Friday, January 06, 2017
WIIN in Water Pipelines
The pun is fully intended. Water Infrastructure Improvements for the Nation Act of 2015, set goals and made appropriations for improvements in the U.S. water supply system and water transportation facilities. Called WIIN for short it is expected to deliver an economic impact of over $18 billion through federal government spending on water-related systems design, engineering and construction. Granted most of those monies are intended for infrastructure at U.S. ports, harbors and other waters important to shipping, but at least $2 billion is indeed in the ‘pipeline’ for projects to make our drinking water safe and leave us less susceptible to drought conditions.
With an infusion of new investment in water systems, it seems like a good time to invest in the companies that will benefit from expanded and accelerated orders for the pipes, fittings and materials that are needed to fill consumers’ water glasses. We begin a new series on water system components suppliers.
First up are the pipe suppliers. The ability to regularly deliver safe water is a constant challenge to water suppliers. Just ask officials in Flint, Michigan to find out the consequences of failure. System problems are not limited to toxic water. Leaks can be costly. Just one leakage point in a single pipe resulting in the loss of one gallon of water per minute can mean the loss of half a million gallon of water per year.
Owners of water systems have some choices for water main pipes. Cast iron pipes were heralded as a major breakthrough for water systems. The first cast-iron pipe for distribution of water was put in place in 1664 in Versaille, France and a foundry in New Jersey products cast the first iron water pipe in the early 1800s. While cast iron piping has had a good reign, it is subject to corrosion issues. Ductile cast iron offers some advantages because it is made with spheroidal graphite rather than flake graphite and then lined with protective internal linings to inhibit corrosion. Ductile pipe is estimated to have a lifetime of at least one-hundred years or longer with the application of polyethylene encasement.
Besides a longer expected lifetime of use, ductile iron has been certified as a sustainable product by the Institute for Market Transformation to Sustainability. However, that designation has to be qualified since the Institute did not take into consideration energy use or emissions during production.
There are more options, including reinforced concrete and asbestos cement. Although asbestos cement has fallen out of favor in recent years for potable water due to health hazards, reinforced concrete is remains popular for its ease of installation and durability. According to the Concrete Pressure Pipe Association, polymer and reinforced concrete have a life expectancy near fifty years, but can be used as long as seventy years. However, the U.S. Army Corps of Engineers regulations lists the life expectancy of concrete pipe at 7t to 100 years.
The most recent addition to water pipeline supply is vinyl. Polyvinyl chloride or PVC has gained popularity for its strength and lightweight. Ease of installation and durability are also advantages of PVC. Vinyl has a lifetime expectation of about forty years.
Growth of microbes along the interior walls of potable water distribution pipes is a top concern. Manufacturers of vinyl claim a particular advantage against microbial growth. Unlike iron and concrete, the smooth interior of PVC pipe does not provide a nutrient for microbial growth.
With differences in performance it is an interesting competitive dynamic among the various water pipe alternatives. According to the Water Quality and Health Council, on a linear basis more vinyl pipe is being installed for water pipelines in the U.S. and Canada than all the other water pipeline alternatives put together. However, the longer life expectancy of ductile iron and concrete pipe suggest these alternatives cannot be counted out entirely.
The next post takes a look at ductile pipe manufacturers.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.