The United Steelworkers Union, joined by several US producers of drill pipe, have filed antidumping and countervailing duty petitions against imported Chinese drill pipe. The petitions, filed on New Year’s Eve, did not attract as much media attention as IADC believes they should.
A day or two earlier, the US International Trade Commission found that oil country tubular goods (OCTG, or casing and tubing for oil well completion) that are imported from China are threatening to injure the US industry. This means that countervailing duties – and likely antidumping duties as well– could be assessed against those products.
According to industry estimates, Chinese drill pipe accounts for 50% of available pipe used in US onshore E&P. If, as IADC expects, Commerce finds dumping and subsidies and the USITC finds injury, Chinese supplies of OCTG and drill pipe would effectively be excluded from the US, causing sharply increased prices and shortages.
Antidumping and countervailing duties are penalty duties; however, unlike normal duties, the importer does not know how high they will be. Therefore, with these products subject to penalty duties, imports are very likely to stop entirely.
A preliminary decision on drill pipe is expected within three to five months. But the prospect of “retroactive” application of these duties could start to dry up imports by March 2010.
Energy producers looking to ramp up exploration and production for oil and gas in promising fields in North America need to get increasing supplies of drill pipe, casing and tubing. Shortages of these products could make our job of supplying more American oil and gas needs from domestic sources harder.
IADC is concerned that the US government is adding to the industry’s burden by entertaining these cases. The association is urging companies to ensure that its representatives at the state and Congressional level understand the impact these rulings may have on energy security in the United States.