What is the direction of NDT in the USA?

As I cast about for an interesting topic for this month’s Letter from America, I was struck by the thought: “How is the NDT market affected by the Donald Trump presidency?” Of course, I realise that anything I write will be subject to a tweet from the White House!

After some research, ie surfing the internet, I came upon some references and although mostly based on individual projections, there were items of interest to the NDT world. The thoughts driving this seem to be the financial stability of the US markets, in general, and the markets that use NDT the most, in particular.

Some of the market analysis was found in an article published by HF Research (www.henryfund.org) and the market segments are shown in the pie chart.

Demand for NDT services in the USA comes predominantly from the oil & gas industry. These businesses are asset-intensive and require ongoing observation and evaluation as mandated by regulatory agencies. In other words, the asset owners create a prescribed programme of system monitoring, using the gamut of non-destructive testing techniques and methods, provided in most instances by NDT service providers.

HF Research tells us that demand from the oil & gas industry began to dip in mid-2016 as the asset owners felt the effects of falling oil prices from mid-2014 through 2015 and reduced the use of the service providers. Although oil prices have bounced back and are projected to continue to improve over the next two years, allowing the asset owners to recover lost oil & gas revenues, the demand for NDT services typically will lag by 6-12 months. This, in turn, suggests that demand from the owner-users will stabilise and return to growth in mid-2018.

However, the owner-users will tend to delay capital investment and become more dependent on ageing infrastructure, which can intensify the need for more NDT to improve the continuing safe functioning of capital assets rather than relying on new capital expenditure.

In fact, the last oil refinery with significant downstream capacity began operating in 1977 and many oil refineries have assets dating to the early 1900s. If the decline in oil prices and production from 2014 outweighs growth from use of NDT, then NDT service providers will struggle to achieve growth in the next 12 to 18 months.

Oh yes, and Donald Trump?

Trump’s victory in 2016 has created uncertainty about the future of environmental regulation in the USA. The oil & gas industry has become accustomed to stringent environmental regulation over the years. The NDT services industry stands to be affected by policy decisions impacting regulatory requirements.

The Trump administration and the Republican-led congress look to support oil-drilling with the associated boost in oil & gas revenues and a gradual increase in utilisation of NDT service providers. One clear risk from looser environmental regulations, a Trump administration tendency, is the loss of NDT services presently required by such regulations. However, relaxation of strict environmental regulations may lead to incidents and accidents, which will intensify the need for NDT.

President Trump campaigned on a promise to rebuild America’s crumbling infrastructure. He has not yet laid out a clear plan of action. Trump’s advisors have projected that the eventual agreement with Congress could provide a budget of $1 trillion to rebuild America’s roads, bridges, airports, etc. Such an agreement is subject to bureaucratic delays and still falls short of the estimate of $3.6 trillion needed by 2020. Infrastructure will continue to age and decay in the coming years, which will increase the need for NDT services in this sector.

The one certainty about the Trump administration is uncertainty. NDT services will continue to be a base requirement. Advanced NDT services will become more popular and will require an increase in the skill levels of the NDT technician. This is an issue I have previously addressed with the concern about the level of education and skill in the present technician pool.

When we awaken in the USA and scan the news, we never know what drama has occurred within The White House. NDT and inspection requires clear technology and predictable direction. The technology is predictable but the direction is not.

So, hang on to your hard hats; it is going to be a wild ride.

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