The demand for valve and actuators across all the end industries in North America have been significantly growing, with an estimated market size close to a $6.4 billion at a growth rate of 4.1 percent for 2013.
In the past, due to the global recession in 2008 and the first half of 2009, the valves and actuator market declined with substantial fall in annual revenue. This is relative to the previous years, due to the termination of existing projects or suspension of large projects planned for the period.
However, with the global economy recovering by the end of 2009 and the active expansion in unconventional oil and gas upstream activities, the growth rate hit the all-time high of nearly 7 percent. The initiation of the accreted suspended projects and new investments resulted in a rapid recovery of the lost market revenue followed by a gradual growth and expansion of the market.
The process equipment market has been highly active since, with notable key mergers and acquisitions observed in the top market share holders. The valve and actuator market is expected to reach revenues around $9.1 billion by the end of 2020 as a direct result of prominent expansion observed in key industries such as extraction and production of oil and gas and water management. The expansion in the oil and gas production has also influenced the growth of other energy dependent industries, such as power generation and chemical manufacturing, which has led to higher demand for flow control equipment market across North America.
The Annual Outlook of Energy report (projection to 2040) from the U.S. Energy Information Administration (EIA), states that 2013 has recorded a high production rate for oil and natural gas from the shale reserves across North America. The vastly expanding shale plays in the U.S. has resulted in enhancing the country’s natural gas production output. Shale gas production from 1 percent of the total U.S. natural gas production in 2000, has reached over 20 percent in 2010, and is expected to go up to 46 percent within the next 20 years. With this rate of growth and expansion in unconventional extraction in the U.S., there has been a large demand expected for the choke and the dump valve which are extensively used in upstream sector of oil and gas industry.
The increasing shale plays have also provided ample shale extracts which aids as an active feedstock in the production of ethylene and propylene, leading to heavy investments made by chemical-based platforms for petrochemical and derivatives manufacturing. Numerous offshore located U.S. based chemical production facilities are planned to be reinstated back to U.S. soil. The high paid U.S. labour pool will be compensated by the low cost energy production from natural gas.
For the first time, in order to stabilize the falling price of gas, North America is planning to export natural gas to the world. As a result, more than sixteen Liquid Natural Gas (LNG) facilities has been proposed with at least thirteen plants in the USA, and three plants in Canada for exporting natural gas.
Natural gas is also the most favored source of fuel for energy generation due to the availability, cheaper price, and lower emission. The EIA’s power generation projections for 2040 indicate natural gas-fired power generation would account to at least 63 percent of the total power capacity of U.S.
These above developments have majorly enhanced the sales of different types of highly engineered valves for midstream gas transfer. These have also positively impacted the standard isolation and control valves with pneumatic actuators that are extensively used for process management in LPG production units and natural gas fired combined cycle power plants.
Regulations driving the after treatment process for water recovery from shale and oil sands extract, have enhanced the opportunities for flow control equipment in wastewater management, both in U.S. and Canada. The other important regulation influencing the process equipment industries catering the water management industries would be the EPA standard for “lead free” mandate effective in U.S. starting January 2014. This has led to the replacement of previously installed industrial valves to lead free valves for the distribution of drinking water.
Coal has been the major resource for both power generation and mining industry in the U.S. and accounts for about 31 percent of the total power generation and close to 40 percent of the total value of country mining output. The one vital restraint on the U.S. valve and actuator market would be demoting coal usage due to the various regulations from environmental regulatory board and tax credits driving the growth of renewable energy from the government. This wold result to lower demand for gate, globe and check valve, and pneumatic actuator due to fall of coal fired power plants and coal mining. However due to expansion in the U.S. and Canadian oil and gas sector and mining activities in Canadian oil sands extraction, there would not be a substantial decline in the overall demand for multi turn valves.
The future of North American valves and actuator manufacturers catering the oil and gas and related industries, looks very bright with opportunities for expansions by merger and acquisition, and good overall growth expectancy in the market.
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