the ndt industry 4-30-14.ppt ndt industry 4-30-14.pdf · • some of the recent market research...

Beyond BRIC: Beyond BRIC: Exploring the Next Game Changers for the NDT Industry

The new North American oil boom and the unending Middle Eastern oil supply present significant growth opportunities

Nikhil Jain, Senior Research Analyst

Measurement and Instrumentation

© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presenter

Nikhil Jain, Senior Research Analyst

Frost & Sullivan

Follow me on:

@njain109

2

• Over 3 years of expertise in strategy consulting and market research in the mechanical test market with a

specific focus on the nondestructive testing (NDT) industry.

• Worked on market expansion, market penetration, growth opportunity assessment and acquisition consulting

projects in the NDT industry.

• Some of the recent market research covers various facets of the NDT industry such as emerging growth

markets for NDT inspection services, analysis of the global ultrasonic NDT equipment market, analysis of the

global NDT equipment market and analysis of the global NDT training services market.

http://www.linkedin.com/pub/nikhil-jain/2a/58/577

Agenda

• NDT Industry Overview

• NDT Inspection Services Market

• Market Opportunity—Growth Regions

• Market Opportunity—Oil and Gas Industry

• Market Opportunity—Canadian Oil Sands

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• Market Opportunity—Canadian Oil Sands

• Market Opportunity—US Shale Oil and Gas

• Market Opportunity—Middle East Oil and Gas

• Key Strategic Conclusions

NDT Industry Overview

NDT Equipment ManufacturersRevenue (2013) - $1,500 M

Distributors and Local Representatives

NDT Training Institutes

Revenue (2013) - $250 M

Develop products and provide after-sales support

Sell products and in a few cases after-sales support

$9

,65

00 M

$7

,90

0 M

$1

,50

0 M

$2

50

M

4

Source: Frost & Sullivan analysis.

NDT Inspection Service ProvidersRevenue (2013) - $7,900 M

End-user Industries

Provide third-party inspection services

Perform in-house inspection or outsource inspection

needs to the NDT inspection service providers

Note: Revenue estimates are approximations

$7

,90

0 M

The NDT inspection services market is approximately 5 times larger than the NDT

equipment market

NDT Inspection Services Market Snapshot

$ 7,900 million

$ 11,700 million

NDT Inspection Services Market

OPEX

(Operational Expenditure)

CAPEX

(Capital Expenditure)

Recurring Revenue for Service Providers

Not impacted by economic downturn or crisis

High risk high revenue market

Dependent on the investment from end user industries in new projects

5

Corrosion Issues with Aging Infrastructure

Need to Run Assets at Higher Capacities

Training Technicians

Lack of Skilled Technicians

DriversRestraints

Government Safety Regulations

High Oil and Gas Prices

European economic crisis and civil unrest in MENA

2013 2018

crisis

Revenue growth relatively lower when compared with CAPEX

Barriers to entry high as there are rolling contracts and growth opportunities limited

user industries in new projects

Severely affected by an economic uncertainty

Barriers to entry low with a new company able to penetrate this segment relatively easily

Source: Frost & Sullivan

Market Opportunity—Growth RegionsOil and Gas industry the biggest driver for NDT inspection services with emerging producers

such as Canada, Indonesia, and Australia offering growth opportunities

North America

Asia Pacific

Europe

2013 2018

CAGR (2010-2020): 4.5%

6

Source: Frost & Sullivan

2013 2018

CAGR (2013-2018): 8% Latin

America

2013 2018

CAGR (2013-2018): 5.5%

2013 Revenue Growth Rate– 15-20%

2013 Revenue Growth Rate– 10-15%

Middle East & Africa

20182013

CAGR (2013-2018): 13%

2013 2018

CAGR (2013-2018):

8.5%

Market Opportunity—Oil and Gas IndustryThis industry accounting for more than 60% of the total market is the biggest driver for the

NDT inspection services market

Exploration and production

Processing and transportation

(Gas) RefiningDownstream pipeline and

International Oil Company

National Oil Company

Independent Operators

Chemicals/ fertilizers/gas to

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production(Gas)

Transportation(Oil)

Refining pipeline and storage

OFSE/ E&P

Providers

Rig Providers

PipelineOperators

Refineries

fertilizers/gas to liquids

ChemicalProducers

Gasprocessing

NDT Inspection Services

PipelineOperators

PipelineOwners


Upstream Midstream Downstream Midstream Downstream

Market Opportunity—Oil and Gas IndustryThis industry accounting for more than 60% of the total market is the biggest driver for the

