Trump’s pipeline memorandum causing concerns in the oil and gas industry
US pipeline manufacturers and oil producers, including the company behind the Dakota Access Pipeline, have called into question President Trump’s call for US pipelines to be constructed from domestically produced steel.
One of Trump’s campaign pledges was to scrutinise US steel imports and seek a revitalisation of the American steel industry, promising “we will put new American steel into the spine of this country.”
In January 2017, Trump issued the Presidential Memorandum Regarding Construction of American Pipelines, which instructed the Secretary of Commerce to “develop a plan under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines, inside the borders of the United States, including portions of pipelines, use materials and equipment produced in the United States…”
In March, the Department of Commerce called for input on the use of American-made materials in construction and maintenance of American pipelines. This input, including responses from a number of pipeline manufacturers, has now been made public.
After welcoming the president’s support of the Keystone XL and Dakota Access Pipelines, the American Fuel and Petrochemical Manufacturers trade association wrote in its comments: “We are concerned, however, about the federal government mandating the use of domestic steel and interfering with the free market.”
Energy Transfer Partners, the major owner of the Dakota Access Pipeline set to open next month, wrote: “If the US pipeline industry were constrained to only domestic steel and pipe mills, we do not believe the domestic producers have sufficient capacity. This has been evident in past years when construction activity was moderately high. The impacts of such a restriction are expected to severely delay project schedules, drive up costs, decrease availability, and lower quality.
Magnolia Energy, which is currently building an LNG export terminal in Louisiana, noted that the policy could increase oil and gas production costs in the USA, in turn pushing international companies to get their oil and gas supplies from elsewhere. Magnolia also questioned whether the United States had the iron manufacturing capacity to match the demands of the growing energy economy.
“In the event that there is insufficient manufacturing capacity to keep pace, broad application of the proposed domestic content policy could create a project backlog, further dis-incentivising investment in U.S. energy infrastructure.”
This article was written by Daryl Worthington, assistant editor of Fluid Handling.