BP, Marathon Oil, Hess, Kinder Morgan ask US for exemptions from steel tariffs on imported pipelines
Their requests began streaming in about two months ago after President Donald Trump imposed a 25pc tariff on steel imports that now applies to Canada, the EU, Mexico and other trading partners. Oil and gas companies are hoping to use a tariff exclusion process that only applies to specific steel products not adequately available in the US or needed for national security.
Oil and gas companies say without exemptions, the tariffs will drive up the cost of drilling wells and building pipelines that consume large amounts of specialty steel that are difficult or impossible to acquire in the US. The US Commerce Department has said it will address most tariff exemption requests within 90 days, meaning initial decisions may start being published in the next few weeks.
BP has requested tariff exemptions for nearly 14,000 t/yr of steel pipes, tubes and other products it says are not available domestically or were sourced before the tariffs were imposed. About 10,000 t/yr of those imports would be used in BP's 140,000 b/d Mad Dog 2 project in the US Gulf of Mexico and will have to have mechanical properties to handle sour crude, according to the requests.
"No US mill can supply line pipe that meets the stringent environmental specifications for Mad Dog 2," BP said.
Marathon Oil is seeking tariff exemptions for 5,000 t/yr of a proprietary pipe product from Japan it says is used in sour wells and not made in the US. The exemption will support a "national security objective" of energy independence, it said. The US subsidiary of Austrian pipe manufacturer Voestalpine Tubular is also seeking exemptions for more than 50,000 t/yr of steel it says are being imported on behalf of Marathon.
Hess two months ago requested exemptions for 3,700 metric tonnes of imported steel from Japan it plans to use for exploration and production on its 80,000 b/d Stampede field in the deepwater Gulf. The company at the time of the filing said some of the steel was already en route to the US and would be delivered by May.
Oil and gas pipeline developers are also seeking tariff exemptions.
Kinder Morgan last month requested an exemption for "highly specialized" 42-inch pipeline being imported from Turkey for its $1.8bn Gulf Coast Express natural gas pipeline, a 514-mile pipeline that will provide 2 Bcf/d of transportation capacity from the Permian basin to Agua Dulce, Texas. The pipeline is "critical" to national security because it will reduce bottlenecks in associated gas production in the Permian basin, enabling 1mn b/d of additional oil production, Kinder Morgan said.