2Q19 OCTG Inventory Analysis: A Calm Before the Storm or Smooth(er) Sailing Ahead?

The OCTG Situation Report July 2019 Photo Courtesy Boomerang Tube, LLC

Photo Courtesy Boomerang Tube, LLC

Susan Murphy | The OCTG Situation Report

Susan Murphy | Publisher + Editor-in-Chief

The results of our exclusive 2Q19 Quarterly OCTG Inventory Yard Survey could be viewed as a beacon of hope for those who expressed trepidation about the outcome in our midyear market conversations last month. Turns out parties with an ear to the ground controlled inventories extremely effectively and managed to stem the tide from Q1 that could have easily rocked the boat this quarter. 

While most of you know the ropes by now we’ll remind everyone that we host our exclusive quarterly surveys in order to measure demand for OCTG throughout the entire US supply chain, delivering the most accurate OCTG inventory updates in the oil patch so that our subscribers can better navigate the course ahead. This quarter’s survey (period ending 6/30/19), revealed that “prime” OCTG inventories in the L48 expanded by a “manageable” amount all things considered. The bulk of increases were posted in the mill/processor segment; concentrated mainly with processors. Hikes were recorded in all but one category throughout the tri-state. Alloy stocks saw the greatest build Q/Q in Q2. Carbon was the only product category registering a decline. Gains in the closely-watched tubing category were witnessed again this quarter. 

The dampened levels of oilfield activity attributable to E&Ps continued commitment to capital discipline discussed last month in our June Report had a direct impact on the lower intensity of inventory builds and were especially evident in Oklahoma and West Texas this quarter. Lower import volumes Q/Q also played into shifts witnessed in the inventory mix this quarter. This was particularly apparent in the drop in carbon products; an import mainstay. Interestingly, tubing stocks were buffeted by twin forces in Q2: one that kept any potential build subdued and one that tempered the possibility of greater destocking. The two factors contributing to this situation were a modest drop in imports and a US DUC count that, despite a slight retreat in Q2, remains well elevated, respectively. 

So, what might the Q2 stats viewed in tandem with our other proprietary quarterly metrics tell us as we cruise into the second half of the year? First, observing the sinking Q/Q permit metric makes it increasingly clear that a rise in rig releases is in store for the next five months. This doesn’t mean a rig count collapse is on deck but conforms with the consensus opinion that “flat is the new up.” This presumption arose in the wake of the WTI volatility that occurred in Q2 and quashed the likelihood for a second half activity rebound that may have otherwise come about. Our estimate for Q2 consumption also offers a less than buoyant probability that OCTG demand will improve much over the balance of the year. At the same time, if we review the depressed Q2 consumption metric for 2018, it could have proven foreboding but didn’t materialize as such. Even though that scenario is unlikely in 2H19, due to different oil patch circumstances Y/Y, we simply can’t rule out the possibility that this metric could continue flat or grow slightly. Meanwhile, we’re keeping a close watch on HRC as mills attempt to shore up prices with a rash of recent price hikes. While this could prevent OCTG prices from drifting down M/M through December, at the moment we don’t see this torpedoing any forecasts for the next six months. 

In closing, we view the results of the 2Q19 inventory survey as setting the OCTG market on an even keel especially given the somewhat murky conditions we’re facing. Inventories of tubular goods may not yet be in a safe harbor, but they’re certainly better positioned to weather any challenges that might arise in the remaining months of the year. And that mates, is as close to “smooth sailing” as one could hope to hear.

NOTE: Our monthly blog posts offer a slice of the content we publish in The OCTG Situation Report every month. For a complimentary copy of our intel please visit: https://www.octgsituationreport.com/subscribe

Photo Courtesy Boomerang Tube, LLC.

 

Japan’s Inpex Buys Into Four Anadarko Gulf Of Mexico Oil Blocks

Japan’s Inpex Corporation said on Friday it had reached a deal with Anadarko to buy 40 percent in each of four exploration blocks operated by Anadarko in the southern U.S. Gulf of Mexico, as part of a strategy to make the Gulf of Mexico one of its priority exploration areas. Under the agreement with Anadarko Petroleum, Inpex will buy a 40-percent participating interest in Keathley Canyon blocks 921 and 965, as well as in Walker Ridge blocks 881 and 925 in the U.S. Gulf of Mexico, the Japanese company said, without revealing details of the…

2019 Who’s Who in E&P A&D Directory

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China To Add More Coal Power In 2019 And 2020 To Meet Energy Demand

