Steel prices have dropped due to the global financial worries. Delays and cancellations of large energy projects are starting to effect pipe mills (LINK) .
In particular, there is a growing demand from energy firms for X-100 and X-120 grade steel pipe that is 48 inches or larger in diameter. X-100 and X-120 are specialty steel alloys consisting of nickel, chromium, molybdenum, niobium, titanium, and copper.Here's the math: Less steel is needed to build a high pressure gas line if you use high strength steel (X-100 & X-120) vs. lower strength steel (X-70 or X-90). Less steel equals less cost, reduces the customer cost paid for the natural gas.
Currently, X-100 and X-120 grade steel pipes are manufactured solely by Nippon Steel and Mitsui.
North American pipe-makers currently offer large diameter pipe with X-70 and X-90 steel grades.
The Japanese have long term needs for natural gas in the form of LNG, the technological ability to supply high strength pipe, and open capacity to produce the pipe. Why haven't they stepped forward for an equity position in an LNG project?
For Alaskans and the Alaska gas producers there are several advantages over the proposed Canadian pipelines:
- Reduced cost (shorter pipeline)
- 100% In State All-Alaska All-USA pipeline.
- Equity partner / Long term customer, reduces project cost and nails down future income model.
- Market Flexibilities - LNG can be sold to multiple markets (West Coast / Asia) vs. a single market via pipeline.