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Dec05

Play Nicely, You Two

BY KATE KUNKEL

us canada borderNorth America, it seems, is falling apart. Traffic is at a gridlock in every major city, wasting countless hours and gallons of fuel. According to the Water Main Clock, 850 water main breaks occur every day in North America, wasting precious water and costing millions in repairs for municipalities and the residents whose homes are inundated with spillage.

A new report from the Building America’s Future Educational Fund explains why the U.S.A. ranks 18th in railroads, 19th in ports, 20th in roads, 30th in airports, and 33rd in the quality of its electrical system. Compared to our economic competitors, we systematically underfund infrastructure investments, have no national infrastructure planning, and, most importantly for the purposes of this blog, we fail to use rigorous measures of evaluation and accountability for the projects we do manage to fund.

Winding its way through the U.S. Congress is The Water Infrastructure Finance and Innovation Act which, among other projects, would establish a 5-year pilot program that would supply secured, low-interest loans from the U.S. Treasury for 10 water supply and wastewater projects costing at least $20 million each or $5 million for water systems serving 25,000 or fewer people.

In Canada, the Economic Action Plan 2013 calls for $70 billion over 10 years for public infrastructure, including the $53 billion New Building Canada Plan to build roads, bridges, subways, commuter rail, and other public infrastructure in cooperation with provinces, territories, and municipalities. It is starting in 2014-2015.

Sounds like a gold mine for EPCs and suppliers on both sides of the border. But therein lies the rub. Thanks to what some Canadians consider a protectionist attitude in the U.S., Canadian infrastructure projects could be closed to U.S. manufacturers. Canadian manufacturers and steel producers are urging Ottawa to channel those tens of billions of dollars their way over the next decade.

"The origin of the problem is the American Recovery and Reinvestment Act of 2009 (ARRA)," said Jayson Myers, president and chief executive of the Canadian Manufacturers & Exporters Association (CMEA) (Toronto, Ontario), in a recent interview. "That law prohibited U.S. municipal infrastructure projects from receiving federal funding if any of the iron and steel came from outside the U.S. The ARRA locked Canadian firms out of the U.S. market."

Given “Buy America” and other protectionist policies, Canadian industry representatives want the federal government to leverage the power of $47-billion to support Canadian companies. The proposed strategy is designed to even the playing field with countries such as the United States and was laid out in a letter signed by three Canadian industry lobby organizations: the Canadian Manufacturers & Exporters, the Canadian Institute of Steel Construction and the Canadian Steel Producers Association, and was sent to federal cabinet ministers in November.

The letter said that while Canadian public procurement practices offer “essentially open and equal access to foreign bidders,” the same foreign bidders benefit from “protective advantages” in their own domestic markets.

While it may seem like a retaliatory move, the Canadians do have a point. If the U.S. government will not even entertain a bid from a Canadian supplier, why, then, should U.S. suppliers be able to bid on Canadian projects? You can see how this could escalate.

Basic economics argues that, for the short term, protectionism can help right a country’s trade balance. But in the long term, trade protectionism weakens industry. Without competition, companies have no incentive to innovate and improve their products or services. Eventually, consumers, including municipalities and the federal government, will pay more for a lower quality product than they would get from foreign competitors.

What effects would a protectionist stance on either side of the border have on your business?

Kate Kunkel is Senior Editor of VALVE Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Nov05

Fighting Climate Change with… Nuclear Power?

BY KATE KUNKEL

Nuclear PowerThere was an interesting article in the Washington Post Monday, and since quite a few VMA members supply to the nuclear power industry, I thought you might like this piece of good news.

According to a story by the Associated Press, “Some of the world’s top climate scientists say wind and solar energy won’t be enough to head off extreme global warming, and they’re asking environmentalists to support the development of safer nuclear power as one way to cut fossil fuel pollution.”

Now it will be interesting to see the response from the environmentalists. I for one am not particularly hopeful that it will be rational, especially after listening to an interview on Canada’s CBC last week. After the third railcar derailment in as many months in Canada, the question was raised, yet again, about why new pipelines were being stalled while thousands more rail cars filled with crude oil were traversing the nation. A Greenpeace activist was asked, “Wouldn’t it be safer to just build the pipelines?” His response was, “Neither is safe. We have to replace fossil fuels with renewables.” When the interviewer asked him how he thought renewables were going to replace fossil fuels right away, he skirted the question and repeated, probably half a dozen times, “We have to replace them with renewables.”

