Virtual Pipeline Market Size, Share & COVID-19 Impact Analysis, By Fuel Type (CNG, LNG, and Others), By Application (Transportation and Industrial & Commercial), and Regional Forecasts, 2022-2029

The global virtual pipeline market size was valued at USD 0.99 billion in 2021. The market is projected to grow from USD 1.02 billion in 2022 to USD 1.48 billion by 2029, exhibiting a CAGR of 5.4% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with virtual pipeline experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global virtual pipeline market exhibited a decline of -3.1% in 2020 as compared to 2019.

A virtual pipeline is a replacement for a physical pipeline in which gas would be transported through a traditional gas pipeline to the delivery point as LNG by sea, road, rail or an amalgamation of one or more of such modes of transport. The LNG is crammed into a cryogenic vessel for transporting it from its source, such as an import terminal, dispensation center or liquefaction provision, to the point of delivery where it will be used. At the point of delivery, a regasification station, a multi-purpose facility that includes LNG storage, vaporization, and pressure regulator, along with control systems delivers the natural gas as exactly as it would have come from the traditional pipeline.

COVID-19 IMPACT

Disruptions in Natural Gas Supply Chain Slowed Down Market Growth during the Pandemic

The COVID-19 crisis created significant challenges for the natural gas industry as a substantial decline in global economic activity and considerable disruption of global supply chains in 2020. The resulting downturn in economic activity negatively impacted worldwide demand and prices for crude oil, natural gas, NGL, refined petroleum products, CO₂, steel, chemicals, and other products that key players in the market handle through its pipelines, terminals, shipping vessels, and other facilities.

Moreover, lockdown measures have put pressure on suppliers, both in terms of operational restrictions and financially, owing to the resulting drop in gas prices. With very few exceptions, suppliers could continue operating their facilities without disruption unless forced to temporarily curtail output due to weaker demand.

In addition to economic disruptions resulting from events such as COVID-19, conditions in the business environment generally, such as declining or sustained low commodity prices, supply disruptions, or higher product developments or production costs, have also slowed down its pipelines and terminals business services. However, energy efficiency increased electrification, and the power sector’s greening will play a major role in the energy transition during post-COVID-19 recovery.

LATEST TRENDS

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Increasing Demand to Enhance Gas Pipeline to Spur Market Opportunities

The population explosion in urban areas due to the migration of people has caused a surge in energy demand from various sectors. The increased urbanization and industrialization have intensified the demand for electricity, gas, and other energy sources. As renewable energy is still in the initial stages of its life cycle in many parts of the world, most power is derived from conventional resources like gas. Pipelines are required to transport these fuels long distances, as pipelines offer the most cost-effective transport option. Due to high energy demand, the increasing offshore exploration activities have led to a surge in pipeline infrastructure development. This has furthered the need for pipeline transport solutions and services to various remote locations.

Increasing urbanization and expanding industry have resulted in natural gas being used in various sectors, such as power generation, chemical, manufacturing, and residential and commercial, which has fueled the demand for the infrastructure of gas pipelines. Also, the government subsidies provided to increase the use of natural gas and deliver natural gas to every part of the country have allured more users.

Natural gas facilities in remote regions face few transportation challenges due to lack of pipeline infrastructure. Using a virtual based pipeline has acted as one of the most reliable options in terms of cost compared to investing in or developing new pipeline infrastructure at remote locations. This new technology also allows the increasing number of vehicular natural gas service stations, with a relatively smaller investment, emphasizing that this technology is also employed in other products and service sectors. This way, the users of vehicles provided with GNV have more flexibility to drive through the countryside of the country, with natural gas available even in places where there are no conventional pipelines.

DRIVING FACTORS

Shifting Trend toward Cleaner Energy Resources and Rising Demand for Natural Gas to Propel Market Growth

The world is facing severe threats of global warming resulting in a shifting trend toward cleaner energy resources, which increased the demand for natural gas. Due to topography or geopolitical events that may drive the market growth, physical pipelines are not always feasible. The virtual type pipeline offers flexibility over the transportation of natural gas. It does not require massive installation of a physical pipeline, resulting in many cost savings of pipeline installation, anticipating the growth of the market.

