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North American Markets for Mechanical Prime Movers in the Oil and Gas Industry
Frost & Sullivan, Aug 2004
This research analyzes the market for various prime mover equipment including gas and steam turbines, medium voltage (MV) motors, and reciprocating engines in terms of different power ratings. Covering markets in the United States and Canada, it evaluates the current and potential opportunities and trends for the various end-user configurations. This research also analyzes major pricing, technological, geographical, and end-user trends, besides identifying the various challenges that affect the market.
High Costs of Crude Oil and Natural Gas Likely to Drive Exploratory Efforts and Demand for Prime Movers
Rising prices of crude oil and natural gas are likely to benefit the mechanical prime mover markets in North America. Since energy requirements in North America are huge and constantly growing, there is a strong possibility for enhanced exploratory efforts to obtain greater supplies of crude oil and natural gas. Given the lack of viable alternative energy sources, this trend is likely to intensify, and thereby, drive the potential demand for mechanical prime movers.
With crude oil and natural gas prices continuing to remain high, the energy demand growing inexorably, and the dependability of imported crude oil becoming increasingly questionable, indigenous oil exploration in North America is bound to grow. As a result, the demand for mechanical prime movers in the oil and gas industry is likely to improve appreciably, notes the analyst of this research service.
Compliance with Rigorous Standards and Emission Requirements - a Strong Challenge
The North American mechanical prime mover markets for the oil and gas industry have been adversely affected due to the stagnant economy, over the last few years. As suppliers of equipment to this industry, prime mover manufacturers are required to meet the increasingly stringent safety standards set by the American Petroleum Institute (API) on the one hand, and strict emission requirements mandated by the Environmental Protection Agency (EPA) on the other. However, adhering to the emission regulations often involves incorporating costly technological improvements in the products - a factor that will impact the equipment manufacturers negatively as the market is highly cost-driven.
Increased Overall Market Size Expected to Aid Growth of Prime Movers Industry
With the power generation sector shifting toward natural gas as the preferred source of energy, the push to explore gas-rich areas such as Alaska and the Rocky Mountains and import liquefied natural gas (LNG) from countries such as Indonesia, Australia, and Nigeria is likely to increase. Combined with the continuing demand for gasoline, aircraft fuel and diesel, these factors translate into improved growth for the prime mover markets.
The EPA’s emission requirements are primarily expected to drive technological advances in these markets. Companies that develop superior designs for gas turbines and reciprocating engines to help lower the level of pollutants, or build advanced material technologies to sustain higher gas turbine operating temperatures are likely to gain greater market share.
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