Global Energy Demand Growth? Follow the Shovels in the Ground
- Jun 12, 2014 9:00 pm GMT
- 335 views
A key indicator of global energy production and consumption growth is mega-project construction. Where are the world’s largest power plants, mining operations, oil & gas developments, utility-scale renewable energy projects or desalination plants being built?
These mega-projects require a company to oversee the engineering, procurement and construction (EPC) aspects of the capital intensive investments. It’s interesting to follow “heads of decisions” and “memorandums of understanding,” which are initial steps companies take when negotiating major partnerships and projects, but there are no guarantees these things will ever be agreed upon and constructed.
That’s why when following major energy development projects like pipelines or LNG plants, it’s important to watch for sales and purchase agreements (legally binding contracts) and final investment decisions. As such, Breaking Energy recently spoke with global engineering, consulting and construction company Black & Veatch’s C&P division president John Murphy about some of the projects they are managing and where they anticipate the most growth.
“The Middle East is positioned for significant growth over the next several years for oil & gas, power generation and water infrastructure. There is a lot invested in the region and we’re confident that a forecast increase in large mega-projects is real. Saudi Arabia alone has forecasted building an average of 10GW annually of new power generation of traditional fossil-fueled plants and renewables,” said Murphy.
Countries like Saudi Arabia and the UAE are dealing with rapidly growing populations and related energy consumption increases. This energy consumption growth requires increasing volumes of natural gas and oil for power generation, water desalination, manufacturing and other industrial sectors. Growing gas and liquids consumption is beginning to chafe against hydrocarbon volumes available for export. “The country can’t wait. We are burning more liquids every year, and that’s why Saudi Aramco now is taking the lead [on solar power],” Gasem al-Shaikh, head of energy unit at Saudi Binladin Group recently said.
Indeed, the Saudis and the UAE are pushing ahead with aggressive renewable energy programs and nuclear power. The UAE recently started, what at the time, was the world’s largest concentrated solar plant in the country’s western desert.
Breaking Energy toured the plant – Shams 1 – read more here.
Rapidly developing Asian economies are also adding significant energy production capacity in everything from renewables to oil and gas. “India is an area we feel is starting to expand. We have a strong presence in India and are expanding our capabilities,” said Murphy.
Malaysia, Philippines, Thailand and Indonesia all show significant power generation growth, he added, with considerable opportunities also emerging in Myanmar as the government makes power sector reforms.
Read additional Breaking Energy coverage of Myanmar here.
“In Asia Pacific we are seeing demand for a combination of coal and natural gas projects with growing interest in geothermal. It’s mixed and not one-sided to a particular technology. We are also executing a very large project in South Africa, another area that is growing. In some of these fast-growing emerging markets the delivery model is unique to the location. In addition to executing the project, we spend considerable efforts transferring knowledge to the locals with a focus on skills training,” Murphy said.
From a strategic growth perspective, B&V aims to regionally split their revenue into thirds, obtaining one-third from the Americas; a third from Europe, India & the GCC; and a third from Southeast Asia.
“We have other large opportunities working with Chile’s mining industry, where we focus our efforts on energy, water and telecommunications, which are all important for that industry,” said Murphy.
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