(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor Projects: The natural gas world is truly a conundrum. Not so long ago we had close to 1,500 rigs drilling for gas and we were building or considering LNG import terminals. Today, because of associated gas production, there are 165 rigs drilling for gas, LNG EXPORTS are ramping up, a significant amount of gas is going to Mexico via pipeline and, finally, there’s this; in North Dakota in June, 24% of the natural gas produced was flared due to pipeline and processing shutdowns. While June was an anomoly of sorts, flared gas averaged about 18% of production for the last 6 months. The state regulation calls for a max of 12%. In Texas, a recent RRC decision made news for two reasons. First, one of the Commissioners dissented on a flaring request which has apparently never happened. In addition, the flaring permit was granted for wells that were connected to a pipeline but the company stated that gas would be uneconomical to ship. Clearly, more demand and pipeline and processing capacity are needed to capitalize on this abundant resource. A quick review of the chart below shows a recent spike in >16” pipe shipments. Often, as we expect is the case this time, the increase in shipments is related to a particular, or several, projects. Still, the cycles are evident. Despite declining OCTG demand, we don’t expect much of an off-cycle in pipeline construction. In the latest Simdex analysis, since May, 31 new North American projects have been added to the database that account for 1,669 miles of pipeline. A significant portion of those miles are related to the June 2019 commitment to build the Red Oak pipeline which is a partnership between Phillips 66 and Plains All American. For more information on this and other pipeline projects, subscribe to the Simdex Future Pipeline Projects Worldwide Guide. Import Supply – The June import total was 124,570 tons. July import licenses are 164,269 tons. The August forecast, with 9 of 22 days summed, is back up at 207,292 tons. The big import item for the month of May 2019 is carbon, ERW over 16”, not over 24” OD with 28,243 tons. The price is $1,079/ton. The YTD for this category, which is mostly sourced to satisfy project demand, is 119,147 tons.
Preston Pipe Report – The Line Pipe Market Jul 2019
Pipe Exchange
14025 West Road
Suite 100
Houston, TX 77041
- Phone: 713.934.9480
- Fax: 713.934.9490
- Email: sales@pipexch.com