NDT inspection services market

The “Royal” Middle Eastern Oil and Gas Supply

Canadian Oil Sands—The “Harper” Effect

Shale Oil and Gas—The New American Petroleum Boom

• Focus Regions—Alberta and

Saskatchewan

• Focus Industry Segments—

• Focus Regions—Bakken Shale

in North Dakota, Eagle Ford

Shale in South Texas, Permian

• Focus Regions—Saudi Arabia,

United Arab Emirates, Oman

and Kuwait

Growth Industry—Oil and Gas

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upstream and midstream

• Market Size—$800 M in 2013

• Competition—Acuren,

IRISNDT, Applus RTD and

Mistras

Basin in West Texas



• Market Size—$2,200 M in 2013

• Competition—Acuren, Mistras,

TEAM, Tuboscope and

Inspection Oilfield Services



• Market Size—$500 M in 2013

• Competition—NDTCCS,

AMSYCO, SGS, Oceaneering,

INSPEC (Intertek), Emirates

Industrial Laboratory, Sievert

(Bureau Veritas)


Poll Question #1

Which on of these emerging growth markets are you, as a company, looking to enter or further invest in?

• North America

• Middle East

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• Africa

• South East Asia

• Australia

Market Opportunity—Canadian Oil Sands




Athabasca

PeaceRiver

Fort McMurray

10

ColdLake

168.7 thousand

million barrels

Proven Oil Reserves (2012)

Source: BP Statistical Review of World Energy 2013, Frost & Sullivan analysis.

Market Opportunity—Canadian Oil Sands




Oil Production: Conventional Vs. Oil Sands, Canada, 2005-2030

Actuals Forecast

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Approximately 45% increase in production from oil sands deposits between 2012 and 2017.

And, 80% increase from 2012 to 2020.

Source: Canadian Association of Petroleum Producers (CAPP), Frost & Sullivan Analysis

Market Opportunity—Canadian Oil and Gas NDT Inspection Services Market




Revenue

$800 M

Potential Revenue

$1,300 M

$33.5 Billion$32.0

Billion

Oil Sands E&P CAPEX, Canada

$4.5 Billion

$2.0 Billion

Pipeline CAPEX, Canada

$27.2 Billion

$1.9 Billion

12

CAGR

Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan analysis.

Stable IncreasingDecreasing

Number of Competitors

150-170

(2018)

10.2 %

(2013)

(2013)

(2013-2018)

2013 2014

Source: Oil and Gas Journal, Frost & Sullivan Analysis

2013 2014

Revenue greater

than $40 M

3-5 participants

Revenue between $15 M and $40 M

Revenue in the range $1 M - $15 M

7-10 participants

120-140 participants

2012 2012

Market Opportunity—Shale Oil and Gas




Key Shale Plays Accounting for Oil and Gas Production Growth, USA

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Oil Rich shale plays

Gas Rich shale plays

Bakken and Eagle Ford plays

account for about two-thirds

of oil production growth

Marcellus play accounts for

about three-quarters of natural

gas production growth

Source: EIA, Frost & Sullivan Analysis





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ry n

atu

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as p

rod

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trill

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bic

fe

et)

ProjectionsHistory 2012

ry n

atu

ral g

as p

rod

uctio

n (

bill

ion

cu

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fe

et p

er

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Dry natural gas production, US, 1990-2040

15


Dry

na

tura

l ga

s p

rod

uctio

n (

trill

ion

cu

bic

fe

et)

Associated with oilCoalbed methane

Tight gas

Shale gas

AlaskaNon-associated offshore

Non-associated onshore

Dry

na

tura

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s p

rod

uctio

n (

bill

ion

cu

bic

fe

et p

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y)





Crude oil production, USA, 1990-2040

Tight oil

ProjectionsHistory 2012

U.S. maximum production level of9.6 million barrels per day in 1970

Tight oil

16


Tight oil

Alaska

Other lower 48 onshore

Lower 48 offshore

Tight oil

Alaska

Other lower 48 onshore

Lower 48 offshore





Increasing Shale Oil and Gas Production Driving Mergers and Acquisitions in the NDT Inspection Services Market

Date Buyer Seller

February 2012 Pine Tree Equity Central NDT

17

Source: Frost & Sullivan Analysis

March 2012 Inspection Oilfield Services (IOS) Castronics, LLC

September 2012 Desert NDTMidwest Inspection Services L.P

October 2012Professional Services Industries Inc(PSI)

Hi-Tech Testing

October 2012 Inspection Oilfield Services (IOS) Permian NDT, Inc

February 2013 Desert NDT T&K Inspection Inc

Market Opportunity—US Oil and Gas NDT Inspection Services Market




Revenue

$2,200 M

Potential Revenue

$3,500 M

$299.4 Billion$273.8

Billion

E&P CAPEX, USA

$25.0 Billion

$12.9 Billion

Pipeline CAPEX, USA

$286.5Billion

$6.6 Billion

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CAGR




450-500

(2018)

9.7 %

(2013)

(2013)

(2013-2018)

Source: Oil and Gas Journal, Frost & Sullivan Analysis

Revenue greater

than $40 M

30-40 participants





2013 2014 2013 20142012 2012

Market Opportunity—Middle East




IraqSignificant number of new projects announced which are expected to provide immense growth opportunities.

