Enron's Pall Drags Market Down As Owners Postpone Expansions 6/10/2002
To contractors and consultants, last year's Enron Corp. debacle looms like an 800-pound gorilla over the natural gas pipeline market. "Ever since the Enron deal, we've seen most of our clients cut back on their capital spending," says David L. Edgar, manager of pipelines for Mustang Engineering Inc., Houston. "We've seen companies that had pipeline projects [planned] shut them down, which caused us to reforecast our revenue for this year." Because many energy companies were tarred with Enron's brush, "financing is real hard to come by," says Lonnie Hamilton, vice president of business development for Willbros Engineers Inc., Tulsa, Okla.
But more than Enron is to blame for the slowdown. Steve Dracos, senior vice president for business development at Houston-based Universal Ensco Inc., recalls that last summer the company bid a 380-mile pipeline and an 800-mile pipeline, but "then the powerplant market fell out from under" those projects. Operators try to cut down on long lead times by commissioning design services years before a project's scheduled construction start, but continuing a pattern familiar to E&C firms serving the industry, many of those proposals eventually fizzle for financial or other reasons, Dracos says.