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US oil and gas industry to apply for steel tariff waivers

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US oil and gas industry to apply for steel tariff waivers

The U.S. oil and gas industry is hoping to get steel tariff waivers for some of the materials they use most, even after the president announced plans to exempt the country's closest neighbors from the tariff.

In declaring a 25% tariff on global steel imports, President Donald Trump on March 8 agreed to allow steel from Canada and Mexico to enter the country without extra duties.

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In addition, waivers will be available for "any steel article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality." Importers will have to make their case to the federal government, according to the presidential declaration.

The Interstate Natural Gas Association of America wasted no time in laying the groundwork to do just that. "We believe the steel products used to build interstate pipeline infrastructure meet the two, independent criteria on which the president directed the Commerce Secretary to make exemptions: lack of sufficient U.S. production capacity and national security-based considerations," INGAA President and CEO Don Santa said in a March 9 statement.

INGAA and a number of other industry groups — including the Association of Oil Pipe Lines, the Natural Gas Supply Association, the Center for Liquefied Natural Gas and the American Exploration and Production Council — have emphasized in recent weeks that there is "zero domestic availability" for certain steel products used in the oil and gas sector.

American allies supply a substantial amount of imported high-strength plate steel and coil steel, which is wound after finishing. Roughly 65% of those products and large-diameter line pipe comes into the U.S. from NATO countries, and about 80% comes from treaty nations, which also include Japan and South Korea, according to INGAA.

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Mexico contributed a material amount steel pipe measuring less than 16 inches in diameter that the U.S. used in recent years, according to a May 2017 study by global consulting firm ICF Inc. The peak annual import of that type of material from Mexico over 2010 to 2016 was 85,440 tonnes, the study said. For reference, the U.S. consumed nearly 870,000 tonnes of that diameter steel pipe in 2016, importing roughly 71% of what the nation used, according to ICF.

Canada has been a significant supplier of line pipe ranging between 16 inches and 24 inches in diameter, according to the study. Looking at the greatest annual import of pipe of that size from Canada over 2010 to 2016, ICF found that one year the U.S. brought in 212,161 tonnes. The U.S. consumed almost 723,000 tonnes of that diameter steel line pipe in 2016, importing roughly 47% of what the nation used, according to ICF.

The American Petroleum Institute on March 8 expressed again its concern about the tariffs and vowed to try to make use of the exemption opportunities within the president's proclamation.

"Steel and aluminum are central to nearly every part of the U.S. energy value chain from on and offshore development, to pipelines, refineries, and the local manufacturing facilities that support them," API President and CEO Jack Gerard said in a statement. "We will work with the administration for maximum flexibility and consideration in how today's proclamation is applied to minimize the impacts to U.S. investment in infrastructure, energy development, and building new facilities for America's future."