In order to meet the growing demand for electricity, China’s biggest power generator, China Energy Group is planning to build 11 gigawatts (GW) of new coal power during this and next year, according to senior official with the firm on Thursday. More than 6 GW of new ultra-low emission coal-fired capacity will be added this year while another 5 GW is planned for 2020, Xiao Jianying, the head of the state-run firm’s coal-fired power department, told Reuters. “China still has quite a big demand for electricity. The government now supports…

Senior Rotating Equipment Engineer Operations Engineering (#769004258)

Posted: 18 July 2019 at 14:42   Expires: 15 August 2019 at 14:42

Posted In: Engineering > Rotating Equipment

Location: Qatar

We are seeking to recruit for the position of SENIOR ROTATING EQUIPMENT ENGINEER who will be responsible for planning, directing, coordinating, accomplishing and monitoring Rotating Equipment Engineering/Overhaul and Inspection activities within client operations. The selected candidate will provide specialised Technical/Engineering support to Plant Operations and Engineers in order to maintain equipment which is applicable to International Standards. It is important to also stay abreast of the “State-of-the Art” developments of Rotating Equipment to be able to propose State-of- the-Art techniques, equipment and materials that will benefit the company and its operations.

Key Requirements

Experience/Qualifications Required
15 years relevant experience in the field of Major rotating equipment
Effective presentation and communication
Technical report writing
Team player with the ability to guide and motivate personnel
Ability to handle contractors
Experienced operating computer applications including Microsoft Office, Lotus Notes and SAP
Proficient in English language.
Degree in Mechanical Engineering
Undergone Engineering and Overhaul/Inspection training courses related to Heavy duty Gas Two shaft gas turbines, centrifugal process gas compressors, expanders, heavy duty gearboxes, torque convertors and large cooling water pumps

Job Description

We are seeking to recruit for the position of SENIOR ROTATING EQUIPMENT ENGINEER who will be responsible for planning, directing, coordinating, accomplishing and monitoring Rotating Equipment Engineering/Overhaul and Inspection activities within client operations. The selected candidate will provide specialised Technical/Engineering support to Plant Operations and Engineers in order to maintain equipment which is applicable to International Standards. It is important to also stay abreast of the “State-of-the Art” developments of Rotating Equipment to be able to propose State-of- the-Art techniques, equipment and materials that will benefit the company and its operations.

The position will be in the client’s Operations Engineering Department and is based in QATAR on a long-term residential contract and can be on married or single status.

Experience/Qualifications Required

15 years relevant experience in the field of Major rotating equipment

Effective presentation and communication

Technical report writing

Team player with the ability to guide and motivate personnel

Ability to handle contractors

Experienced operating computer applications including Microsoft Office, Lotus Notes and SAP

Proficient in English language.

Degree in Mechanical Engineering

Undergone Engineering and Overhaul/Inspection training courses related to Heavy duty Gas Two shaft gas turbines, centrifugal process gas compressors, expanders, heavy duty gearboxes, torque convertors and large cooling water pumps

If you wish to be considered for the above position kindly send an updated detailed CV/Resume in Microsoft word format

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Chevron Seeks to Turn Canada LNG Plan into All-electric Design (Wednesday, 17 July 2019)

Chevron Corp. is seeking approval to modify its plans for a liquefied natural gas export facility on Canada’s Pacific Coast to an all-electric design that it says will result in the lowest greenhouse-gas emissions per ton of LNG of any large project in the world.

Chevron and its partner Woodside Petroleum Ltd. earlier this year had announced they’d applied to expand the capacity of their LNG project in Kitimat, British Columbia, by as much as 80% to 18 million metric tons a year.

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That triggered a new federal screening of the project that’s expected to “commence shortly,” according to a July 8 letter filed by Chevron to the provincial environmental assessment office. As part of the fresh round of approvals sought, the project is proposing to become an “all-electric plant” powered by hydroelectricity, allowing expanded capacity without the corresponding increase in emissions of a traditional LNG facility, the letter said.

LNG is created by cooling gas to minus 260 degrees Fahrenheit (minus 127 degrees Celsius) in an energy-intensive process typically powered by burning natural gas. Kitimat LNG instead proposes electric motor drives totaling 700 megawatts to run all liquefaction, utility compressors, pumps and fans with hydropower bought from the provincial utility, according to its revised project description dated July 8. It will have backup diesel power generators onsite for emergencies.

The proposed plant “will achieve the lowest emissions intensity of any large-scale LNG facility in the world,” according to the project description. Kitimat LNG will produce less than 0.1 ton of carbon dioxide equivalent for every ton of LNG compared with a global average of more than 0.3 ton of CO2 equivalent, according to the document.

Chevron and Woodside expect to make a final investment decision in 2022 to 2023 with production starting by 2029, according to the project description. The revised proposal may trigger the need for a federal environmental assessment, according to the document.

Source: www.worldoil.com

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