KuwaitHigh growth potential market with high investments but corruption a major

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investments but corruption a major hurdle to growth

OmanOil and gas reserves depleting with the power generation industry expected to drive growth in the NDT inspection services market

Saudi ArabiaThe country is witnessing significant investment in new oil and gas infrastructure projects but there are a number of challenges for overseas companies to establish

UAEThe country was a late entrant in oil and gas industry but is already leading some other Middle Eastern countries in terms of investment.


Market Opportunity—Middle East




Oil

CountryProven Reserves

(Thousand million barrels)

Production(Thousand

barrels/day)

R/P ratio(Years)

Saudi Arabia 265.4 11,160.60 65.2

Iraq 143.1 2,798.10 140.1

Gas

CountryProven Reserves

(Billion Cubic Meters)

Production(Billion Cubic

Meters)R/P Ratio

Qatar 25,047.1 146.8 170.6

Saudi Arabia 8,150.2 99.2 82.2

20

Iraq 143.1 2,798.10 140.1

Kuwait 101.5 2,865.40 97

UAE 97.8 3,322.10 80.7

Libya 47.1 479 269.4

Qatar 24.7 1,722.60 39.3

Oman 5.5 891 16.9

Yemen 2.7 228.4 32

Bahrain 0.11 47.4 6.2

Jordan 0.001 20 0.1

Note: Reserves-to-production (R/P) ratio - the reserves remaining at the end of any year divided by the production in that year

Saudi Arabia 8,150.2 99.2 82.2

UAE 6,089.9 51.7 117.8

Iraq 3,587.7 1.9 1,939.30

Kuwait 1,784.0 13 137.8

Libya 1,495.0 4.1 364.6

Oman 950.0 26.5 35.8

Yemen 479.0 9.4 51

Bahrain 347.7 13 26.8

Jordan 6.0 0.2 27.4

Market Opportunity—Middle East Oil and Gas NDT Inspection Services Market




Revenue

$500 M

Potential Revenue

$985 M

$39.8 Billion

$34.8 Billion

E&P CAPEX, Middle East

959 miles

Pipeline Construction, Middle East

$27.9Billion

0 miles

21

CAGR




160-190

(2018)

14.5 %

(2013)

(2013)

(2013-2018)

Revenue greater

than $15 M

5-8 participants



15-20 participants

80-100 participants

2013 20142013

20122012

miles

Source: Barclays Research, Frost & Sullivan Analysis

Note: Pipelines planned to be completed

1North America, the Middle East Africa and South East Asia are driving growth in the NDT industry

Strategic Conclusions

2The Canadian oil sands and the US shale oil and gas boom has provided significant growth opportunities for the NDT industry in North America

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2growth opportunities for the NDT industry in North America

3Significant challenges for overseas companies wanting to invest in the Middle East NDT market

Frost & Sullivan’s NDT Market Coverage

The list of recently published deliverables in the NDT market are provided below.

• World Nondestructive Test Inspection Services Market

• Analysis of the Global Nondestructive Test Equipment Market

• The Nondestructive Testing (NDT) Industry Survey

• Analysis of the Industrial Digital X-ray Inspection Systems Market

• Industrial X-ray Film Market

• Emerging Growth Markets for NDT Inspection Services

• Analysis of the NDT Software Market

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• Analysis of the NDT Software Market

The list of upcoming deliverables that are to be published in 2014 is provided below.

• Beyond BRIC: Strategic Analysis of the MENA NDT Inspection Services Market

• Analysis of the Global NDT Training Services Market

• Alternative Energy and NDT: Impact of Shale Gas and Oil Sands on the NDT Inspection Services Market

• Corrosion Inspection and Monitoring Equipment Market

• European NDT Industry: A Review of the Offshore Inspection Market

• Emerging Geographic Growth Markets for NDT Equipment

Next Steps

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join our GIL Global Community

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For Additional Information

Jeannette Garcia

Corporate Communications


+1 (210) 477-8427

[email protected]

Nikhil Jain

Senior Research Analyst


+91 (44) 6681 4013

[email protected]

27

Vijay Mathew

Program Manager


+91 (44) 6681 4014

[email protected]

Derek Seckinger

Director Strategic Accounts


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[email protected]

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