Keeping up with demand

2022 will be a banner year for the flowmeter markets, suggests Jesse Yoder, PhD, Flow Research, USA.

The past several years have been an anomaly for the flowmeter business for multiple reasons. The COVID-19 pandemic disrupted demand for the products flowmeters are used to measure. Flow Research recently completed a study of the worldwide flowmeter market, including all flowmeter types. Our goal was to determine the impact of the COVID-19 pandemic on the flowmeter market as a whole, and to find out which types of flowmeters were most impacted by the pandemic. We published our findings in a new study called ‘Volume X: The World Market for Flowmeters, 8th Edition’. The study was published in January 2022.

The markets in 2020 The year 2020 was in many ways an anomaly, and virtually no industrial, commercial, or retail segments were unaffected by the pandemic. Many businesses were forced to close, travel slowed to a trickle in many cases, and demand for many products simply dried up. This especially applied to the energy industry. Demand for gasoline and jet fuel plummeted, as people curtailed both driving and flying. Due to the prevalence of the pandemic, many people worked from home. This had its own impact on travel, as Zoom calls replaced many in-person meetings. For most of 2020, business as we know it was dramatically altered or ceased to exist.

As we researched the flowmeter market, including all flowmeter types, we found that most, though not all, companies reported reduced revenues in 2020 when

compared to 2019. While 2019 was not a stellar year, it was a much more ‘normal’ year than 2020. We also found that many companies expected to have revenues in 2021 that were close to their 2019 revenues. In the end, 2021 may have been a slightly weaker year than some expected, due in part to uncertainty caused by the emergence of the Omicron variant towards the end of 2021, and due to some re-emergence of the Delta variant in Europe as colder weather in the autumn drove people indoors. Even so, the determined efforts by the developed countries to vaccinate as much of their populations as possible made 2021 a much more viable year economically than 2020.

While the pandemic taught us once again how difficult the future is to predict, it is not controversial that energy demands will remain high, chemical plants will continue to operate, power plants will generate needed power, and water and wastewater treatment plants will produce clean water and treat wastewater. Flowmeters are needed for all these applications, and with an expanding population in most countries, demand for flowmeters will increase. Which flowmeter markets can be expected to grow the fastest depends on the industries and applications.

The comprehensive new Flow Research study found that the worldwide flowmeter market totalled US$7.03 billion in 2019 and US$6.6 billion in 2020, with revenues forecast to reach a projected US$6.9 billion in 2021 and US$8.2 billion by 2024. Coriolis and magnetic flowmeters are the revenue leaders in the flowmeter market, with Coriolis meters projected to take over the lead more strongly by 2024, due largely to growing demand in the oil and gas industry for more accurate custody transfer measurement. Coriolis flowmeters are the most accurate meters on the market today.

Coriolis, ultrasonic, and magnetic flowmeters lead the way Coriolis, magnetic, and ultrasonic flowmeters drive the total flowmeter market, and the decreased demand and supply of oil and gas during the pandemic significantly affected the Coriolis and ultrasonic markets. Going forward, however, the tightness in supply for both oil and natural gas could cause significant growth in these flowmeter markets.

Magnetic flowmeters are widely used in the water and wastewater industry, and are growing in demand as water shortages and climate change intensify the need to monitor water supplies and usage more closely. In fact, thanks to industry group standards that include using magnetic flowmeters for water utility measurement, these meters are now displacing positive displacement and turbine meters in some commercial and industrial applications. Magnetic flowmeters, which do not measure hydrocarbons, are used in the oil and gas industry and were also affected by the slump. These meters are used for hydraulic fracturing or ‘fracking’ applications, including measuring water injected into oil and gas wells and water flowing from them for capture, disposal, or recycling.

The ultrasonic flowmeter market is projected to grow the fastest over the next three years. Ultrasonic flowmeters feature high accuracy, high reliability, high turndown ratios, long service life, low maintenance, relatively low cost, diagnostics, no moving parts, and redundancy. Both Coriolis and ultrasonic flowmeters have received industry association approvals for custody transfer of both gas and liquids, but, unlike Coriolis meters, ultrasonic flowmeters perform very well in the large line sizes often used in oil and gas pipelines.

