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Pipe price not only factor when buying: end-user

Keywords: Tags  Jeff Farmer, Atwood Oceanics, Perry Roberts, Energy Transfer Partners, Brandon Middleton, Noble Energy, AMM tube and pipe conference, Michael Cowden

HOUSTON — Price is a big consideration in procuring pipe, but it’s hardly the only one, according to some end-users.

Pipe and tube consumers in the energy sector also look at a host of other factors—mill quality, service, reliability and innovation—when choosing a supplier, all issues that might trump price when it comes to deciding from whom to procure pipe.

The metallurgy of pipe and the ability of a supplier to trace it also might be a key factor when it comes to choosing a pipe supplier, according to Perry Roberts, senior director of procurement at Dallas-based energy transmission company Energy Transfer Partners LP.

"We are looking for suppliers who can be more innovative in the ability to provide clear and concise traceability from cradle to grave, all the way to the end of the project. We would prefer our supplier to manage that product all the way to the ditch if possible," he said during a panel discussion at AMM’s 6th annual Steel Tube and Pipe conference in Houston.

Jeff Farmer, supply chain director at Houston-based offshore drilling company Atwood Oceanics Inc., agreed that price isn’t the most salient consideration. A product’s history, quality and transportation costs also are big factors, he said. "In large part, what we are looking for is who’s got material that meets our specifications, meets our standards and has it available. ... Then we say ‘OK, is this a reasonable price for the product we are trying to buy?’ "

Keeping drill rigs running also trumps price, Farmer said. "So when you start looking for a string or a couple of joints of pipe, it’s ‘Who has got those things available ... and who is answering the phone at midnight.'"

Panelists generally brushed off the implications of a potential import complaint, noting that their business models might require them to source pipe from around the world.

Atwood Oceanics has ruled out some suppliers, Farmer said, but because the company operates a global fleet it has no incentive to buy tubular products from the United States or any other one location.

Other advantages that might give pipe suppliers an edge are better coatings, Farmer said. And on the price front, it could be the ability to offer more creative solutions. Atwood might have pipe in storage that is unusable offshore, and that pipe could be scrapped and made into new pipe that could then be sold at a discount, reflecting a supplier saving on scrap, he said.

But at the end of the day, price remains a big consideration, even if pipe costs sometimes gets unfairly picked on compared with other costs, such as drilling rig rates or the cost of fracking services, according to Brandon Middleton, category manager at independent Houston-based energy company Noble Energy Inc.

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