Pipes, Fittings and Flanges, or commonly called PFF, are all products and materials used in the “processing” part of hydrocarbon production, as well as in midstream and downstream segments. Processing the hydrocarbons is required to ensure it is ready for “sale” or further transfer to a refinery or a tanker/carrier and involves various separation, treatment, filtration and pumping equipment and processes, all connected by a system of pipes.
A hollow tube that is used to convey hydrocarbons, water or process air, called a pipe. Sometimes, people may call the pipe and tubing interchangeable, yet there is a difference in how they are classified and used, i.e. the pipe is used mainly for process-related applications to transfer fluids and gases and classified by "Schedule Number" (SCH) and Nominal Pipe Size (NPS), whereas a tube is primarily used for structural purposes and “higher” pressure / critical applications (flowlines and control, umbilicals, heat exchangers) and classified by the outside diameter (OD) and wall thickness (WT). In addition, tubing requires stricter tolerances during the manufacturing process, hence making it more expensive than piping.
So, descriptions look like this (e.g.)
- Tube: 1" x 2”
- Pipe: NPS 1-SCH 60
Steel piping products are distinguished by a number of different criteria, such as:
- Material type & grade
- Manufacturing process
- Manufacturing standards
Material type & grade
Generally, carbon steel pipe is widely used and the most cost-effective choice, when the operating conditions allow using carbon steel pipe or a deliberate decision is taken (based on the economic and technical comparison) to use carbon steel pipe vs. stainless steel. Other materials, such as copper, nickel, chromium, manganese (commonly called Alloy Steel) and various variations of Stainless Steel are widely used depending on the application. The oil & gas industry is the heaviest user of alloy steel pipes, due strength and impact resistance levels of the materials required. Obviously, the utilization of non-carbon steel pipes comes with a significant cost difference.
Pipes are manufactured using 3 distinct processes:
- Manufacturing of Seamless Pipe requires a process whereby a heated piercing rod pushed through a solid steel billet that creates a hollow section in the billet, which then becomes a tube.
- Electric resistance welding (EWS) is the process whereby steel coils are welded longitudinally, which gives a superior output when compared to other welding methods. ERW products are the next available alternative to seamless pipes, in certain cases.
- Submerged Arc Welded (SAW) pipe is manufactured by rolling and welding steel plates, using longitudinal welding ( LSAW), double submerged arc welding ( DSAW) or spiral welded pipe (SSAW). This type of pipe mainly comes in large sizes and used for transmission purposes ( line pipes).
These are the pipes norms and standards that govern the manufacturing process:
- ASME B36.19 (stainless and nickel alloy pipes) and ASME B36.10 (carbon/alloy pipes)
- EN / DIN / BS (European standards)
- API 5L (line pipes for midstream oil & gas)
A flange is a ring of steel that connects two pipes together. Flanging, as a method, is one of the most widely used methods to join pipes, after welding. In addition, flanges are used as a breakup connection, when a pipe system requires inspection and maintenance. Any flanged connection/joint is always composed of two flanges, a gasket, and nuts & bolts, to ensure there is a sealed connection.
Type of Flanges
The most commonly used flanges in the petroleum industry are:
|Lap Joint Flange is mainly used where regular disassembling is required, as well as when there is a limit on space. As a result of lack of contact with fluids, low carbon steel materials can be used.
|SlipOn Flange is most suitable for low pressure and low-temperature applications|
|Welded Neck Flange is used in several applications, high-pressure extreme temperatures (including sub-zero). When compared to other flanges, welding neck flanges cost more and bulky.|
|BlindFlange is used for isolation and piping system termination purposes|
|SocketWeld Flange commonly used in small diameter piping systems and mainly suitable for low pressure/temperature applications|
|Threaded Flange is mostly used in utility services, like water/air and/or small-bore piping systems|
Images source: https://hardhatengineer.com/types-flanges-used-piping/
Flanges Materials and Pressure Rating
Flanges could be made of different materials, such as steel of various grades (stainless steel, carbon steel), aluminum, cast iron, bronze, brass, and others. Forged carbon steel flanges are the most commonly used. In some applications, flanges could be lined with higher-grade materials and generally would match the material of the piping system itself.
There 7 common pressure classes of forged steel flanges, according to ASME. The higher the class, the higher the pressure the flange can handle. The number below are in pounds, you may see a variation of it, e.g. 150lb, 150#, Class 150.
