U.S. Oil & Gas EPC Market Size, Share & Industry Analysis, By Contract Type (Fabrication & Equipment, Construction & Installation, Management Services, and Others), By End-User (Upstream, Midstream, and Downstream), By Application (Onshore and Offshore), and Country Forecast, 2024-2032

The U.S. oil & gas EPC market size was valued at USD 13.54 billion in 2023. The market is projected to be worth USD 14.23 billion in 2024 and reach USD 22.42 billion by 2032, exhibiting a CAGR of 5.84% during the forecast period.

Oil & Gas EPC (Engineering, Procurement, and Construction) is a contract-based project delivery model where a single contractor manages the entire process of designing, procuring materials, and constructing infrastructure projects for oil and gas companies. This model helps reduce risk for the client by providing a single point of contact and streamlining project execution. EPC (Engineering, Procurement, and Construction) firms specialize in delivering large-scale projects, such as extracting, transporting, and storing oil and natural gas, and are critical to the oil and gas industry's infrastructure development.

Government initiatives and regulatory changes significantly impact the global oil & gas EPC landscape. Policies promoting energy independence, environmental protection, and infrastructure development influence project planning and execution. For instance, the U.S. government's emphasis on domestic energy production and infrastructure upgrades drives demand for new projects and retrofitting existing facilities.

When the COVID-19 pandemic hit, lockdown measures in the U.S. significantly reduced oil & gas demand in the industrial and commercial sectors. COVID-19 has had an impact on the industry, primarily through a decline in demand, financial stress, and disruption to the energy supply chain. Increased unemployment due to the pandemic left many people unable to pay their utility bills. Delays and late payments by end consumers (private households, commercial and industrial) had a detrimental impact on the energy supply chain. Manufacturing and the supply chain slowed down drastically.

U.S. Oil & Gas EPC Market Trends

Regulatory Policies and Environmental Considerations Favor Market Progression

The importance of reducing environmental impact has broadened the scope of EPC services. Companies are now seeking EPC providers who can deliver projects that meet regulatory standards and contribute to overall sustainability goals. This includes designing and constructing facilities that utilize advanced technologies for emissions control and demand for energy efficiency.

Moreover, regulatory pressures are prompting a transformation in the oil and gas industry's operational strategies. Companies are adopting more complete approaches to environmental stewardship, which involves close collaboration with EPC firms from the early stages of project development. This collaboration ensures that projects are designed with compliance and sustainability in mind from the outset, reducing the risk of regulatory non-compliance and associated penalties.

For instance, regulatory-driven development in the U.S. oil & gas EPC market is the Petra Nova project in Texas. This project, a collaboration between NRG Energy and JX Nippon Oil & Gas Exploration, exemplifies how stringent environmental regulations and the push toward sustainability are driving innovation and the evolution of the EPC sector.

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U.S. Oil & Gas EPC Market Growth Factors

Increasing Development of Natural Gas Infrastructure is Set to Boost Oil & Gas EPC Market Growth in the U.S.

The increased demand to develop natural gas infrastructure is significantly increasing the U.S. oil & gas EPC (Engineering, Procurement, and Construction) market share. As the U.S. aims to enhance energy security, reduce carbon emissions, and leverage abundant natural gas reserves, investments in infrastructure such as pipelines, processing plants, and export facilities are surging.

For instance, the Mountain Valley Pipeline (MVP), a 303-mile interstate natural gas pipeline system set to transport natural gas from the Marcellus and Utica shale formations in West Virginia to markets in the Mid-Atlantic and Southeastern regions of the U.S. This USD 6 billion project represents the large-scale infrastructure development driving the EPC market. Managed by a group of energy companies, the MVP includes the construction of new compressor stations and interconnections with existing pipelines, demonstrating the comprehensive EPC work involved.

The U.S. is highly developed in the production of shale gas. Companies are likely to invest heavily to meet the growing demand for oil and gas. According to the American Petroleum Institute (API), over USD 1.34 trillion in private investment is expected in natural gas and oil infrastructure between 2018 and 2035. A significant portion of this investment is dedicated to expanding the natural gas infrastructure, reflecting the sector's potential for growth.

Surge in Offshore Oil and Gas Exploration and Production (E&P) Activities to Stimulate Market Growth

Offshore oil and gas exploration and production activities are increasing globally in the search for fuels. The offshore E&P sector has observed significant technological advancements, such as the development of subsea processing and enhanced oil recovery techniques. These technologies enable access to previously unreachable reserves, increasing the potential for new offshore projects. The advancement in drilling technologies, in the long term of deep-water drilling and floating production systems, further supports the expansion of offshore exploration activities.

The U.S. government has implemented policies to support offshore drilling activities. The opening of new offshore areas for exploration, reducing regulatory barriers, and streamlining the permitting process are measures taken to encourage offshore development. For instance, the Bureau of Ocean Energy Management (BOEM) has been active in auctioning offshore drilling rights, providing opportunities for new projects, and stimulating the U.S. oil & gas EPC market growth.

RESTRAINING FACTORS

Increasing Renewable Energy Usage Poses a Threat to the U.S. Oil & Gas EPC Market Growth

The U.S. is experiencing a growing demand for renewable energy generation as part of its efforts to address climate change, reduce greenhouse gas emissions, and transition toward a more sustainable energy future. The increasing oil prices and shift toward renewable energy sources is set to stimulate the U.S. oil & gas EPC market share as the nation's energy infrastructure undergoes significant changes to accommodate these new power generation technologies.

