(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – Small Diameter – Demand for small diameter line pipe, along with some standard pipe in the form of A106, is determined in part by flowlines and sales lines that are required by new drilling. Small diameter line pipe is also used in midstream and downstream applications which are driven by pipeline construction and by development activities including new industrial and residential areas. Our forecast, therefore, is dependent upon our forecast for upstream activity, that will be presented in the OCTG section, for midstream construction, and for facility/development construction of the type that will consume line pipe. This could include hydrocarbon processing, natural gas power generation, and others. We also consider the current industry inventory position which, in general, is lean. Part of the reason for low inventory is the fact that OCTG has been busy and that hot rolled band prices have been high enough, until recently, that some supply has been largely out of the market. Large Diameter It was unfortunate that a natural pipeline construction cycle ended, or was ended, by Covid and has subsequently remained depressed along with oil and gas development. Oil and gas development has improved but primarily in areas where pipelines already existed. The build cycle that ended coincidentally with Covid left sufficient capacity in most regions, at least for oil, particularly since drilling was contracting with the lockdowns and resultant low prices for oil. Some capacity additions are in the works for natural gas in the Permian, in particular, and in the Haynesville to feed growing LNG export capacity. Additions in the Permian are initially focused on compression expansions but a new pipeline, the Matterhorn Express, is in the works. Last month’s Line Pipe section dealt with ‘promised’ energy infrastructure permitting reform. It is badly needed for this sector and notably absent from the news of late,
Preston Pipe Report – October 2022
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