Over time, the demand for gas has been increasing across all regions. However, natural gas supply through conventional pipelines has not kept pace with this need. Therefore, a Compressed Natural Gas (CNG) system that can meet the needs of cities for power generation, automotive, industry, and industrial use is the need of the hour.

A virtual based pipeline is a system that enables the transportation of natural gas in the form of compressed or liquefied gas using modules integrated with mobile platforms transported by trucks, ferries, boats, and rail platforms. Subsequently, this pipeline makes it possible to meet the demand in regions without gas pipeline distribution network infrastructure, which helps in the market development.

Increasing Operations at Remote Locations to Drive Market Growth

The use of a virtual based pipeline must not be seen as a permanent and definitive alternative but as a quick way to bring natural gas to places where the traditional pipeline is not technically or economically feasible.

In places without natural gas, the industry is limited to processing or developing products and services using energy sources and does not keep up with new technologies that may be more economical, having lower emissions, higher quality, and more reliable.

The industry/commercial operator can use natural gas in the local market of any region, which is a cleaner energy source compared to the oil by-products, by developing more competitive goods and services for internal and external competitors, thus stimulating their penetration into new markets.

The virtual pipeline is a passport to new frontiers, consolidating natural gas consumption and preparing the region for the future use of conventional gas supply, as this pipeline creates the flexibility for a more suitable industrial location and the possibility of better use of geographic resources at a better cost-benefit ratio. In this case, the virtual based pipeline system can be transferred to a newly developed region. This is fueling the growth of the market.

RESTRAINING FACTORS

Rising Adoption of Renewable Energy Sources and Volatility in Gas Prices to Hinder Market Growth

The increasing demand for clean energy has led to the tremendous development of solar, wind, and other forms of energy worldwide. In particular, the European continent is expanding its renewable energy capacities. This has led to a decline in investments in the crude oil industry and infrastructure development. This is expected to hamper the virtual pipeline market growth. According to the International Monetary Fund (IMF), large companies have scaled back their investments in oil infrastructure. Due to rapid depletion of oil reserves, a decline in oil reserve replacement and investment has been observed since 2014. In parallel, the volatility of natural gas prices is also hampering the mainstream adoption of natural gas worldwide, which is also likely to hamper the market in forecast period.

Subsequently, natural gas is extremely flammable and requires precautionary measures while handling and transportation, which is expected to hinder market growth. The variation in normal temperature may change the natural gas properties that require special attention and insulation, which is expected to increase overall maintenance costs. Thus, it may hamper the market growth.

SEGMENTATION

By Fuel Type Analysis

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CNG to Hold Dominant Share Due to Crucial Role in Delivering Fuel with Low Cost

Based on fuel type, the market is segmented into CNG, LNG, and others. CNG is set to dominate the market, as transport of CNG through virtual based pipelines is the best alternative to costly underground pipelines for transporting natural gas to remote locations for distances up to 250 miles. In addition, high oil prices are increasing the demand for natural gas. CNG deliveries via virtual based pipelines are the best alternative to transport natural gas to remote locations. Based on this factor, the CNG holds the dominant market share.

Other fuel types, such as hydrogen and renewable natural gas, are transported through virtual based pipelines. Like conventional natural gas, RNG can be used as a transportation fuel in the form of Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG), which is likely to see significant demand in the years to come.

By Application Analysis

Transportation Segment to Dominate the Market Due to Increasing Natural Gas Consumption 

Based on application, the market is segmented into transportation and industrial & commercial. The transportation segment consists of natural gas distributors such as CNG & LNG stations. With the growing need for clean energy, the demand for natural gas will likely experience significant growth in the coming years. Based on this factor, the transportation application will likely dominate the virtual pipeline market share during the forecast timeframe.

Moreover, the transportation of natural gas is done across industrial and commercial applications, such as the mining industry, infrastructure maintenance, food & beverages, and others, which also operate at remote locations.

