(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Diameters –Beginning in the mid-200xs, the shift to horizontal drilling was in full swing. By March 2007, the vertical rig count had begun to decline while the horizontal count continued to grow. At the same time, while
footage of line pipe per well was declining in horizontal applications, a larger pipe size was more than offsetting the weight lost. Vertical well small diameter line pipe consumption per well hasn’t changed much but consumption for horizontal wells continued to increase over the period.
This is primarily due to multi-well pads (higher production rates) and the expansion to larger diameters and heavier walls even at the expense of footage. In the chart above, we’ve plotted rigcount and small diameter tons per rig from ’06 through the beginning of the recovery. Two things stand out. First, there is minimal lag – perhaps only a month or two. Second, why the dip in tons per rig? Many reasons including inventory reduction, DUCS, recession, etc. Greater than 16” Outside Diameter – In the latest Simdex update, 31 projects have been added in NA in 2018 for a total of 3,281 miles. About 20% of the projects fall in the small diameter classification. The most popular size in the large diameter group is 24”. Import Supply – January imports totaled 195,384 tons. It looks as if the 232 is having an impact on volume going forward as February licenses show 133,258 tons on the way. That is above our early forecast but not a surprise. The March forecast with 9 of 22 days reporting is 140,094 tons or about steady. We are expecting further drop in volume in the near term. The top item for the month of January is Carbon ERW over 4 ½” not over 16”, at 81,093 tons. The landed price was $776/ton, down $12/ton from last month and $102/ton in the last 2
months. After the 5 months run of increases this is showing what is necessary to obtain buyers this close to the 232 announcement.
