Industry outlook in the process, power and marine (energy) sector

At the HxGN conference in Las Vegas this morning, a very intriguing perspective on the process, power and marine (PP&M) industry (weighted toeward energy) outlook was presented by Gerhard Sallinger, President of Intergraph Process Power & Marine, which is part of Hexagon at the HxGN conference this morning.

Industry outlook

• First of all project sizes are getting bigger in the energy sector.  Gerhard mentioned an Alberta oil plant project seven years ago that cost $6-7 billion which was considered large at the time.  Currently bidding is underway for a $60 billion LNG terminal in Mozambique.
• What this means is that modular prefabrication will be increasingly used, indeed required, for projects of this size.  One of the advantages of modular prefab is that it reduces the number of workers on-site.
• Gerhard is expecting that energy demand will increase by a 1/3 by 2030.  He expects the total capex for energy-related infrastructure to exceed $1 trillion.  What he is seeing from Intergraph's customers is that gas is booming, green continues to grow, and nuclear is coming back - projects are actually being built, not just planned, in Turkey, the US, China, and other countries.
• Shipbuilding continues to be depressed, but offshore (oil platforms) is growing.
• He sees shale gas on the rise, and went so far as to predict that it will shake up the industry.  For one thing, it is cheaper than offshore oil (or oil sands I would add from a Canadian perspective).  But from a software vender's persepctive shale gas plants are simple compared to other forms of energy and his team is looking into what the implications of this are for plant design software.

From a vender perspective, which can be one measure of the health of an industry and the directions it is headed, PP&M has been seeing solid revenue growth, in fact Q1 2013 was their best quarter ever according to Gerhard.  About one third share of the PP&M revenue came from the Americas, one third from EMEA, and one third from Asia.  Gerhard singled out Asia is having the greatest growth potential, calling if highly dynamic.