REGIONAL INSIGHTS

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North America to Dominate the Market Owing to the Presence of Major Operating Players 

Geographically, the market is studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. Major players operating in the market, such as CERTARUS Ltd, Xpress Natural Gas, CNG Services, and Edge Energy, offer their virtual pipeline services in the U.S., Canada, and Mexico, which result in the dominating share of the market in North America and development in Latin America. Followed by North America, Asia Pacific holds substantial share of the market. Factors, such as increasing urbanization and industrialization, are propelling the demand for fuel for various applications in remote locations, which is surging the demand for virtual pipeline services across the region. Furthermore, there is increasing adoption of CNG and LNG as a clean fuel in the transportation sector in the U.K., Germany, and Poland, which is surging the demand for virtual pipelines for transportation application in Europe. Countries in the Middle East & Africa are undergoing major infrastructural development, and the transport of fuel through pipelines is playing a crucial role in fostering economic growth, resulting in the demand for such pipelines.

KEY INDUSTRY PLAYERS

Key Participants are Concentrating on Enhancing their Business Capacities Through Collaboration and New Investment Strategies 

Most market participants invest in research and development activities, which will likely help the market generate better returns. The market players are likely to collaborate with major players in the market. They have positive in-store traits for market operation and growth until 2029. The considerable increase in market funding and investment puts the production and manufacturing units in a better position for mass-produced products that will help the market to expand and improve at the global level.

List of Key Companies Profiled:

• Kinder Morgan (U.S.)


• Stabilis Solutions, Inc. (U.S.)


• Hexagon Agility (U.S.)


• Fiba Technologies (U.S.)


• Petronas (Malaysia)


• CNG Services (U.K.)


• Gas Malaysia (Malaysia)


• Galileo Technologies (Argentina)


• NG Advantage (Vermont)


• Marline Gas Services (U.S.)


• Snam (Italy)


• Certarus Ltd (Canada)

KEY INDUSTRY DEVELOPMENTS:

• August 2022 - Kinder Morgan acquired North American Natural Resources, Inc. and its affiliated companies, North American Biofuels LLC and North American-Central LLC, for USD 135 million. The acquisition, in the amalgamate purchase amount along with related contract costs, includes seven quantities of landfill gas to power plants located in Michigan & Kentucky. Through this acquisition, Kinder Morgan makes the Final Investment Decision (FID) to convert 4 of the 7 gas to power plants to renewable natural gas plants at a capital expenditure of approximately USD 175 million.


• June 2022 - AVR assessed the possibilities of locally managing its hazardous gas and cleaning residues by partnering with HaloSep AB, a Swedish company. The HaloSep process is a patented solution that turns hazardous waste into harmless and useful fractions. By selecting HaloSep’s solution, AVR will be embellished into a circular by recovery of material resources along with a reduction of the plant’s environmental footprint.


• December 2021 - Tennessee Gas Pipeline (TGP), a subsidiary of Kinder Morgan, Inc., has filed a proposal with the Federal Energy Regulatory Commission (FERC) for implementing a responsibly sourced natural gas (RSG) supply assembling regathering service at selected locations across the Tennessee Gas Pipeline system. The proposed service is planned to sanction the suppliers as well as customers on TGP to buy and sell RSG supplies at abstract trading facilities, thereby serving end-users, utilities, power plants, and LNG facilities connected to the TGP system.


• October 2021 - Gas Malaysia and Malakoff Corporation Berhad formed Malakoff – Gas Malaysia Cogen O&M Sdn Bhd. The alliance is a strategic partnership between two utility companies within the MMC Group of Companies that brings together the expertise and resources of both parties to commence the cogeneration plant’s Operations & Maintenance (O&M) services in Malaysia.


• September 2020 - Petronas has rolled out the Virtual Pipeline System (VPS) solution through the Regasification Terminal (RGT) in Pengerang, Johor. In part, of the company's customer driven offerings, propels the extension of clean energy usage in Peninsular Malaysia. The VPS solution was evolved by Petronas Gas and New Energy's business segment and is being retailed by PETRONAS Dagangan Berhad to deliver Liquefied Natural Gas (LNG) majorly to off-grid customers using trucks equipped with cryogenic tanks.


• June 2019 - Galileo Global Technologies set forth the beginning of operations, Edge Gathering virtual pipelines 2 LLC (Edge), a U.S. based company. Edge Gathering Virtual Pipelines 2 LLC will commission the Liquefied Natural Gas (LNG) virtual pipelines to associate the shale producing gas fields with the consumers without laying down conventional pipelines.

REPORT COVERAGE

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