Found on the AP wire
10/10/1997 18:23 EST
Pipe Shortage Threatens Oil Boom
ODESSA, Texas (AP) -- A major drilling industry group has asked the federal government to ease restrictions on the importation of drillpipe, which has became scarce during the recent oil boom.
Gary Green, governmental affairs chairman for the International Association of Drilling Contractors, has formally requested that the U.S. Department of Commerce to lift prohibitive tariffs on foreign pipe.
''A few of the biggest drilling contractors are getting what they want,'' said Brian T. Petty, also of the IADC. ''But the problem comes for the smaller guys. Those are the ones getting nailed, and it's having a big impact.''
Domestic pipe production isn't keeping up with recent demand, and drillers say a federal tariff designed to protect U.S. steel companies makes foreign pipe too expensive.
The dispute is expected to incite a congressional fight between oil and steel forces, but IADC officials don't want to wait for Congress.
''In many cases, independent drilling contractors must wait 18 months for delivery of pipe,'' Green wrote to the Commerce Department. ''Compounding the problem is the preponderance of old, wornout drillpipe that's falling apart. This means a driller must fork over about $400,000 for a new string of pipe (for a 10,000-foot well).''
Green's request is being opposed by U.S. Steel and Maverick Tube Corp., two major domestic pipe makers.
Lack of competition and short supplies have pushed pipe prices from $6 to $40 per foot since 1993, the Odessa American reported.
Large Chinese steelmakers are ready to jump into the fray, said Frank Wang, vice president of New Sun, a Beijing-based international engineering company.
''You get (American drillers) in contact with me; we'll get them whatever pipe they like to have,'' Wang said. ''I've been associated with several steel firms there. China can definitely be major supplier of equipment and materials (for drilling).''
Unfortunately for drillers, the tariffs came because foreign pipe makers previously ''dumped'' their products on the U.S. market, which might make officials wary of reopening the door.
''Our argument to the Commerce Department is: Until and when the U.S. (steel) industry can meet the demand, we should have the opportunity to temporarily import the foreign stuff without dumping penalties (placed on those countries),'' Petty said. |
