As the second half of 2006 begins, the United States faces a relatively unstable economic environment. High energy prices combined with unpredictable markets have affected American consumers across the board. It would come as no surprise then if these market trends affected utilities and their customers as well.

Fortunately, it appears that the gas utility market has remained relatively stable despite these and other factors. The use of trenchless technologies for installation, inspection, maintenance and repair purposes has also remained constant, and, in some cases ,has even seen growth as popularity among contractors has increased. Trenchless Technology spoke with a number of experts about where the market is, where it is headed, the technologies that will help it grow and the challenges that lie ahead.

Steady As She Goes
Though the gas market is not on a downswing, companies are using the current market situation as a time to focus their efforts on keeping business steady. As costs for both equipment and labor rise, everyone is looking to do more with less by way of employing the best and brightest people to work with the latest technology.
Allen Spivey is manager of the office of corporate engineers at AGL Resources, a leading distributor of natural gas on the East Coast. Spivey says that some regions are putting people first. “Gas companies are putting emphasis on top-grading [or retaining and investing in quality staff], employing more robust work management systems and establishing alliances that can help reduce costs,” he says.

While it may seem contradictory, this process has actually led to some companies downsizing their employee base. “Many companies have undergone staff reduction and are actually experiencing some difficulty in hiring the right people, particularly mid-level gas engineers,” Spivey explains.

The need to reduce payrolls and refine employee specialization could be the result of a cost control environment, according to Glyn Hazelden, R&D director at the Gas Technology Institute (GTI). “Nobody wants to go in for rate relief. There’s very much a bottom line focus, so things are tightening in that area,” he says. “The market has been affected by some of the mergers and acquisitions; people want to remain competitive.”

Companies looking to be more economical could turn to trenchless methods. “I think that with the rise of prices and the cost of doing business, there’s probably more of a focus and more of an interest on trenchless technology from the gas industry perspective than there ever was,” says George Ragula, distribution technology manager for Public Service Electric and Gas (PSE&G), Newark, N.J. “I’m not so sure that gas prices are fueling that as much as increases in permitting costs, increasing restoration costs, increasing restoration requirements and the overall cost of doing business. I would expect that to continue.”

Then & Now
The current state of the gas market was not unexpected. While trends toward cost control may initially appear to be the result of a downswing in the market, Hazelden says that this is not the case. “I think the market for gas sales itself is relatively strong,” he says. “We’re so weather dependent; it’s very hard to control. But the market itself seems to be pretty strong. The ability for local distribution companies (LDCs) to place gas in commercial and residential use is still pretty good. There tends to be an increase in regulation, both commercial and technical, but the actual gas sales market is fairly decent.”

Other market segments are also performing as predicted, according to Ragula. “I think [predictions] have been reasonably accurate, given the short-term, mid-term and long-term R&D that’s taken place and the emphasis that’s been placed on robotics, maintenance, repair and inspection technologies, which started out really back in the early 1990s. The only areas where markets may have slowed down to some extent are technological issues and barriers, which will happen in any R&D environment. But overall I’ve been pleased with the focus and with the way things have been unfolding.”

Market progress in general may be steady, but as with any utility or commodity, performance in local or regional markets can be quite different from national or international tendencies. “While there is marginal growth, some companies are dealing more with load shifts than load growth,” Spivey says. “This can result in increased costs to both maintain the existing network, even when the previous loads no longer exist along the current arteries, and to build new and larger mains to serve more remote but growing demand centers.”

Other factors, such as unstable prices and adverse weather conditions, also can have a negative impact on both companies and consumers. Since both are unpredictable, it is difficult to say how these elements will affect the utility through 2006 and the first half of 2007. However, both Hazelden and Ragula are optimistic — should current conditions persist, the gas market should continue to stay strong.
“Like I said, it’s hard to predict the weather, but if it’s normal weather, we think the market is pretty good,” Hazelden says.

And as the market grows, Ragula expects to see trenchless technologies become even more popular among gas companies and contractors. “There are some utilities that are in the position to be leaders, and they’re going to lead efforts in the trenchless industry,” he says.

