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Caterpillar top exec expects energy sector to stay strong

Keywords: Tags  Caterpillar, Douglas D. Oberhelman, energy industry, turbine, Eagle Ford, Petróleos Mexicanos, Pemex, Lukoil Enrique Peña Nieto

CHICAGO — The energy industry continues to be a solid consumer of heavy equipment and expectations are for steady demand growth, according to Caterpillar Inc. chairman and chief executive officer Douglas R. Oberhelman.

Caterpillar’s power systems business includes customers in the oil and gas, solar and turbine business, as well as marine and rail equipment manufacturing, and the Peoria, Ill.-based company’s insights into the direction of such end markets can be useful.

"The turbine business has been fantastic for us the whole time we’ve owned it, going back to the mid-1980s," Oberhelman said during the company’s earnings conference call with analysts. "But with the oil and gas boom, the fracking boom—around this country and elsewhere—that has been a real stellar performer the past few years, and I expect it to continue."

After visiting the Eagle Ford shale in Texas, he said Caterpillar’s dealers are more optimistic than he expected and they feel 2014 could be another solid year.

"The fracking business has changed the gas pipeline and gas compression business immensely in this country, and there’s still a lot of build-out on getting that gas out of the ground. I’ve got to believe the opening in Mexico, when that starts, is going to change the dynamics completely again," Oberhelman said, referring to the Mexican government’s reform of its energy industry, including allowing foreign-owned companies to conduct exploration and drilling, breaking the monopoly of state-owned Petróleos Mexicanos SA de CV (Pemex).

Russia’s OAO Lukoil signed an agreement last week with Mexican President Enrique Peña Nieto, making it possible to increase deepwater exploration and production as well as extract shale gas and oil.

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