MECHANICAL CONTRACTING | PVF FORECAST |


PVF sector in growth mode, primed for 2011 breakout


BY MORRIS BESCHLOSS CONTRIBUTING WRITER


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year for all aspects of the pipe-valve- fittings sector. After almost two years of minimal inventories at the distribution level, manufacturing capacity was stuck in a recessionary low 70% usage, and nuclear energy and deep sea drilling were practically non-existent. Therefore, 2011 would appear to be the springboard for an overdue turnaround. However, a partisan political “gridlock” confrontation could still upset a solid comeback period after two years of recessionary demand trends. Since the last couple of years have


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seen the demand for energy derivatives (oil, natural gas, solar power, geothermal and hydro and electric energy) being reduced to a low ebb, the impact of the PVF sector’s reversal has not been as profound as if this had happened in a more vibrant economy. Put in the context of limited


growth anticipated in 2011, even a moderate comeback from a depressed 2009, and a repair, maintenance and inventory rebuilding of 2010, would call for a growth in the low double digits, with


nder normal circumstances, 2011 should surely be a major economic rebound


the end-use needs of even a slowly- expanding economy going forward impressively. With the traditional 50/50 split


between new projects and MRO diminished to 85% maintenance and only15% capital expansion during the recession, even a minimal shift toward a historical balance would assure an expansion of PVF business in the upcoming months. However, guarded optimism for a certain rebound from the 2008-2010 bottoming out is best explained by the major end- use industries that comprise a sector estimated at approximately $30 billion in revenues at the prices paid by installers, contractors, and for maintenance and project development. • Power. Power generation


resource still used by 50% of existing power generating utilities. This has held up the development


of increased capacity, the lack of which would have played havoc


Natural gas has taken front and center row as the powering element of choice...the extraction, piping and end-use installation of natural gas will provide a major lift to PVF product usage, as its expected major


expansions in 2011 and 2012 take hold.


has traversed maximum volatility during this century’s first decade. After the rigged pricing of phony shortages perpetrated by properly maligned Enron, new projects were stopped or mothballed, as power generation went through a period of reassessment. This was complicated by an increasingly aggressive Environmental Protection Agency that demonized coal, the natural


Bakken Belt Williston Basin provides major U.S. energy independence thrust


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hen the price of oil vaulted to $147 per barrel in July 2008, it heightened the excitement of exploiting new oil discoveries within the confines of the 50 U.S. states. However, the price of black gold descended to as low as $32 a barrel in February 2009, so the cost/price margin had narrowed to a point of discouraging domestic drilling. But now, as the price of oil hovers


around $90 a barrel, a breakthrough within the lower U.S. 48 states is about to occur. The Bakken Belt, named after the farmer in North Dakota on whose land this initial find was first discovered years ago, is now ready for the greatest American on-land breakthrough since the heydays of Oklahoma, Texas and California. The belt spans the Dakotas, Montana and two of the adjoining Canadian provinces. Estimated reserves are adjudged to reach a potential of 520 billion barrels, twice the amount


allocated to Saudi Arabia as the world's largest oil reserves. A thick layer of dolomite bedrock, which must be cut through, has proven too costly to access when oil is below $70 a barrel. If prices stay up, this problem is on the verge of resolution. Since it's in an area devoid of rare wildlife and not in danger of displacing ongoing crop farming or industry, watch for the Bakken Belt to become the center for dry land drilling attention that could be growing by leaps and bounds throughout 2011. With the U.S. automotive and truck industry coming back to life, the peak 21 million barrels a day of 2006 may spring back from the current 18 million mark. If environmental concerns can be overcome, the Bakken Belt and the Canadian oil sands may still become the champions of the American fossil fuel sector that will still dominate the market for combustion engine-driven vehicles 50 years from now.;


under traditional growth conditions. Although coal is still the cheapest powering element for utilities, and is in primary use by power development in the emerging nations of Southeast Asia, so-called “clean coal” is a myth, and will not be approved as new utilities are built, or current power generation stations are expanded. The EPA has made coal its target for elimination domestically, but this has been more than offset by foreign buyers, especially in Southeast Asia. • Natural Gas. This has taken


front and center row as the powering element of choice due to its relatively low cost, its newfound abundance through the shale


“fracking process,” and minimal tolerance from the Environmental Protection Agency. The extraction, piping and end-use installation of natural gas will provide a major lift to PVF product usage, as its expected major expansions in 2011 and 2012 take hold. • Nuclear Power.With 104


nuclear-powered generating utilities being expanded “in place,” this fertile area of power development is still meeting major institutional and populist resistance. Cost and lengthy development time factors are just about putting this powering element on the back burner, despite the


e Continued on p 64


phc january 2011 www.phcnews.com


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