I wanted to jump through the radio and shake him. And ask him if he was going to stop flying or driving to protests or raising funds on the net with his Powerbook, because unless everybody does the same, there is no way that is a viable solution.

Everybody involved in the energy business knows that it is going to take decades, and it may in fact never happen, for our growing energy demands to be filled by wind farms and solar arrays. So wouldn’t it be safer to have pipelines to convey oil to wherever it needs to go? But I won’t get into that again here. I’ve covered it probably too many times in previous blogs.

The point of this missive is nuclear energy. On this, for once, I actually agreed with the climate scientists when they said in an open letter to environmental groups and politicians that “Those energy sources [renewables] cannot scale up fast enough” to deliver the amount of cheap and reliable power the world needs, and “we cannot afford to turn away from any technology” that has the potential to reduce greenhouse gases.

The letter signers were James Hansen, Ken Caldeira, Kerry Emanuel, and Tom Wigley. While I personally don’t believe there is irrefutable proof as to the actual cause of climate change (after all, we had ice ages and periods of global warming long before man started burning fossil fuels), these guys are right to say that the opposition of most environmentalists to nuclear power isn’t realistic.

Of course, terrible accidents like the one at Fukushima, have made this a difficult sell, but I for one believe that nuclear is a viable choice to help meet the energy demands of the future. What I haven’t heard yet is a way to deal with much of the waste generated from nuclear power generation, but I’m sure there are plenty of smart people out there working on that.

I’d love to hear your thoughts on climate change generally and if nuclear power is a viable response to its threat.

Kate Kunkel is senior editor of VALVE Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it..

Oct09

Is Gas Price Relief Ahead in the Natural Gas Boom?

BY KATE KUNKEL

UPS truck refuelingIn the Summer 2013 edition of VALVE Magazine, several pages were devoted to a discussion of the debate and opportunities brought about by the natural gas boom. A great deal has also been made of the potential for a resurgence in the American manufacturing sector thanks to what is being called the “shale revolution”, but generally speaking, it has not made a huge difference in the way people get around in their cars, trucks or buses.

A big reason for that is because until recently, there has been no infrastructure to support the move to LNG powered vehicles. Where would you fill up if your car ran on natural gas?

It seems, however, that the tide is beginning to turn, starting with the news released this week that UPS is spending $50 million to more than triple the current number of liquefied natural gas fueling stations it owns. United Parcel Service (UPS) and companies like it which have huge fleets of vehicles are trying to capitalize on the low price that has been made possible in the U.S. by new drilling technology.

Even though UPS began adding natural gas tractors to its fleet in 2002, it had only 4 fueling stations. In the recent announcement, the company announced it will build nine more in Florida, Illinois, Indiana, Mississippi, Missouri, Ohio, Pennsylvania and Texas. It is a huge investment for the company, which has 1,000 natural gas powered tractors on the roads.

This is a good start, but it’s taking awhile for other trucking companies to make this kind of investment in infrastructure. And despite the fact that the natural gas industry is making a big push for passenger vehicles that run on natural gas, there are few choices for American motorists looking to buy a car, van or light truck that runs on the fuel.

In recent data from the U.S. government, the price difference between gas and CNG was substantial. Compressed natural gas was selling for $2.10 per gallon equivalent in the U.S. compared to $3.59 per gallon for gasoline and $3.99 per gallon for diesel fuel. That’s a healthy difference, although you would have to travel many miles to make up the difference in money spent on a vehicle that runs on CNG.

An example is the forthcoming natural gas version of Ford’s F-150. The company says it plans to harden valves and other parts at the factory, then hand the prepared vehicle to an upfitter for fuel systems. All of this would cost more than $7,500 to the purchaser. Definitely not something regular consumers would likely be willing to pay; this would appeal more to purchasers of fleet vehicles.

And, of course, the fact that there are few refueling stations accessible by ordinary consumers is also a challenge.

But – these are some promising signs. For manufacturers of valves, CNG or LNG refueling stations could be a promising market. For commuters tired of the high price of gasoline, they could mean welcome relief. It’ll be interesting to see how long it will take for North America’s fuel delivery system to catch up with the natural gas boom to help cut fuel costs for the average consumer.

Kate Kunkel is senior editor of Valve Magazine. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it..  

Sep09

Unconventional Oil and Gas: An Economic Panacea?

By Kate Kunkel

gas-flareA study just released by global information company IHS says that the unconventional oil and gas revolution will increase disposable household income in the U.S. by more than $2,700 and improve the country’s trade position by more than $164 billion in 2020. The report also predicts that more than 3.3 million jobs will be supported in 2020 as the unconventional oil and gas revolution boosts industry competitiveness and manufacturing growth.

