International drilling drives OCTG demand

Jan 31, 2012 | 07:00 PM | Michael Cowden

Tags  OCTG market, drill rig count, shale plays, offshore drilling, Charles Bradford, Michael Cowden

A slow and steady climb in the international drill rig count is driving consumption of oil country tubular goods (OCTG), especially for premium grades used in offshore drilling.

Some OCTG experts are even predicting a possible surge in drilling activity abroad thanks to deep offshore plays and the development of shale gas reserves. Drilling is picking up in places as diverse as Poland and Argentina. China is looking to get in on the action, too, with a story from China’s official Xinhua News Agency boasting that the country has as much shale gas as the United States, albeit “largely undeveloped”—at least for now.

Still, the international scene continues to be driven primarily by high oil prices and offshore plays, OCTG experts said. 

The international rig count stood at 1,180 in December, up 62 rigs (5.5 percent) from a year earlier, according to data from Houston-based oilfield services firm Baker Hughes Inc., while the U.S. rig count ended the year at 2,007, up 313 rigs (18.5 percent) from December 2010. But don’t let the smaller gain on the international front fool you. OCTG demand may be booming on plays such as the Bakken shale in the United States, but energy tubulars also are being gobbled up at a rapid clip abroad.

“Certainly there are some areas that have the potential to explode,” said Kurt Minnich, editor of Tulsa, Okla.-based Pipe Logix, pegging the value of the worldwide OCTG market at roughly $20 billion.....