November 2014

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32 | www.cedmag.com | Construction Equipment Distribution | November 2014 Sector Check have pipeline operators increasingly turning to rail options to meet the growing demand in the U.S. and Canada. This, in turn, has spurred construction of additional rail facilities. According to The Energy Information Administration, U.S. transport of crude oil by rail, truck, and barge soared 57 percent between 2011 and 2012, surpassing 1 million barrels per day. Along with pipelines comes the need for engines, power systems, pumps and compressors to push the oil and gas through the pipelines, yet another opportunity for dealers. "Another huge category for dealers is engines used for compression," said Mack. A tremendous amount of power generation is needed to transport oil and gas over pipelines. At the initial injection station, also known also as "supply" or "inlet" station, the product is injected into the line. Storage facilities, pumps or compres- sors are usually located at these locations. Pumps for liquid pipelines and compressors for gas pipelines are located every 40-100 miles to move the product through the pipeline. The location of these stations is determined by the topography of the terrain, the type of product being transported, or operational conditions of the network. Downstream Impacts for Dealers The IHS study quantifies, for the first time, supplemental construction activity attributed to the unconventional oil and gas industry. "Supplemental activity is construc- tion related to the development of oil and gas but the cost of that construc- tion isn't born by the gas companies, said O'Neil at IHS. "Instead, it's driven by jobs growth and income growth in other industries that use oil and gas byproducts such as fertilizer plants." That could mean spending on construction of new or expanded highways, offices, hotels, storage facilities, schools and housing. Nonoperator supplemental construc- tion spending related to unconven- tional oil and gas activity is expected to remain near $4 billion in 2014 with waves of activity as states proceed through their development. Spending in residential construction will have the largest impact, amounting to $2.9 billion in 2014 and 11,000 jobs. Spending peaks in 2021 at $5.3 billion, yielding over 17,000 jobs. The second largest impact comes from commercial activity, which will generate $873.4 million in 2014, trans- lating into nearly 3,400 jobs in 2014. Workers are needed not just to oper- ate equipment on the fields themselves, but throughout the supply chain. These workers require food and housing. Growth Brings Housing and Infrastructure A look at Williston, N.D., sheds light on the real impact of oil and gas activity. According to a February 2014 article in Business Insider, Williston had the highest apartment rents in the U.S. The current population is estimated at 30,000, up from 12,680 in 2000. In its 2014 Impact Statement, the City of Williston identified $625 million in infrastructure projects over the next six years. The 2013 state legislature changed its funding formula for the oil gross production tax and oil impact funding and designated Williston as the most impacted "Hub" city, eligible for approximately $60 million in formula funding over the 2013-2015 period. Although oil and gas activity stabi- lized in North Dakota in 2013, other businesses continued to fuel growth in Williston. An airport designed to handle 6,000 enplanements annually actually handled 90,000 enplanements in 2013. Airport officials hope to replace the current facility with one that is seven times larger by 2016/2017. Meanwhile in Ohio, houses and hotels are included among the $22 billion in shale projects reported by the Columbus Law firm, Bricker & Eckler since 2010 as demand for temporary housing was generated by an influx of-out-of-state workers. A new Shale academic research center at Case Western University is also in the works. Policy Changes and the Future IHS researchers note that the report is based on current public policy. "Major geopolitical or technological changes could have a significant impact on the numbers," said O'Neil. ("Shale Gale Spreads Equipment Opportunity" continued from page 30)

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