(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor Projects: In the OCTG section of the Report, we made a comment related to OCTG inventory noting that if drilling spreads around – not so concentrated in the Permian Basin – we would likely need additional OCTG inventory to
support the activity. For drilling to spread around much, we need line pipe. It was reported recently that 50,000 to 80,000 bpd of oil production was being kept offline due to a lack of takeaway capacity – combined with flaring regulations – in the Bakken. In our latest Weekly, we referred to an article that
pointed out that the amount of gas being flared in Texas was enough to supply every home in that state. That is an enormous waste of precious resources and a much better solution would be pipelines. Given the greenhouse gas reduction efforts, how long will it be before this is a problem? We also noted in the OCTG section that a partial startup of the Sunrise pipeline expansion boosted the oil price at Midland. The ultimate capacity of the Sunrise is expected to be around 500k bpd. Other pipelines scheduled to be completed in the Permian include the Cactus II (670k bpd – 2H19), the Grey Oak Pipeline (800k bpd –
2H19), the Epic Crude Oil Pipeline (675k bpd – 2H19), and the Permian Gulf Coast Pipeline (600k bpd – Mid-20). Exxon Mobil has also noted that along with their investment in the region to boost their production to 1 mpbd by 2025, they would be in the pipeline business to ensure no takeaway capacity issues. They are exploring a 1,000k bpd pipeline with Plains. Final duties on large diameter line pipe imports from Canada, Greece, Korea, and Turkey are in the Trade Case Scoreboard. Import Supply – The February and January import totals were 213,895 tons and 327,544 tons, respectively. January was a pretty high volume month given the season, but there was a good amount of large OD product. Line pipe is one of the only product sectors shipping ahead of last
years activity level. The March licenses suggest 156,621 tons. The forecast for April with 12 of 22 days reporting is 231,513 tons. The big import item for the month of February 2019 is alloy spiral weld at 100,886 tons. The price is $1,062/ton.
