NEWS RELEASE                                   JANUARY 2007

Coal-fired Power and Ethanol Replace Oil and Gas as the Big Process Equipment Markets

This new century arrived along with a huge market for gas turbine systems and all the components as Europe and the U.S. chose this route to solve their energy problems.  At the same time the future for refining and oil and gas exploration looked bright for at least the next several decades.

Just six years later, the picture has dramatically changed.  In fact suppliers of pumps, valves, pollution control equipment and instrumentation have a much different opportunity.  The magnitude of this change is documented in a number of market reports published by the McIlvaine Company.

China and the U.S. are embarked on huge coal-fired plant building programs.  Even a Kyoto stalwart, Germany, is building 23,000 MW of new coal-fired boilers.  Despite the concerns about global warming, coal-fired power will dominate the generation choices worldwide according to the McIlvaine predictions.

McIlvaine bases its forecasts on several key factors. (l) The cost of coal-fired power will be far lower than alternatives. (2) Utilization of the latest technology will allow the world’s fleet of generators to be expanded while total emissions are reduced.  Energy farms will allow use of waste heat making super critical coal-fired plants nearly twice as efficient as their stand alone predecessor subcritical units.

The recent reports that Iran could become a net importer of oil is indicative of the rapidly changing outlook for conventional oil and gas.  The boom in ethanol plant construction around the world is creating a very large market for process equipment.  The McIlvaine Company has identified more than 400 ethanol projects worldwide.

Oilsands and other nonconventional oil sources also represent a big and growing market. There is even consideration of tapping the vast oil shale reserves.  The conversion of coal-to-liquid fuels is commercial.  A number of projects in the U.S., China and elsewhere will result in high grade fuel production from coal at a cost less than $50/barrel.

The capital investment in process equipment is peaking in the Middle East and will begin a steady decline.  The boom in the process equipment market in the U.S. will continue over the next decade.  China with its big coal and synthetic fuels program will be the leading purchaser.  Countries such as Brazil where sugar cane can be very economically converted to ethanol will also benefit from the move away from oil for transportation fuels.