Valves, Automation, Measurement & Instrumentation
The high-pressure gas side of the utility services sector is consuming large numbers of 12” and smaller trunnion ball valves for transmission and storage projects this 2022 construction season. There is pressure on this size range in welded body configurations with the alternative being bolted body configurations, which are readily available. Buttweld valve modifications are currently running 6 to 8 weeks with expedited delivery available when needed. The low-pressure distribution side of the gas utilities sector is extremely active, and there is a lack of availability of certain meter set valves. Early planning will be critical as this market is expected to see pressure on availability through 2022 and into 2023.
The PHMSA pipeline safety ruling, which you can read about in our Additional InSight section, will have an impact on our upstream, midstream and gas utility customers. Please contact your MRC Global representative for information on how we can support your efforts to meet these new requirements.
Downstream, Industrial & Energy Transition (DIET)
The downstream valve and automation sector continues to gain momentum with increasing demand across both capital project and maintenance activities. The shift towards renewables and lower-carbon fuels has led to a multitude of capital investments from well-known end users as well as emerging players. Grounded in a significant number of higher pressure and temperature applications, these energy transition projects are requiring a growing necessity for stainless steel and nickel-based products, oftentimes with aggressive and challenging on-site delivery requirements. Fast-track style engineering, procurement and construction (EPC) projects have become the new norm and are being met with stubborn headwinds due to rising energy costs, labor shortages and ongoing supply chain and logistics obstacles. A high demand now exists for suppliers with inventory and shorter lead time solutions where expediting costs, air freight, and overall risk of delays in project schedules can be reduced or eliminated. Adequate planning and early supplier engagement are crucial to cost control, product availability, and on-time delivery, as valves continue to be a critical factor in the success or failure of a major project/turnaround.
Upstream demand for valves and actuation is slowly improving with major activity focused on midsize and smaller exploration and production companies. Select valve manufacturers servicing this sector have additional production capacity available to adequately supply current market demand. Except for some isolated items, valve and actuator supply is adequate to meet demands for well hook-ups and gathering lines. Following price adjustments and increases implemented in late 2021 and early 2022, pricing remains stable with no material increases anticipated.
China has adopted a “zero-COVID” policy which uses mass testing and targeted lockdowns in an effort to prevent community spread of the COVID-19 virus. Implementation of this program has caused delays for core manufacturers sourcing complete valves and valve components from China. Actuator manufacturers who are globally sourcing components are also experiencing longer lead times. MRC Global is working to mitigate these delays by stocking sufficient valve and actuator inventory, through forward-purchases and through our relationships with vendors who both source and manufacture within the U.S.
As of July 8, the U.S. rig count reached 752, up 273 rigs from the same time last year. Canada is up 38 rigs to a total of 175. The largest U.S. increase is in the Texas Permian Basin, which is up 113 rigs to 350. Internationally the rig count is up 66 from the same time last year to 824.1 In North America, approximately 80% of rigs are drilling for oil with 20% of rigs drilling for gas. As rig count numbers continue to climb, the demand for well hook-up valves and gathering system valves will increase.
1. Baker Hughes: https://rigcount.bakerhughes.com
Activity in the midstream sector is improving, as the rise in rigs and well completions will require infrastructure to transport the additional capacity. Demand will continue for floating and midrange trunnion valves required for hook-ups and gathering systems, but the current supply is adequate for the need. Integrity and maintenance projects will keep operators busy, increasing 16” and smaller trunnion and floating ball valves and pneumatic actuation. The major capital project market has also seen an uptick in activity. Mainline transmission pipelines and compression stations will require 20” through 42” trunnion ball valves with pneumatic and gas hydraulic actuators.
There are requests for expansion to existing export LNG terminals requiring larger diameter valves and actuation. The U.S. is well-equipped to supply Europe with much needed natural gas following the development of these LNG transportation systems and export terminals. Midstream valve and actuator demand is also expected to increase with this growth.
Pricing remains stable following increases implemented in early 2022 with no expectation of additional increases at this time. API published the 25th edition of API 6D with many trunnion ball valve manufacturers in compliance. This is anticipated to be finalized around November 1, 2022, giving manufacturers one year to be in full compliance.