The gas compressors market is expected to register a CAGR of about 3% during the forecast period of 2020-2025. The factors, such as the growing demand for natural gas (by 1.6% y-o-y till 2022), are expected to drive the growth of the gas compressors market during the forecast period. However, the growing share of renewable energy (in the total volume of energy consumption) is expected to restrain the growth of the market during the forecast period.
- The midstream sector includes gas processing, gas pipeline transmission, and gas storage. It is expected to dominate the market during the forecast period.
- The increasing demand for electricity in the emerging markets, such as India, China, Brazil, and Mexico, is expected to drive the demand for natural gas in the power generation sector. This factor is expected to provide a significant opportunity for the manufacturers of gas compressors in the near future.
- North America is expected to dominate the market, with most of the demand generated from the United States and Canada.
Key Market Trends
Oil and Gas Midstream Sector to Dominate the Market
- The application of gas compressors in the midstream sector includes gas processing, gas pipeline transmission, and gas storage. Transport of gas in pipelines is a very effective way of transporting energy over large distances. By increasing the pressure of a gas, compressors are used to help liquefy and transport natural gas from one location or process to another.
- However, the flow of gas in pipe suffers from pressure losses that increase with the velocity of flow and the length of the pipe. Therefore, every 50-100 miles, a compressor station is necessary to re-compress the gas and compensate for the pressure losses.
- In 2018, operators planned to complete about 11,936 miles of gas pipelines, worldwide. Whereas, for projects completed after 2018, companies planned to lay more than 24,731 miles of pipeline. Therefore, with the increase in construction activities of pipelines, the demand for compressors within the midstream sector is expected to increase during the forecast period.
- LNG contracting activity rebounded, in 2018, to reach the highest level in five years, with a total of 123 bcm/y of concluded contracts. This increase relates to the development and financing of new liquefaction projects.
- Hence, with the increasing completion of pipeline, the midstream sector is expected to dominate the market during the forecast period.
North America to Dominate the Market
- The United States holds about 6.0% of the global proven crude gas reserves. The production of oil and natural gas expanded rapidly in the recent years, owing to development of unconventional resources, easing the country's heavy dependency on foreign sources of energy.
- Natural gas production grew by an average rate of 11.53% y-o-y in 2018. About, one-third of the natural gas output in the United States was derived from crude-focused associated players, with about 288 mcm/d produced from the more oil-rich Bakken, Eagle Ford, Niobara, and Permian Shale plays, in 2018. A rising gas oil (GOR) ratio implies that continued investment might result in the increased supply of natural gas during the forecast period.
- The production of natural gas in the United States is expected to remain high over the next decade, driven by increasingly cost-effective developments, particularly within associated shale gas plays. Further, the increase in gas production is supported by the strong LNG exports and rising domestic demand from the petrochemical and power sectors.
- Growing export capacity through, both, pipelines and LNG terminals are expected to propel total natural gas net exports, throughout the forecast period. New LNG liquefaction terminals are likely to supply the majority of exports. Combined with the other approved terminals, total LNG export capacity is expected to grow to over 97 mmtpa, by the end of 2020.
- With, both, LNG and pipeline export capacity set to expand over the coming years, the United States is expected to become a net exporter of natural gas in 2019.
- The developments from upstream and midstream in the country is expected to create additional demand for gas compressors, over the forecast period, helping the country to maintain its market position in the region.
- Moreover, over the past five years, the geographic focus of oil production shifted from United States to Canada.
- The Oil Pipeline Transportation industry grew mainly driven by steady oil production. Directional drilling, hydraulic fracturing, and other advanced drilling techniques have increased the number of profitable oil reserves.
- Further, Canada's pipeline system is highly interconnected with the US pipeline system. This relationship has served both countries well in terms of the pipeline networks and will continue to do so in the future with many expansions and new pipeline projects planned.
- Hence, this is expected create new opportunities for additional pipeline capacity during the forecast period, thereby, boosting the gas compressors market in the region.
The gas compressors market is moderately fragmented. Some of the key players in this market include Ariel Corporation, Atlas Copco AB, Bauer Compressors Inc., Burckhardt Compression Holding AG, and Gardner Denver Inc.
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