Planned projects push OCTG sector forward

Jan 31, 2012 | 07:00 PM | AMM staff

Tags  OCTG market, steel tube and pipe market, Keystone XL pipeline, shale plays, TransCanada,

Headlines in the oil country tubular goods (OCTG) sector of the steel tube and pipe industry in recent weeks have centered around the delay until 2013 of a federal decision on whether to approve TransCanada Corp.’s proposed Keystone XL pipeline project. 

The setback has drawn much ire from the steel and energy industries, and some individuals have expressed fears that pipe earmarked for the proposed project will potentially spill into the market.

The situation also has led to questions about the pipeline permitting and approval process in the United States and could lead to future projects being put off or canceled, said David Delie, president of Little Rock, Ark.-based Welspun Tubular LLC, one of the suppliers of OCTG products for the Keystone XL project. “If you’re sitting on a board of directors and you’re being asked to push forward with a project, would this (XL delay) not cross your mind? It would have to. . . . And we’ll never know the real impact—how many pipelines that are on the edge, whether they get built or not,” he said.

Delie also expressed concern about what might happen to line pipe already produced for the proposed project and “sitting in different yards waiting to go somewhere,” noting that TransCanada could sell the pipe back into the market.

The general consensus, however, is that the delay won’t lead to excess pipe flooding the market. And a TransCanada spokesman told AMM that the energy firm intends to keep pipe for the Keystone XL project in storage because the Calgary, Alberta-based company thinks the project will go forward. “This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed,” he said.....