It’s a Gas
The shale-gas and oil boom in the U.S. has ignited a lot of excitement in the industry. "There is a relatively strong appetite for capital investments, driven by the expansion of infrastructure both to support unconventional natural-gas production and, more recently, the expansion of liquids production," says John Allcorn, executive vice president of Willbros Group. He sees increased spending on pipeline integrity and maintenance. "Pipeline failures over the past few years have brought more scrutiny, which will require additional investment to prove system integrity," he says.
Much of the oil-and-gas work will be focused on the Gulf Coast. "I think that everybody wants to talk about shale gas in the Gulf Coast, which is a great story. We're in the early stages of $35-billion worth of EPC value," says Seaton of Fluor.
The increasing availability of cheap domestic gas and oil has spurred potential opportunities beyond just the petroleum market. "There is a lot of work in North Dakota, but most of the growth will be in the South," says Dudley. "We are seeing several petrochemical projects moving ahead. We expect to book at least one, if not more."
However, Dudley says the impact of the gas boom will go beyond just upstream extraction, transport of the gas and petrochemical plants. "We expect manufacturing projects in the plastics industry," he says, which means power and infrastructure projects will follow to support this upswing in industry. "Unfortunately, we are not seeing the volume of power work that we might wish for," he says.
The power market is suffering from a great deal of regulatory uncertainty, leading many utilities to hold off investing in capital improvements until the rules are more clear. One area of uncertainty is what direction the U.S. Environmental Protection Agency will take since a federal court invalidated its Cross-State Air Pollution Rule in 2012.
"If you are a generator and the regulators aren't giving you the answers you need to make your capital decisions, you're going to have to [delay investments] until you have that data," says Seaton. He says gas-fired plants will replace some coal-fired plants, but "until [utilities] really know the capacity that they have to replace, they don't know exactly which gas projects to sanction and move forward with."
The renewable-energy industry has an uncertain future for the long term as tax breaks supporting that market expire. An Internal Revenue Service rule issued in April allows the production-tax-credit extension to cover all wind-farm projects that begin construction by Dec. 31 of this year. "It is our belief that several projects that would have been previously scheduled to build in phases may be consolidated into one larger project to ensure the developer or utility qualifies for the tax credit," says Paul M. Daily, CEO of Infrastructure and Energy Alternatives.
Electric transmission and distribution is an area of opportunity for many contractors. Willbros is planning to parlay the firm's high-voltage-transmission construction experience in Texas into surrounding states, says Allcorn. He says, "Our strategy is to expand our presence and provide our services to the markets between the mid-Atlantic and Texas," he says.