All of this progress, however, is dependent not only on market demand, but also forward-looking individuals within the gas industry itself. “I think overall, from a gas industry perspective, the trenchless potential is rather large, but really it’s a matter of education, getting people informed and the leaders being in tune with forward-thinking companies and communicating the benefits and results of trenchless applications,” Ragula says. “The gas industry has historically been very conservative, but there are several companies that are leading the pack, and I think that you’ll see the results of their innovation over time.”

Trenchless Methods
Like many other utilities, the gas industry continues to reap the benefits of trenchless technologies, depending once again on the region and the scope. “Trenchless technologies continue to realize limited growth,” Spivey says. “Some of the new structural external wraps and improved coating techniques are being adopted by more utilities.”

Others are painting a different picture of the role of trenchless in the gas industry. “There’s definitely a trend toward trenchless of all kinds, particularly [horizontal directional drilling (HDD)] and piercing tools,” Hazelden says. “HDD tends to be used on bigger diameters, so it’s tough to call it popular. It’s certainly a preference when it’s in the right diameter.”

He says that other common trenchless methods, such as pipe splitting, aren’t used as much in the gas industry as it is in others, but some are seeing an upswing in usage. “Sliplining and pipe insertions are pretty strong and very popular,” Hazelden says. “Cured-in-place lining is starting to become popular, but it’s still boring and sliplining that seem to be the most common.”

As more money and man-hours are put into the research and development of new trenchless methods, Ragula predicts that there will be some exciting developments in the near future. “The gas industry is looking at expanding the use of trenchless technology, particularly directional drilling, with its member-funded support of obstacle detection technologies for use on directional drills and enhanced subsurface locating technologies,” Ragula says. “The successful development of obstacle detection technologies on directional drill platforms will have a dramatic, positive affect on expanding the use of this equipment throughout the industry while also greatly enhancing safety. The commercialization of an obstacle technology will be analogous to finding the holy grail.” Ragula says that GTI has been playing a leading role in this area.

“As far as new stuff that’s evolving that’s of considerable interest, there are robotic maintenance, inspection and repair technologies under live gas conditions,” Ragula continues. Other automated technologies, such as second-generation CCTV inspection equipment, may also come under heightened interest from companies and contractors looking for ways to maintain their lines without disrupting service.”

Even with these innovative methods, there are many traditional technologies that will continue to maintain popularity. “Drilling is tried and true and is going to continue to be very popular and probably expand,” Ragula says. He adds that many people have experienced the benefits of these more established methods, and as such will stay with them until they see similar benefits and reliability with newer technologies. “I think that as other technologies develop, other opinions will be formed around those newer technologies,” he says. “But certainly directional drilling is here to stay, and if anything it will increase as people understand it better and get more educated.”

The Challenges Ahead
The outlook for the gas market may be strong, but it won’t be completely smooth sailing. There are still a number of challenges within the industry that, while not insurmountable, may keep innovation and deployment from occurring as quickly as some would like.

“Two primary obstacles for most trenchless technologies are 1) they generally require more planning to complete the job successfully, and 2) many operators are too busy to find the right application or the time to learn more about the new technology,” Spivey says. “Many operators are not aware of the improvements made over the years with new technologies and do not have the staff or the time to research the technology. So far, higher cost alone has not swayed operators from the conventional construction methods.”

Spivey says that the environmental and restoration requirements of other countries have done much to encourage the use of trenchless technologies there, but more research will be needed for it to truly catch on in the United States.

Education is also crucial to advance trenchless in the gas industry, Ragula says. “Education is a key word, education and communication to help those who perhaps are not as in tune as they should be.”

Ragula also is concerned about how a lack of research and innovation can have an adverse effect on trenchless in the industry. “The other area that is impacting the gas market negatively is the amount of R&D dollars that are available to develop and move forward technologies to a commercial stage. Money is really tight — any kind of money, let alone R&D money — and I think that the overall decline of R&D funding in the gas industry is having somewhat of an impact.”

In addition to these internal pressures, the use of trenchless in the gas industry may also face problems from outside regulations, according to Hazelden. “It sounds crazy, but people go into trenchless — piercing, boring, HDD — because they want to cross certain spans of right of way or land, and then state or local regulations suddenly lay over that and say, ‘You’ve got to expose the other utilities,’” he says. “It’s sort of a contradiction. I think there’s going to be a lot of attention paid to regulatory affairs and to try to avoid that sort of thing.”

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