increasing demand for refining capacity, which also means growing demand for valves.
McIlvaine expects that in this demanding environment, more valve manufacturers will be actively assisting oil and gas operators with services and products and promoting their ability to provide “total solutions” to industry needs.
Oil and gas isn’t the only industry in which McIlvaine forecasts strong valve demand. The sanitary valve market, which covers pharmaceuticals, food, and life sciences, is on track to spend more than $3.4 billion in 2015 on valves.
A good deal of these expenditures will be in Asia, where generic drug manufacturers in India and China are investing in new and expanded facilities, and where other producers are adding capacity to meet local and regional demand. This could be the start of a shift away from the United States and Europe in valve supply, which have been major markets for pharmaceutical valves.
A similar situation is developing in food processing. Factors include growing demand for processed foods, as well as for modern plants that minimize the potential for contamination. Valve manufacturers supplying processing plants will benefit from higher prices for their equipment, McIlvaine says, because of the high sanitary levels required in these facilities.
The global sanitary valve market is forecast to account for $1.5 billion next year in sales to pharmaceutical and biotech manufacturing, $1.4 billion in food and beverage processing, and $500 million in other life sciences (not including hospitals), the company predicts in its report.
In a related area, municipal drinking water plants in 2015 will spend more than $3.8 billion for valves, McIlvaine forecasts.