06072020Sun
Last updateFri, 05 Jun 2020 3pm

The Outlook for LNG and Water/Wastewater Markets

Every valve end-user market is feeling the effects of the global COVID-19 pandemic. Amid the shock and uncertainty, each will find its way forward.

LOOKING AHEAD AT LNG

Though consumption of all fuels has taken a dive with the COVID-19 pandemic, the natural gas industry should recover and continue its healthy growth, said David Sword of dps360 Energy in a VMA webinar held May 14, 2020.

In less than a decade, North America has gone from a natural gas importer to an exporter. The natural gas that comes out of the ground is chilled to -265F (-160C), at which point it becomes a liquid (LNG—liquid natural gas) that is 600 times more dense than in its gaseous state.

Projections for the whole range of energy sources for the next 20 years show all of them growing to a greater or lesser extent. Coal is expected to grow slowly, while natural gas will likely show strong growth.

Natural gas burns cleaner than other fossil fuels and with its current plentiful supply and relatively low cost, it will likely continue to be used to replace other fuels. In addition, natural gas is the “perfect fuel complement to renewables,” Sword said, as it can easily be used to generate power when solar or wind provide less than needed.

With the growth in the natural gas market, investment continues to support the needed infrastructure. Sword described seven existing LNG export terminals, eight that are under construction in the U.S. and two under construction in Canada. Also, more than a dozen U.S. LNG terminals have been approved by the Federal Energy Regulatory Commission (FERC) but are not yet under construction. The total construction cost for these projects totals more than $60 billion, Sword said.

Looking ahead, Sword sees a maturing global market for LNG. The United States will continue to be a major exporter, along with Qatar, Australia and Russia. The global demand for all forms of energy, including clean energy, will continue, and the U.S. is well positioned as an LNG provider.

WHAT THE FUTURE MAY HOLD FOR WATER AND WASTEWATER

The water and wastewater industry saw significant growth in 2018 and 2019, said Tom Decker of Thomas E. Decker Consulting during the May 14 VMA webinar. (Decker will cover the outlook on water and wastewater in depth at the VMA Virtual Market Outlook Workshop, Aug. 6-7, 2020.)

That growth was driven by infrastructure repair and replacement activity, a healthy economy and attractive financing, ongoing concern about the water supply and other factors.

Even in the first two months of 2020, it showed an increase of over 20% over the same period the previous year.

And then the pandemic hit. Revenues have gone down some, Decker said, and utilities have to adapt to keep their employees safe. Also, because of the need for social distancing and other safety measures, construction has become more cumbersome. On top of all that, supply chains have had problems providing equipment, supplies and spares.

So far, though, Decker sees reason for some optimism. For example, construction delays and cancellations are not widespread and requests for proposals on new projects are continuing to be issued. Interest rates are very low. The construction and utility industries are considered “essential” and so can continue to operate within the guidelines for maintaining employee health.

No matter what happens, water and wastewater services will still be needed. In the current situation, the public seems to have heightened its awareness of the need for safe water, Decker said.

In general, during a downturn the economic performance of the water/wastewater industry lags the economy as a whole by about 18 months, Decker said. He suggested watching for a slowdown in the last half of 2020 and during 2021 in the U.S. Also, a “cash crunch” may hit utilities at some point.

A rapid economic recovery would do little to harm the water/wastewater market, Decker said. If the recovery is slow or intermittent, however, this could cause problems. Federal financial relief for utilities could ease the strain; at the time of the webinar this was not yet an option.


This email address is being protected from spambots. You need JavaScript enabled to view it.is web editor at VALVE Magazine

VALVE Magazine Print & Digital

Subscribe VMWNT20FREE SUBSCRIPTION*

• Print magazine
Digital magazine
• VALVE eNews
Read the latest issue

*to qualified valve professionals in the U.S./Canada

Looking for a career in the Valve Industry?

ValveCareers Horiz

To learn more, visit the Valve Careers YouTube channel to watch the videos below or visit ValveCareers.com a special initiative of the Valve Manufacturers Association

  • Latest Post

  • Popular

  • Links

  • Events

New Products