A pipe fitting is a component of the piping system that changes the direction of the pipe, the size and serves as a connection. There is a large variety of fittings of different pressure class and material composition. Those include:
- Butt-weld (BW) fittings
- Socket Weld (SW) fittings
- Threaded (THD) fittings
- Elbows of various radius
- Tees (straight, reducing, concentric)
Fittings can be manufactured both from the welded pipe and seamless pipe. Various hot or cold processes are used to manufacture fittings, such as:
- Induction bending / Mandrel method
- Extrusion method Tees
- Deep drawing method for Caps
Supply & Demand Dynamics
Supply & Demand Dynamics
Demand for PFFs is primarily driven by general economic growth worldwide. PFF demand is very diverse and includes water, sewage, industrial, petroleum and various process industries. Key demand drivers in the petroleum industry are:
- New project awards in upstream (30%) and downstream (70%)
- Brownfield modifications of old platforms, extensions and tie-ins
The market is divided into manufactures/mills, traders/stockholders. In general, manufacturers/mills prefer to deal with traders/stockholders, although some of the mills would have in-house trading divisions. Major manufacturing locations are the USA, Italy, UK, France, Germany, Spain, China, India.
Lead times vary, depending on how close the material specification to standard and most commonly used materials. Lead times in the USA and the Asia Pacific tend to be half the time of European origins.
Lead times (approx.)
Stainless steel welded pipe
- Europe 10-24 weeks
- Asia Pacific 10-14 weeks
Stainless steel seamless pipe
- Europe 16-24 weeks
- Asia Pacific 10-12 weeks
Stainless steel fittings
- Europe 10-24 weeks
- Asia Pacific 16-22 weeks
Stainless steel forged flanges all classes
- Europe 12-24 weeks
- Asia Pacific 8-12 weeks
- US lead times are 4-16 weeks
Duplex steel materials have lead times ranging from 18 to 26 weeks. Duplex materials PFFs fluctuate significantly more, both in terms of prices and lead times, than stainless steel made PFFs. Generally, traders and suppliers are in the best position to know the market and find effective solutions, when the lead times are critical.
Overall, global production levels are almost back to a pre-pandemic time and there is no disruption expected.
Cost & Price Analysis
Cost & Price Analysis
Prices for PFFs generally follow the costs and can fluctuate 5% - 7% in a 6 months span, given no extraordinary events happen. Prices for forged flanges can fluctuate up to 25% in a 6 months span, given no extraordinary events happen. Aspects such as 1) point of origin (e.g. Asia vs. Europe) and 2) mill vs. stock materials have a direct impact on prices for PFF and may represent a difference of more than 15%. In addition, standard products with higher demand tend to be priced less, as the supply of those products is high. Whereas, more bespoke and exotic specs materials with less demand on them, costs more to produce, hence priced accordingly.
Price margins of traders are one of the lowest and do not generally exceed 5%, depending on numerous facts. The volume of a single order is the key factor that influences the margin.
Due to reduced demand, the utilization of production capacity is relatively low, creating downward pressure on prices for pipe, fittings and flanges. Yet, this is somehow balanced by significant fluctuation in raw materials, in particular for commodity items and stainless steel materials.
The cost structure of pipes, fittings, and flanges is broken down into as below. The biggest components are steel prices ( including scrap), utilization levels and price of Nickel.
- Raw materials
- Mill utilization levels
- Forge masters utilization levels
- Manufacturing processes
There is no clear and direct correlation between prices for raw materials and ready-made products, as sometimes scrap prices may keep the prices of raw materials unchanged, even during increasing cost of steel and other alloys. As a rule of thumb, higher-grade materials, with the larger composition of Nickel, will be more subjected to raw materials costs. Whereas standard products are more driven by utilization levels and energy costs (manufacturing processes).
This category is highly standardized and commoditized. This gives the highest level of competition, as well as an opportunity for sourcing on a global basis. In addition, leveraging bigger spend adds value, as mills and traders are interested in the visibility and stability of revenues. There are multiple procurement options available, yet the summary as below:
|Strategy||Market's Best Price||Market's Best Delivery||Cost to implement||When to use|
|Frame Agreements - fixed price||NO||NO||LOW||Dependent on an organization. Least preferred option|
|Frame Agreements - fixed price+ surcharge for fluctuating materials||YES||NO||LOW||Dependent on an organization. Might work well in large organizations|
|Preferred Vendors Frame Agreements – call-off pricing||YES||YES||MEDIUM||Frequent, repetitive and larges orders|
|Tactical procurement||YES||YES||HIGH||When orders ( irrespective of size) are not frequent|