Benedikt Blitz, Senior Market Analyst SMR Steel & Metals Market Research, Austria Wolfgang Lipp Managing Director SMI Steel Market Intelligence GmbH Corrosion Resistant Alloys in the Oil & Gas Industry Source: Baker Hughes Source: SBO Source: Butting Source: FMC Technologies
World Primary Energy Demand Oil & Gas is still expected to account for around 50 % of the world energy demand by 2035. Production of oil and especially gas will continuously grow until then. Mtoe 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Other Renewables Bioenergy Hydro Nuclear Coal Gas 2,000 Oil 0 2000 2010 2015 2020 2035 2000 2010 2015 2020 2035 Share Oil 36% 32% 31% 30% 27% Share Gas 21% 22% 21% 22% 24% Share Oil & Gas 57% 54% 53% 52% 51% Source: International Energy Agency, World Energy Outlook 2012, Energy trends to 2035, New Policies Scenario
Million barrels/day Index based on 2005 Oil Production by Type Long Term Outlook The share of deepwater production will double (from 4 to 9 %). Also onshore production (incl. shale) is growing. 120 100 Deepwater Shallow Water Onshore 300 250 Onshore Shallow Water Deepwater 80 200 60 150 40 100 20 50 0 2005 2011 2015 2020 2025 2030 2035 0 2005 2011 2015 2020 2025 2030 2035 Source: International Energy Agency, World Energy Outlook 2012
Corrosiveness, Temperature, Pressure Why is the share of CRAs (stainless steel & nickel alloys) increasing? The era of easy accessible oil & gas has ended! Increasing offshore production Rapid growth of ultra-deepwater production Increasingly severe operating conditions (higher pressure, higher temperature, higher corrosion) Boosting technologies to increase brownfield production Titanium Ni Alloys 28Cr (Alloy 28) Superduplex (25 Cr) Duplex (22 Cr) CRA demand is driven by the production/reservoir conditions (sorted by importance): 1. Corrosiveness (H 2 S, CO 2, Chloride) 2. Temperature 3. Pressure There is no alternative to CRAs! 300 series austenitic 13Cr, martensitic Alloy Steel Carbon Steel
Nickel alloys have a low share in tonnage but significantly more in value. With alloy steel it is the other way round. Steel Demand in the Oil & Gas Industry by Steel Type in 2012* - Tonnage vs. Value 80% 70% 60% 50% 40% 30% 20% 10% 0% Alloy Steel Stainless Steel Nickel Alloy - 4 -
Product Forms Used in the Oil & Gas Industry by Steel Type (total ~1.4 million tpy excl. Carbon Steel) Alloy Steel (496 kt) Stainless Steel (848 kt) Nickel Alloy (56 kt) Seamless Tube & Pipe Welded Tube & Pipe Forged Products Rolled Long Products Flat Products Seamless Tube & Pipe Welded Tube & Pipe Forged Products Rolled Long Products Flat Products Seamless Tube & Pipe Welded Tube & Pipe Forged Products Rolled Long Products Flat Products - 5 -
Steel Grades Used in the Oil & Gas Industry by Steel Type (total ~1.4 million tpy excl. Carbon Steel) Alloy Steel (496 kt) Stainless Steel (848 kt) Nickel Alloy (56 kt) 4130/4140 4145H 300 Series 13Cr 625 718/725 8630 F22 Duplex Non-Mag 825 28 4330/4340 Others Martensitic Other 925 Others - 6 -
Application Overview Source: GENESIS Oil & Gas - 7 -
Examples for CRA Applications: Drilling & Completion Source: VAM Drilling Drill Collars, Heavy Weight Drill Pipes Source: VAM Drilling Source: Rimor Stabilizers Source: Baker Hughes Source: SBO Bottom Hole Assembly incl. Drill Bit, Mud Motor, MWD/LWD, Non-Magnetic Drill Collars - 8 - Downhole Tools incl. Packers, Screens, Subsurface Safety Valves, Liner Hangers - 8 -
Examples for CRA Applications: Wellhead Parts Tubing Hanger Source: FMC Source: SMI Manufacturing Tubing Head Source: SMI Manufacturing Casing Head Source: FMC Source: FMC Source: Cameron High Pressure Housing Seal Casing Hanger - 9 -
Examples for CRA Applications: BOP Parts Source: Ringmill Body Source: Shanghai Qimiao Flange Source: SMI Manufacturing Ram Operating Piston Source: Fomas Group Annular BOP mono-block - 10 -
Examples for CRA Applications: Tree and Manifold Parts Source: FMC Master Valve Block Wing Valve Block Tree Cap Source: SMI Manufacturing Manifold Block Source: FMC Technologies Subsea Trees Source: Cameron Manifold - 11 -
Examples for Applications: Risers, Flowlines, Umbilicals Source: Aker FMC Solutions Technologies Drilling Riser Source: Oceaneering Cameron Flying Leads Umbilicals Source: Aker Solutions Source: Total Source: Butting Flowlines with CRA cladding Flexible Risers Source: Subsea Riser Products Riser Stress Joint - 12 -
Examples for Applications: Flanges & Connectors Source: FMC Technologies Source: FES International Collet Connector Source: Source; Cameron Oceaneering Stab Connectors Source: Radoil Stab Plates Source: Aker Solutions Source: Ameriforge Flowlines with CRA cladding Clamp Connector Source: Hunting Source: Subsea Riser Products Hydraulic Couplings - 13 -
Examples for Applications: Control Units Source: Oceaneering Source: Proserv Well Control Panel Source: Parker Umbilical Termination Source: KME BOP Control System Source: Rimor Subsea Control Module Control Lines - 14 -
The Oil & Gas Materials Supply Chain Example downhole hardware in Houston Steel Mills Distributors Major Equipment Producer Independent Big Machine Shops Independent Small Machine Shops Oil Company - 15 -
The Oil & Gas Materials Supply Chain Example non magnetic drill collars & downhole hardware Stock Points best worst Raw Materials Meltshop, Remelting & Pre-forming, Testing Forging, Rough Machining of Component, Testing Heat Treatment, Final Machining, Test Assembly of Component, Testing Field Installation, Testing - 16 -
Index based on 2007 Stainless steel and nickel alloys demand for oil & gas applications will grow faster than the alloy steel demand. Stainless steel and nickel alloys are more related to offshore drilling. Forecast: Steel Demand in the Oil & Gas Industry by Steel Type (2007 2018) 150 Historic Forecast 140 130 120 Total Alloy Steel Total Stainless Steel Total Nickel Alloys Total meters drilled offshore Total meters drilled onshore 110 100 90 80 70 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f - 17 -
Index based on 2007 After a temporary slowdown of projects, a lot of flowline projects are in the pipeline from 2015 to 2018. Especially the demand for clad pipes will grow fast which could result in long delivery times. Forecast: Seamless and Welded Tube & Pipe (stainless steel and nickel alloys, 2007 2018) 240 220 200 180 160 140 Seamless Welded Clad Total meters drilled offshore Km of rigid flowlines & SCR Historic Forecast 120 100 80 60 40 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f - 18 -
This must not happen again! High performance materials incl. CRAs improve the safety of offshore production! - 19 -
If you have questions please contact: SMI - Steel Market Intelligence GmbH Kohlplatz 7, 6600 Reutte, Austria Tel. +43 5672 64262 Fax +43 5672 64262-88 www.steel-intelligence.com Wolfgang Lipp, Managing Director w.lipp@steel-intelligence.com THANK YOU! - 20 -