The past few years have been particularly difficult for the oil and gas industry. Weak demand resulting from historically low prices made life remarkably tough right across the supply chain. It has been estimated that the collapse in oil prices, beginning in 2014, led to a global reduction in capital expenditure of some 40% over the following two years. Major projects that could no longer even come close to previously expected profit criteria were deferred or dropped altogether.
Although prices are still well below the post-recession high point, they now appear to be stabilising at a sustainable level. Combined with the drive for efficiency savings, that took place in every corner of the industry following the collapse, these higher prices are showing signs of stimulating a renaissance in activity.
According to Nicholas Head, product manager for Ametek SMP, “We’re considerably more confident about 2018 than we were about this year. We’re investing in raw materials, moving ahead of the market to support the increased demand that we anticipate in 2018. Initially, we expect to see this coming from the United States and from the Middle East shortly afterwards. But we believe it will be a global phenomenon.”
In gearing up for this upturn, it is particularly critical for a company such as Fine Tubes – one of SMP’s businesses - to match availability to demand because of the sourcing complexities involved when manufacturing high-performance tubes from speciality alloys, such as stainless steel, nickel and titanium, designed to provide maximum corrosion resistance and withstand pressures of up to 60,000 psi.
“Over-ordering of raw materials, or under-ordering, could prove to be a costly mistake,” says Head. “That is why we’ve developed an integrated forecast system designed to support our planning and raw material purchasing. It’s a feature of our operations that sets us apart from our competitors and gives us the confidence to really start investing in the coming recovery.”
A further measure of that confidence is the decision to promote the full range of the Ametek SMP offer at ADIPEC, one of the most important events for the global oil and gas industry. In addition to the precision, high performance tubing products manufactured by Fine Tubes, Ametek SMP produces high-purity strip, foil, shaped wire, high-purity metal powders, master alloys and clad metals. All six companies within SMP are niche specialists with a record of serving the oil and gas industry. Ametek SMP’s broad speciality metal product offering as a one-stop solution provider for critical applications is another string to the bow of Fine Tubes as the company prepares itself for the upturn.