By Robert Carpenter, Editor-in-Chief
For the energy pipeline construction industry, 2015 and 2016 were, to say the least, disappointing in many ways for both contractors and energy companies.
Obviously, with the price of oil and natural gas remaining largely depressed in recent years, many pipeline projects have been placed on hold, waiting for improved overall industry economic conditions, price points and stability. But perhaps of equal importance, improved business conditions have been sorely needed, as well. Pipeline contractors, along with subcontractors such as horizontal directional drilling companies, suffered through limited job opportunities in 2015 and 2016.
It is no secret that the policies of former President Barack Obama created significant barriers to anything related to carbon. Those policies boldly halted pipeline projects and subtly provided important delays and aid that subsequently allowed the birth of a broad and organized radical, anti-pipeline movement. As you’ll recall, that rise of negative and obstructionist activism, along with President Obama’s stalling tactics, stifled the Keystone Pipeline.
By the time Obama ultimately rejected Keystone, the anti-pipeline movement was entrenched, organized and confident that it could take on Big Oil and win. Next on its target list was the Dakota Access Pipeline. The activists jumped in at the last minute, just as the construction of DAPL was wrapping up, to wage another war against pipelines and Big Oil & Gas. This time, their strategy was to manipulate an Indian tribe into a very public war against DAPL.
When the battle began, DAPL was essentially only a directional drill away from completion. Using the weapons of “ensuring safe drinking water” along with “preventing cultural defilement,” hundreds of die-hards – and a few Native Americans – started a nearby campground as a permanent base for what became a steady diet of “newsworthy” staged protests.
But the shocking election in November 2016 changed everything for pipelines. Not only did President Trump’s new policies effectively thwart the anti-DAPL lawsuits, but it cleared out the protest camp and allowed the pipeline to be completed. The anti-pipeline confederation was forced to regroup and is still trying to stop the actual flow of oil with nuisance lawsuits.
Trump also rescinded the Keystone denial. However, it is still not known if TransCanada will continue with the project after this long delay and reversal of oil fortunes from when the pipeline was originally to be built.
Trump has steadily been dismantling not only anti-pipeline executive orders, rules and regulations, but other business inhibitors, as well. The unpredictability of President Trump, combined with a slumping energy market, had underground infrastructure companies nervous about their future. However, by the end of 2017, a much clearer picture has emerged: less onerous regulations, slowly improving oil prices and a lower break-even price for shale. Those improved conditions put incentives and motivation back into the energy market. Pipeline projects that were shelved in 2014 were reinvigorated for 2017. Further, pending legislation could add pressure to various agencies to approve/disapprove pipelines in a timely fashion. The clear message is that politically motivated delaying tactics, used with much success over the past several years, will no longer be tolerated.
The positive market movement was met with contempt and chaos by the anti-pipeline movement. Like a rabid dog, the extremist organizations have still lashed out and attacked major pipelines, targeting them with the typical tactics of nuisance lawsuits, organizing locals and whipping them into a frenzy against the evil pipelines. While that strategy has achieved minor success, it appears that unless there are legitimate issues, those construction projects will eventually move forward – but not without pipeline companies spending an inordinate amount of time and effort in defense.
The anti-groups , on the other hand, have a finite amount of resources they can bring to bear. Targeting a small number of major pipelines is all they can afford to do at this time. But for every major pipeline project being constructed or on the drawing board, there are many more small-to-moderate pipeline projects in the queue with a green light to proceed. Once these pipelines pass their due diligence requirements, work proceeds. Much of the excessive, cumbersome and unnecessary bureaucratic nonsense has evaporated. With the extreme need to expand the pipeline grid, the result is that new construction and HDD are having a good year in 2017, with 2018 looking even better.
Homerun projects are always chased by contractors, but the small-to-medium projects are the industry’s bread and butter – and still represent high profit potential. In 2017 and going forward, smiles have returned to the faces of pipeline contractors, engineers and owners.