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The election of Donald Trump has sent a positive message to a besieged industry. Inauguration is not until January 20th and President Obama has signaled that there will be a deluge of new regulations that will be issued before Mr. Trump takes office. President Trump will have to act quickly and decisively during his first days in office to negate the damage that has been done previously and will probably escalate with the ensuing new regulations.
The first quarter of our new year will continue to feel the effects of the depressed market that has been fostered by artificially inflicted low oil prices. However, as predicted in “The Oil & Gas Journal”, the general consensus of oil and gas services firms indicated that the global oil market would seek a balance by the second quarter is on track. OPEC has recently announced an agreement to cut production by 1.2 MBD, attempting to raise the price of oil while witnessing a slowing in demand.
Revisions made by President Trump in the dismantling of the restrictive EPA regulations on the energy industry will put wind in the sails for new and the re-starting of delayed projects. A time gap from the lifting of the regulatory burdens and the start up in construction is expected, and will not have a major impact on business in the first quarter. However, the optimism generated by the business and energy-oriented administration may be reflected in improved sales as the quarter progresses.
Predicated on current market conditions, the cost basis for raw materials required for the production of carbon steel butt welding fittings and forged steel flanges has remained stable. Pricing for both commodities are, therefor, forecasted to remain firm through the quarter. Pending ITC rulings on the petition initiated by Weldbend and Boltex may have a profound impact on the offshore pricing and supply of carbon steel forged steel flanges. This, in turn, may have an impact on the supply and demand dynamic for domestic products. It is suggested that you keep in close communication with your suppliers and continue to monitor the market on a regular basis going forward. The ITC ruling may have been issued by the time this issue has been distributed.
The election of Donald Trump is raising hopes for the revival of the much delayed Keystone XL pipeline. TransCanada Corp. has stated that it remained fully committed to the project. TransCanada's acquisition of Columbia Pipeline Group will bring a construction portfolio of $3.8 billion that are in the construction and development stage with completion scheduled to be in place by the end of 2018.
Natural gas-fired maintenance projects totaling $502 million are scheduled for start up during the first quarter of 2017. These range from $1 million to multimillion dollars throughout the U.S. market such as the 70-day outage planned for Frederickson Power Station in Tacoma, Washington.
The Southwest Region
The Southwest market regions value of the planned natural gas-fired outages is the highest in value in the U.S. with 34 planned outages valued at $117 million.
In addition to the natural gas-fired maintenance projects, the Southwest Region is the recipient of the largest power industry project in the region. FGE Power, L.L.C's $1.1 billion first phase of the Eagle Pines Energy Center in New Summerfield, Texas. The first of three power blocks with an output of 1,133 MW each. Contruction is scheduled to kick off during the second quarter of 2017 with completion anticipated in 2019.
The Southeast Region
The state of Florida hosts the largest gas-fired capital project that is set to kick off during the first quarter. Valued at $1.2 billion, the 1,470-MW Okeechobee Clean Energy Center combined cycle facility will enter the contruction stage during the first quarter with completion scheduled to be in place by 2019.
Transportation is playing a major role in the industrial manufacturing industry role in new project kick offs totaling half of the $9.27 billion.
Two of the largest airport expansion projects are the $1.8 billion dollar terminal addition to the Orlando, Florida International facility and $1.2 billion additions to the Nashville airport in Nashville, Tennessee.
The chemical processing industry is looking at $8 billion in projected kick offs in 2017. Most of these projects are in the final planning stages as of this writing.
Not as prevalent in the Southeast as in other regions of the country, the oil and gas production industry is looking at $3.19 billion in planned starts. These include small-scale "micro LNG" facilities, and among them is the $250 million LNG plant in Titusville, Florida.
The Midwest Region
Power dominates the region with $8.3 billion attributed to wind farm generation.
Petroleum Refining has $2.8 billion in the first quarter project kickoffs that includes the Flint Hills Resources Limited Partnership $500 million coker unit replacement at the Pine Bend Refinery in Rosemont, Minnesota.
Pharmaceutical and biotech industry boasts $2.79 billion in start up that includes a $1.3 billion Oxford On The Blue Biotech Park in Kansas City, Missouri.
Northeast / New England Regions
The pharmaceutical and biotech industry continues to play the dominate role in the Northeast for new construction scheduled for kick off during the first quarter. In addition, a $65 million addition of a natural gas compressor station for the Transcontinental Pipeline near Parkin, New Jersey is scheduled to move forward during the first quarter.
The labor market and the availability of materials continue to be topics of major concern for the energy related industries. Professionals from the chemical processing, refining, pipeline and petrochemical industries all share concerns regarding the difficulties in finding and retaining craft workers. In addition, with many competing companies in the expansion mode all are expressing concerns over the availability of materials required to meet their scheduling demands.
The PVF Roundtable (Houston, Texas-based 501C) is addressing the shortage of skilled labor required for the needs of the construction industry. The PVF Roundtable has initiated scholarships programs for the trade schools to educated students for the welding, pipe fitting, crane operating and other related skill sets required by the industry.
President Donald J. Trump has set forth an aggressive agenda for his first one hundred days. Many of the items that are of high priority on his agenda are related to the energy industry. Repressive regulations, the Dakota Pipeline stoppage and taxation issues are areas, that if addressed properly, will provide much needed relief for an industry under siege by the current administration. Stay tuned, as I believe events will be unfolding at a rapid pace during the first quarter of 2017.