HP/HT, sour gas field activity pushing demand for exotic alloys

There is growing demand in the offshore market for corrosion resistant alloys, according to analyst Westwood Global Energy, with a growing proportion of field developments requiring high-quality downhole tubulars.

Offshore staff

LONDON – There is growing demand in the offshore market for corrosion resistant alloys (CRAs), according to analyst Westwood Global Energy, with a growing proportion of field developments requiring high-quality downhole tubulars.

Sour gas fields and high-pressure/high-temperature (HP/HT) wells need stainless, duplex, or nickel alloys to reliably transport production from reservoir to surface facilities.

Westwood associate director Matt Loffman said that the backlog of projects in this category includesBuckskin in the US Gulf of Mexico and Dongfang in the South China Sea, while many more sour gas projects will approach a final investment decision (FID) in the next three years - all likely to consume large volumes of high quality oil country tubular goods (OCTG).

The North Sea CRA sector has suffered more substantial losses in percentage terms than any other major region since the commodity price downturn, Loffman continued, with demand in 2016 of 2,000 metric tons (2,204 tons) representing less than 50% of the equivalent 2014 market.

This has led to reports of a widespread reduction in inventories across the region as suppliers incrementally cut regional production and imports.

Of the minimum 11 UK North Sea fields expected to pass the FID stage this year, at least five appear to be strong candidates for CRA tubulars, including Blythe and Apache’s Seagull, whileMaersk Oil’s Culzean HP/HT development and Serica Energy’s Rhum gas field will probably also require additional volumes of CRA OCTG.

Westwood anticipates upward pressure on pricing for the required grades as new projects pass FID.

TheMiddle East remains the largest market for CRA products and there is increasing competition to supply good-quality nickel alloys to sour gas field developments in the region, not just in the more established tubular markets, but also to E&P operators in Egypt, Libya, and Iran.

In the more established countries - Saudi Arabia and the UAE - gaining qualification for the required grades will likely be a focus for those suppliers not yet qualified, Hoffman said.

02/20/2018

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