Subscribe to our newsletters & stay updated
December is the end of a turbulent year for the PVF sector of our economy: supply-chain constraints, rising costs of material, labor shortages, escalating energy costs, international conflicts and a political environment hostile to fossil-fuel energy sources.
President Joe Biden, a day before the mid-term elections, announced that, under his administration, he will end the drilling for oil and gas and will close all coal-fired power generating plants in the country. The country will be fueled by wind and solar power.
The White House was quick to respond by back-peddling his comments as misinterpreted.
Regardless of the outcome of some still-tight House midterm races (Democrats remain in control of the Senate), President Biden says he has no plans to change his policy regarding energy and continues to threaten energy companies with a windfall profit tax.
Oil inventories are significantly below average levels, and global markets are poised to tighten further in the coming months with the planned imposition of European Union sanctions on Russian oil exports. The ban could slash the country’s output by approximately 20 percent by the beginning of the new year, per the International Energy Agency (IEA).
Brent is flirting with $100 per barrel (Bbl) pricing again, per Christof Ruhr, senior analyst at Columbia University’s Center on Global Energy Policy. “That’s exactly where no one in the consuming countries — from central banks fighting inflation or finance ministries preventing recession to a public that supports Ukraine against Russia — wanted to see it,” he notes.
The IEA warned that restricting oil output at this time could push fuel costs to levels that ultimately trigger a global recession.
The OPEC+ alliance was scheduled to meet on Dec. 4, a day before the EU embargo on Russian oil takes effect.
“More than 90 percent of U.S. chief executives believe a recession is on the horizon,” says Jeff Currie, head of commodities research at Goldman Sachs Group.
As of this writing, WTI is at $88.86/Bbl and Brent is at $95.89/Bbl.
With all the rhetoric regarding ending drilling, EOG Resources is targeting a 20-well program in the Utica I 2023 after establishing a new position in Ohio, accumulating 395,000 net acres and around 135,000 mineral acres in the southern portion of its acreage footprint for less than $500 million.
The product mix averages around 60 percent to 70 percent liquids across the acreage where EOG already completed four wells and operates 18 additional legacy wells across a 140-mile stretch.
The Interior Department’s Bureau of Ocean Energy Management formally announced an offshore oil and gas sale for tracts in Alaska’s Cook Inlet scheduled for Dec. 30. Lease Sale 258 was canceled by the Biden administration in 2021 and revived as part of the tax and spend bill passed by Congress in August 2022.
M6 Midstream (Momentum) has taken a final investment decision on its new natural gas gathering and carbon capture and sequestration project, New Generation Gas Gathering (NG3).
NG3 will have an initial gas-gathering capacity of 1.7 billion cubic feet/day (bcfd) and also capture and permanently sequester up to 2 million tons/year of carbon dioxide. The project is scheduled to be operational during the second quarter of 2024.
Cheniere Energy will form a joint venture with WhiteWater Midstream to construct the ADCC natural gas pipeline with units from Whistler Pipeline. The 42-inch ADCC pipeline is expected to extend to around 43 miles from Whistler’s terminus to Cheniere’s Corpus Christi liquefaction facility.
Cheniere gave the financial go-ahead in June to a $8-billion expansion of its Corpus Christi plant and signaled future expansions are possible predicated on the strong demand for LNG as Europe loses access to Russian gas.
Strong PVF Demand for
The repositioning of the chip manufacturing industry to the United States as the country is disengaging with its dependence on China is impacting the East Coast, Mid-Atlantic and Southwest regions.
Intel’s Buckeye $20 billion chip manufacturing facility located approximately 20 miles outside Columbus, Ohio; the Taiwan Semiconductor Manufacturing Co. $12-billion chip-making facility; and Intel’s $20-billion chip plant in Chandler, Ariz., are only a few of the announced projects.
This segment of the industry, along with the number of data storage facilities scheduled for these regions, will provide the PVF industry with a strong demand for pipe, valves, welding fittings and forged-steel flanges.
During the month of November, a major producer of carbon-steel butt-welding fittings announced a 10 percent price reduction on all its products, with the exclusion of caps, thus passing on the savings resulting from declining costs of materials and services.
in response, other major players have followed the lead and adjusted their pricing policies and terms and conditions to maintain market share.
In reality, this action is resulting in the devaluation of distribution’s inventories.
Forged-steel flange manufacturers, on the other hand, are looking at the possibility of an increase in billets. At the time of this writing, an amount or date of a price adjustment has not been posted.
With the developments mentioned herein, it is advised to remain in close communication with your manufacturers/suppliers and avoid surprises in fluctuating prices and availability of product as demand increases.
The PVF industry continues to struggle with the shortage of skilled labor in all segments of our industry (manufacturing, distribution, construction, transportation, etc.)
The availability and cost of labor, escalating costs of materials and supply chain constraints remain major issues that contractors have to contend with in a highly competitive environment.
The Mechanical Contractors Association of America, Associated Builders and Contractors, and the unions are investing huge sums of capital to provide training curriculum and facilities to fill the void created by the graying of the skilled workforce.
PVF Roundtable News
To date, $1.7 million in scholarships have been distributed by the PVF Roundtable Charitable Foundation to universities and trade schools for the development of a skilled labor force for the PVF industry.
The PVF Roundtable golf tournament and the TroutBlast are the two major fund-raising events held by the foundation. Funds raised are dedicated to the PVF Roundtable Scholarship Programs.
The next meeting of the PVF Roundtable will be the Christmas Celebration and Casino Night, Dec. 13 at The Bell Tower on 34th, Houston.
All attendees are encouraged to donate a toy or a gift for Operation Stocking Stuffer, sponsored by Houston’s firefighters.
As a member of the board of directors, we thank you for your participation in these events.
With the uncertainties in the current turbulent PVF market, these meetings are a unique venue for you and your associates to network with your peers in the PVF industry. These events provide the platform to share information, discuss pertinent issues, meet new contacts, develop new long-lasting friendships and pursue new opportunities in the industry.
© 2023 All Rights Reserved