The impact of oil prices on the flowmeter markets One reason for the downturn in the flowmeter market in 2020 was the drop in oil prices. Flowmeters are widely used in upstream oil production, in oil and gas refining, and in downstream distribution of oil and gas. In 2020, oil prices started off the year at above US$60/bbl. However, by April 2020, prices had declined to less than US$20/bbl. This prompted an emergency meeting by OPEC to support prices by taking supply off the table. In a meeting on 12 April 2020, OPEC used multiple means to reduce supply by almost 20 million bpd. This had the desired effect, and by July 2020, oil prices were above US$40/bbl.

As economies in the US and around the world began opening up, demand for petroleum products began coming back. At the same time, most OPEC and non-OPEC countries were abiding by the terms of the supply cuts that were part of the April agreement. This had a stabilising effect on the oil markets. After July 2020, prices continued to rise slowly through 2020, and in the beginning of 2021 prices reached the US$50/bbl range.

Oil prices in 2021 stayed above US$50/bbl until mid-February, when they reached US$60/bbl. Prices remained mostly between US$60 and US$65/bbl until early June, when they climbed to US$70/bbl. From that point on, prices stayed between US$65 and US$75/bbl until early October, when they reached US$80/bbl. For the rest of 2021, prices remained high, although they declined to under US$70/bbl in December 2021.

Oil prices in 2022 In January 2022, oil prices topped US$80/bbl on 11 January. Since that time, prices have climbed steadily, reaching US$123/bbl on 8 March. Russia’s invasion of Ukraine on 24 February introduced many new uncertainties in the market. The most pronounced long-term result is a crimp in the world oil supply since some Russian oil has been taken off the market. In addition, supply chain shortages are disrupting manufacturing around the world and inflation is rampant. This is not the kind of instability that anyone wants.

In the first week of June, the EU agreed to phase out a substantial portion of Russian oil imports by the end of the year. This will further reduce the amount of oil available on the market. During that same week, crude oil was trading at above US$115/bbl. In response to the action by the EU, Russia, which had already halted gas supplies to Bulgaria, Poland, and Finland, also cut off gas flow to some companies in Denmark and Finland. In the past, European countries have been heavily dependent on Russian oil and gas.

Figure 1. Crude oil prices from January 2014 to May 2022 (US$/bbl). Source: Energy Information Administration (EIA).

Oil prices are fundamentally determined by supply and demand. With supply continuing to diminish, and demand for refined fuels increasing due to pent up demand from the pandemic, it is difficult to see how oil prices can go anywhere but up over the next six months. As for Europe’s dependence on natural gas, it is now beginning to turn to LNG to fill its natural gas needs. The problem with this solution is that there are not currently enough LNG terminals to meet Europe’s growing need.

The current supply and demand energy situation is likely to have these consequences: ) Increased drilling for oil and natural gas.

) Greater reliance on LNG as a source of gas supply.

) An acceleration in the search for competitively priced renewable energy.

The dynamics for these consequences were in place before the war in Ukraine began on 24 February. However, the war has intensified the situation by reducing oil and gas supplies even as demand for refined fuels is rising.

Effect on the flowmeter markets Flowmeters are likely to have a banner year in 2022. Increased oil and gas production should especially benefit ultrasonic and turbine flowmeters. The greater need for downstream delivery of refined fuels will favour both Coriolis and positive displacement flowmeters. Magnetic flowmeters will benefit both from increased fracking and from measuring produced water coming out of oil and gas wells. They will also benefit from additional investments in clean water and wastewater treatment plans, as water becomes scarcer and the need to measure it rises. Coriolis and magnetic flowmeters will be more widely used in chemical and food and beverage plants, especially for sanitary applications. This shows that energy needs are not the only reason why 2022 should be a banner year for flowmeter sales – the reasons span the entire process industries.