Oil, gas industry leads the charge for medium-voltage motor drives
IMS Research discusses growth potential in the medium-voltage market and its impact on manufacturing worldwide with CFE Media.
Medium-voltage (MV) drives sales into the oil and gas industry will outpace the market in 2011 due primarily to the high oil prices in 2010 and early 2011, increasing investment for production capacity expansion, according to a new study, “The World Market for Medium Voltage Motor Drives,” from IMS Research.
Due to the profits seen from expanding production capacity at higher oil prices, MV motor drives sold into the oil and gas industry are estimated to grow by over 20% worldwide in 2011.
“Sales of MV motor drives into the oil and gas segment is predicted to continue increasing, as orders of medium drives in the oil and gas industry during the second half of 2011 remain strong, only increasing current backlogs and growth for 2012,” said IMS analyst Jenalea Howell. “However, growth will continue to slow due to the difficulties of sustaining such high growth, and more importantly high oil prices.”
She spoke with CFE Media about the growth potential in the MV market and its impact on manufacturing worldwide:
CFE Media: It seems that the MV drives market is going to do only as well as the oil and gas industry. What’s driving the move toward reinvestment in these products?
Howell: I would not say that the MV drives market is going to do only as well as the oil and gas industry, but instead that it will provide a sales impetus for the overall market. While the oil and gas industry is a very significant industry sector in terms of revenues for the worldwide MV drives market, other industries, such as metals and power generation, also account for large portions of the global market.
The relatively higher prices for crude oil in the past two years is the primary driver for the re-investment of MV drives into the oil and gas industry as significant profits can be obtained from expanding production capacity during periods of high oil prices. Within the past two years, IMS Research has noticed that reinvestment in the oil and gas industry occurs at the price point of $80-$100 per barrel due to more cautious capital expenditure following the downturn.
Another key industry for the MV motor drive market is the commercial marine sector. During the downturn, shipbuilding came to a halt due to the industry’s dependence on the transportation of goods. As shipbuilding began to recover in late 2010, sales for MV drives in the commercial marine sector also grew significantly and are forecast to grow by 18% in terms of revenues by the end of 2011 as MV drives are used not only in propulsion but also in auxiliary positioning systems.
CFE Media: The BRIC countries seem to have the greatest potential in these areas, but we’ve also seen an interest in Canada and a renewed interest in the Gulf of Mexico. What does the North American market look like right now, and where are the possibilities?
Howell: Investment for MV motor drives in the North American oil and gas industry are used in the tar sands in Alberta, Canada, for exploration, extraction, and transportation. There is also significant investment for MV drives in offshore oil and gas in the Gulf of Mexico for both crude oil and natural gas. Growth potential within the United States is seen in the natural gas reservoirs of states such as Texas, Arkansas, Pennsylvania, and Oklahoma.
CFE Media: Are there any real growth areas outside of oil and gas?
Howell: Outside of the oil and gas industry the fastest growing sectors in terms of revenues are power generation, metals, and mining due to continued urbanization, a growing world population, and the higher prices for commodities such as metals. In 2011, power generation is forecast to grow by 18.6% in terms of revenues from 2010 levels, while metals and mining are estimated at 17.5% and 18.2% respectively.
The mining industry’s investment for MV drives is due to the reopening of mines that were shut down during the economic recession in 2009, driven by recovering economic activity and the increasing demand for rare-earth materials.
CFE Media: How should manufacturers get ready to take advantage of this market growth?
Howell: The need for MV drive suppliers to have a local footprint in the product’s end-destination country has become more important due to service and maintenance becoming a more integral part of the purchasing decision. This is primarily due to the higher technical expertise needed for commissioning and maintaining a MV motor drive when compared to a low-voltage product.
MV drive suppliers are increasingly training the distributors and end users in foreign countries to provide the service necessary for these maintaining MV products.
Edited by Sharon Sofinski