The cost of Solar Photovoltaic (PV) technology has decreased dramatically, making it an attractive alternative to traditional fossil fuels. Wind technology has similarly improved, with larger and more efficient turbines increasing the feasibility of wind farms. These advancements reduce the reliance on oil and gas, subsequently decreasing the demand for associated EPC services.

U.S. Oil & Gas EPC Market Segmentation Analysis

By Contract Type Analysis

Construction & Installation Leads with Comprehensive Service Offerings

The market by contract type is segmented into fabrication & equipment, construction & installation, management services, and others.

The construction & installation segment includes installation projects where a company provides services for installing platforms, pipes, pipe fittings, boilers, turbines, mud pumps, fans, engines, and others. In contrast, construction involves the building of drilling rigs, production platforms, refineries, and many more, at either onshore or offshore locations. The development of oil & gas fields and facilities has led to the domination of the construction & installation segment, and this trend is expected to be continued in the market during the forecast period.

Fabrication & equipment is an integral part of the oil and gas industry. Advanced manufacturing techniques, such as modular construction and automation, are streamlining operations and reducing costs leading to growth. It involves the fabrication contracts for various tools and important machinery parts covering valves, boilers, turbines, pipes, pipe fittings, elevators, conveyors, machine tools, industrial storage, and others. The management services type of contract includes management of labor, plants, rigs, sites, and other services.

By End-User Analysis

Upstream Segment Dominates with Growing Expansion of Oil & Gas Fields in the U.S.

By end-user, the market is segmented into upstream, midstream, and downstream.

Past activities include drilling and field development to increase production volumes of oil and gas fields. Growing upstream activities, well development in onshore and offshore areas, and investments in gas fields are likely to drive growth in the upstream segment.

Intermediate operations include the transportation of fuels from drilling rigs to refineries by pipelines and other modes of transportation. Oil and gas storage is also covered in the midstream application for the transportation. Growing investments in pipeline transportation and end-to-end storage solutions will accelerate the growth of the segment. Processing activities include refineries, sales, distribution, and marketing, which require logistical support. The growth of the segment will be helped by the construction of refineries and increasing changes in processing plants.

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By Application Analysis

Increasing Offshore Investment in Oil & Gas Activity to Boost Market Development

Based on application, the market is bifurcated into onshore and offshore.

Onshore EPC is the leading segment as its projects are carried out on land is the traditional field of application with increased investments in the reclamation of brownfield sites and the development and modernization of onshore processing facilities. The U.S. government has supported onshore oil and gas development through initiatives such as the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and CHIPS Act, which are expected to drive further investments in the sector.

Offshore EPC projects are carried out in water bodies such as seas and oceans, where oil and gas are extracted from subsea surfaces. As onshore oil wells mature in the U.S., investment in developing offshore oil and gas fields is increasing.

KEY INDUSTRY PLAYERS

Leading Players are focused on Developing and Investing in the Oil & Gas Infrastructure

The oil & gas EPC market in the U.S. is highly fragmented, with a medium and large number of players delivering a wide range of products and services across the value chain. Numerous companies are actively operating in the country to meet the specific demands of the oil and gas industry for infrastructure development. Companies are also focusing on product technology advancement, and collaborating with industry market players, including network providers, system integrators, and end-users, allows companies to access new key markets and enhance their oil & gas EPC market share in the U.S.

List of Top U.S. Oil & Gas EPC Companies:

• John Wood Group PLC (U.K.)


• Petrofac Limited (U.K.)


• Worley (Australia)


• Fluor Corporation (U.S.)


• Bechtel Corporation (U.S.)


• Aker Solutions (Norway)


• SLB (U.S.)


• KBR (U.S.)


• TechnipFMC (U.K.)


• Larsen & Toubro Ltd (L&T) (India)

KEY INDUSTRY DEVELOPMENTS:

• May 2024: Aker Solutions announced to double its consultancy business and unveiled a new name, Entr. For this it will double its headcount by 2030. The company aims to twofold its revenue through a significant increase in the core headcount from 300 to more than 600 employees across its global hubs in Norway, the U.K., Canada, the U.S., India, and Malaysia. 


• April 2024: SLB completed the acquisitions of ChampionX in an all-stock transaction at USD 7.8 billion to enhance its expertise in oil production and capture carbon dioxide from industrial sources.


• January 2024: SLB and Nabors Industries collaborated to scale the adoption of automated drilling solutions for oil and gas operators and drilling contractors. The contract is aimed at enabling customers to seamlessly integrate the companies' rig operating systems and drilling automation applications to improve well construction performance and efficiency. This new integration provides customers with access to a broad suite of drilling automation technologies and greater flexibility using either SLB's PRECISE or Nabors' SmartROS rig operating system.


• October 2023: SLB, Aker Solutions, and Subsea7 announced the final closing of their joint venture. The new business will adopt the OneSubsea name and drive innovation and efficiency in subsea production by helping customers unlock reserves and reduce cycle time. OneSubsea was announced to be headquartered in Houston, Norway, Oslo, and Texas. In the joint venture, SLB holds a 70% equity stake, with Aker Solutions and Subsea7 holding 20% and 10%.


• June 2020: KBR Inc. announced its plan to exit most of its Liquefied Natural Gas (LNG) construction and other energy projects and to refocus on government contracts and technology businesses, as over 70-80% of the company's earnings are derived from government business. The changes will enable significant realignment in some offices, transformation to the new structure, and the exiting of certain markets/geographies and offices.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as major key players, product types, and leading applications of the product. Besides, the report offers insights into the competition landscape, market trends, and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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Report Scope & Segmentation