It’s Economics 101. Current and expected increases in the demand for pipe, coupled with a sorely deficient supply, are giving Louisiana’s pipe manufacturers and fabricators the confidence to update and expand their facilities.
Much of the current orders for pipe are coming out of the shale plays of Texas and Louisiana, but the impending proliferation of liquefied natural gas plants is expected to soon add fuel to the fire. That means pipe suppliers must prepare now for a ramp-up in production if they want to stay ahead of the curve.
It’s a far cry from the dismal days of 2015 and 2016, when the industry suffered from a sharp decline in the oil and gas market. That led to significant and sizeable layoffs for many pipe suppliers. Moreover, volatile commodity prices led to wild fluctuations in the price of steel, an essential input to the industry.
That all changed in 2017 and 2018, as oil prices stabilized, and optimism rebounded over market forecasts. According to the Industry Market Research Report, published in December 2018 by IBIS World, demand for both seamless and welded pipe increased substantially in 2018, a trend that will likely continue through 2019 and 2020 due to a significant rise in oil and gas exploration. This presents unprecedented opportunities for the pipe industry.
Louisiana firms are already in prep mode, and have felt confident enough to open up their pocket books. In February, Baton Rouge-based Epic Piping announced plans to spend up to $40 million to expand its pipe spool fabrication facility in Livingston and invest in a new 24,000-square-foot administrative office in Baton Rouge.