Boom Times For Megaprojects
The world's hunger for energy is fueling giant backlogs for engineering and construction firms
High engineering costs will be even more of an issue for energy companies if fuel prices-and profit margins-continue their slide. Michael Leger, president of Turner, Mason & Co., consultants to both refiners and their lenders, says he does not think many companies will follow the path of Tesoro and actually cancel projects. Energy demand is still growing and expected to outstrip the 1.7 million barrels per day of U.S. refining capacity planned through 2012. "There are sufficient numbers of well-founded, viable refining projects that need to go forward to keep [contractors] quite busy for the next several years," he says.
Philip Asherman, chief executive of Chicago Bridge & Iron, a leader in refinery and liquefied natural gas projects, says his company's backlog has grown at 30 percent annually for the past four years. "We have not seen any interruption in spending due to fluctuation in oil or gas prices or some of the other volatility in the market," he says. The industry has certainly ridden past cycles up and down, but the current growth of worldwide energy consumption, particularly in China and India, is unprecedented. "We think," Asherman says, "this is a market unlike any previous market for our industry."
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