According to HIS vice chairman Daniel Yergin, the unconventional oil and gas revolution is much more than an energy story; it reverberates throughout the U.S. economy not just for upstream and processing jobs and lower energy prices. It will also help revitalize the U.S. manufacturing, refining and petrochemical processing sectors.

For an economy still struggling to overcome the recession of 2008, this is excellent news and was confirmed by several speakers at VMA’s recent 2014 Market Outlook. But also at the Market Outlook were a couple of concerns connected to this growth in the unconventional oil and gas sector.

One concern is the effect that the environmental movement might have on the amount of growth. While there have been many advances in technology which make producing these resources more environmentally friendly, there has been recently a noticeable increase in gas flaring. This is one matter that has environmental groups with powerful support raising concerns about the continuing impact on public health and the environment.

A recent report shows that, despite environmental concerns and the fact that flaring is a huge waste of resources, (more than $100 million per month is burned off in the Bakken alone), flaring is on the rise worldwide. According to the World Bank, there was a 2 billion cubic metre (bcm) increase in flared gas in 2011 compared to the year previous, and each year it has been rising. The U.S., Russia, Kazakhstan and Venezuela were the biggest contributors to the rise.

This kind of activity is that upon which environmentalists seize, and could create enough backlash to stifle some of the potential growth.

Another concern is the availability of skilled workers who can make this happen. Besides the fact that more younger people eschew manual labor in favor of high tech jobs, even if all of them were willing to get down and dirty in the oil and gas fields, there probably will not be enough of them to fill the need. Throughout North America, the population is aging and, according to Alan Beaulieu of ITR Economics, the number of people over 65 in the next 25 years will double. For the first time in our history, more people will be over 55 than under the age of 18. What effect will workforce issues have on the potential for unconventional oil and gas to grow the economy?

It’s impossible to say at this point and there are many other factors that could dull the shine off the silver spoon promised by unconventional oil and gas. Like… what if the rest of the world taps into its similar resources? We lose our edge again.

For now, though, it’s time to grab the brass ring and ride that boom all the way to the bank. We can sort the rest of it out later. Hopefully.

Kate Kunkel is senior editor of VALVE Magazine and web editor at VALVEMagazine.com. Reach her at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Aug02

Looking Forward to Market Outlook 2014

BY KATE KUNKEL

market outlook photoIt’s almost Market Outlook time. This is one of the best events VMA puts on every year, and this year I’m especially excited to be going. San Diego. Yippee!

No, wait, I’m going to work, right? Well, yes, of course, but… it’s San Diego! Surf, sun, great Mexican food, Gaslamp district, shopping and, did I mention the surf? This year’s Market Outlook venue is just blocks from ML King Promenade Park, the Embarcadero and… the Pacific. For this land-locked Canadian, that massive expanse of salty water is an irresistible beacon.

But first, I will be attending and reporting upon this annual feast for the financial senses. After having a sneak peek at some of the presentations by our speakers, I know this is going to be another top notch source of information that will help our members make wise decisions over the next months and years.

At the 2012 event, Alan Bieuleau of ITR Economics joked about the economic recovery, “Everything that we want to happen is happening, but still we’re not happy, proving that we truly are American.” He projected that the U.S. economy would continue to expand in the last half of 2012 and the first half of 2013. It has.

There were many more accurate predictions from all of the speakers. You can read a summary in the fall 2012 issue of VALVE Magazine, and compare them with what you have seen go on since August, 2012.

There have been many natural disasters this year, and it will be interesting to see what effect, if any, they and the recent events like the train derailment in Canada might have on the predictions from our presenters. What effect might these events have on economic rebound in North America, especially with respect to oil and gas production and transmission? An aging infrastructure is being blamed for the exacerbation of problems related to storms, so I’m wondering if we’ll see any reference to that in the market outlook.

Not long to wait now, and I’ll be reporting on all of our presenters in the special fall edition of VALVE Magazine, but you can catch an appetizer in the web feature to come online at VALVEMagazine.com on August 12.

And, be sure to catch the feed on Facebook and Twitter and LinkedIn as I report from the beach, er, I mean, the Market Outlook event next week, August 8 and 9.

Kate Kunkel is Senior Editor of VALVE Magazine. Contact her at This email address is being protected from spambots. You need JavaScript enabled to view it.  

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