|Valves, Automation, Measurement & Instrumentation|
Activity in the gas utilities segment is expected to remain strong in 2023. New residential and commercial construction projects, along with ongoing integrity projects replacing aging systems, are expected to support the demand for 12” and smaller API 6D trunnion ball and API 6D lubricated plug valves. Gas providers continue to consume 16” and 20” ball valves in smaller quantities for transportation and storage projects. Remote controlled automated valve packages are frequently used for emergency shut down applications, utilizing pneumatic actuators and various control configurations. Due to new regulations requiring more automated emergency shut down valves, the demand for trunnion ball valves and actuators will continue in both the regulated and non-regulated portion of our gas utilities sector. While welded body ball valve configurations are preferred for buried service, the demand for bolted body configurations is significant for above-ground applications.
With gas utilities demand remaining strong, the increased activity in traditional midstream pipeline transmission and compression sectors means that accurate and timely forecasting of valves and actuators will be extremely important. While lead times for valves and actuators are becoming more consistent and predictable, many valve types are still experiencing extended lead times of 30 weeks or more. Planning ahead for specific valves or preferred actuator design is critical for meeting construction deadlines. For more details on the midstream transmission valve and automation activity, please see “Midstream Pipeline” below.
Downstream, Industrial & Energy Transition (DIET)
The DIET valve and automation sector continues to experience significant movement, both on the supply and demand side. The Russian-Ukrainian conflict has kept energy costs high, especially for European manufacturers, at a time when overall demand has increased in the U.S. and the Middle East. As a result, there has been a surge in demand for products from most European manufacturers, leading to increased pricing and lead times. The liquefied natural gas (LNG) sector and corresponding projects are also ramping up, which is increasing demand for stainless steel valves, automation and supply solutions. This often requires competitive lead times under 20 weeks. The North American refining segment should remain strong as domestic users continue to rely on its oil and gas assets to meet global demand and energy security. Despite volatile energy prices and recessionary pressures, the kick-off of major chemical projects in key areas globally should add to growth in 2023.
The upstream segment experienced a manageable increase in valve and actuation demand in 2022. As drilling activity increased, so did the demand for ½” through 4” valves used for well hook-ups and tank battery piping systems. Gathering system construction was active with increased demand for 6” through 20” trunnion ball valves. The smaller sizes experienced the most increases in demand. The production and gathering upstream segments continue to experience a slow but steady increase in demand across multiple regions, with the largest activity taking place in the U.S. Permian Basin.
The 2023 rig count will play a key role in valve and actuator demand for the upstream oil and gas production segment due to the reduction in drilled but uncompleted (DUC) wells. At the time of this writing, the U.S. rig count stands at 779, an increase of 179 rigs from year-end 2021. This significant increase is expected to continue with renewed U.S. exploration and production, especially in the U.S. shale regions. Across the producing regions, the U.S. Permian Basin experienced the largest rig count increase from 290 rigs to 352 year-over-year. The Canadian rig count declined by 6 in 2022, settling in at 84 active rigs. International rigs in operation increased to 910, up 93 rigs from December 31, 2021.1
Although China has finally lifted its “zero-COVID” border restrictions, the country is facing an unprecedented surge in COVID-19 cases, leading to incomplete manufacturing orders and supply chain delivery problems. However, valve and actuator manufacturers who source finished valves and components from China have adjusted to the additional lead times required to meet market demand.
1.Baker Hughes: https://rigcount.bakerhughes.com
While traditional midstream transmission demand for valve and actuator products was restrained in 2022, midstream end users are now making forward purchases to cover 2023 and 2024 project activity. This demand, which includes large diameter 30” to 42” pipeline valves, is expected to continue. The Russian-Ukrainian conflict continues to put pressure on U.S. demand for the export of LNG to Europe, leading to an increase in additional transportation and export terminal capacity. Most of the expansion appears to be around gas transportation and to LNG export facilities, although there are indications for increased activity in the liquid valve and automation space as well.
In addition to the increase in future oil and gas exports, the midstream segment is experiencing an increased demand for ball, plug, gate, globe and check valves and actuation products for carbon capture projects.