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.
Caterpillars 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 companys insights into the direction of such end markets can be useful.
"The turbine business has been fantastic for us the whole time weve owned it, going back to the mid-1980s," Oberhelman said during the companys earnings conference call with analysts. "But with the oil and gas boom, the fracking boomaround this country and elsewherethat 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 Caterpillars 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 theres still a lot of build-out on getting that gas out of the ground. Ive got to believe the opening in Mexico, when that starts, is going to change the dynamics completely again," Oberhelman said, referring to the Mexican governments 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).
Russias 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.