The scientists at Russia’s NUST MISIS answered the call – they proposed an innovative technology for the production of rolled steel to manufacture corrosion-resistant field pipes with improved mechanical characteristics.

How will the new steel grade “SeverCorr” help reduce environmental risks and the operating costs of oil extraction? POSCO Newsroom presents worldsteel, “New Steel for Oil Pipelines Prevents Leaks.”

A newly-developed steel grade is improving the integrity of pipelines and reducing the environmental impact of Russia’s oilfields.

Oil extraction in Russia presents a particularly tricky environment for engineers. Pipes are constantly exposed to corrosion by a mixture of oil and concentrated salt, meaning that operation periods are cut short and accidents become increasingly likely. These can be particularly problematic, with surrounding areas becoming subject to dangerous levels of pollution in the result of leaks.

Repairs are not easy, either. Oilfields are often remote, and conditions can be hostile. The wilds of Siberia have weather conditions that contribute to the pipes requiring constant maintenance while simultaneously complicating the delivery and installation of replacement sections.

Thankfully a new, innovative technology from Russia’s National University of Science and Technology (NUST) looks to change the way such pipes are manufactured – increasing efficiency for companies and reducing not only operating costs and necessary repairs but also risk to the environment.

▲ Pipelines that service Russia’s oilfields must withstand extreme environmental conditions. (Image source: iStock)

l Making the Grade

At the centre of this innovative technology is a new steel grade – Severcor. The addition of chromium, copper and nickel during the steel’s manufacture means that the composition of the pipes can be carefully regulated, thus boosting their anti-corrosive properties. This could, researchers hope, “at least double” the lifecycle of the pipes, which in certain oilfield conditions can be as little as two years.

“The new technology provides increased corrosion and cold resistance,” explains Alexander Komissarov, one of the steel’s developers and research associate from NUST. “The development of new alloying schemes (adding impurities to the composition of the materials to improve the properties of the base material) and providing the necessary structural and phase steel composition to the production of rolled and sheet metal has become our main task.” According to NUST, this advanced steel grade will lower operating costs and reduce the environmental impacts of oil production.

“It is not just the steel grade’s intrinsic properties that have improved pipeline performance – the way the metal is shaped is also crucial.”

It is not just the steel grade’s intrinsic properties that have improved pipeline performance – the way the metal is shaped is also crucial. The new pipeline technology uses precise steel rolling techniques. What this does is twofold, reducing thickness and making that thickness more uniform. This uniformity means that the pipes are less susceptible to corrosion and to cold – a frequent issue in the freezing oil fields of Siberia.

The project has also developed several other steel concepts that researchers describe as “promising”. The NUST team says one set of melting and smelting experiments “passed the corrosion tests with flying colours”. Full-scale pilot tests for this new alloy are now being launched in Lukoil, Gazprom Neft, and Irkutsk, oil fields in West Siberia.

Severstal, the company that commissioned the university to research the production of the pipes, underlined the impressiveness of NUST’s technical achievement. The company said the that project involved high levels of “steel purity and structural uniformity” that represented “partly contradictory technological tasks”.

This makes it even more impressive that the research team were able to craft and implement this new steel grade – and could mean more impactful innovations for both steel and oil pipe manufacturing down the line.

The original content published on the worldsteel’s ‘Our Stories’ section is available at: https://stories.worldsteel.org/infrastructure/new-steel-for-oil-pipelines-prevents-leaks/

Consider some of the bigger shifts in the US energy industry:

The Shale Revolution

The “shale revolution” has impacted the entire energy system in the US and worldwide. Although the elements of horizontal drilling and fracking had been known for decades, it was the entrepreneurial genius of men like George Mitchell of Houston who found the way to link these technologies and apply them commercially. It resulted in the US going from a natural gas importer to an exporter of pipeline gas and LNG, an exporter of oil (but not a net exporter), and the collapse of prices for gas, LNG, oil and oil products. It reverberated throughout OPEC countries and other major producers like Russia, as well as in major importing countries. It also enabled oil and gas producers to reduce their footprint overseas and focus on domestic production opportunities.

The “shale revolution” has impacted the entire energy system in the US and worldwide. (Source: Bloomberg Business)

Coal Industry

Coal, which had been king in the middle of the last century, has been declining rapidly, losing market share to often cheaper natural gas. The improbable opportunity to ship coal to Germany provided some relief. The Trump Administration may have won the election by making promises to US coal-producing states, but having an impact on this declining industry will take more than rhetoric. While much attention has been given to anti-coal regulation it has been market forces that caused electricity producers to shift from coal to natural gas.

Nuclear Energy

Nuclear energy faces the twin threats of obsolescence, as well as competitiveness with natural gas. The regulatory system also contributes to its decline. Many of the roughly 100 nuclear facilities operating in the US were built about 40 years ago, which means that they were due for major upgrades or retirement now. Only a few new plants are under construction, and they are massively over budget and have been built only in states with regulatory systems in which consumers must bear the cost of such overruns. Conventional wisdom had been that these plants would be upgraded and run for decades more. Instead several have announced shutdowns, and more are expected to follow. Nuclear had been considered a low-cost base fuel, but has trouble with competing with natural gas at current prices.

U.S. President Donald Trump and Secretary of Energy Rick Perry (Source: Fortune)

Energy policy in the Trump Administration, led by Secretary of Energy Rick Perry, is trying to protect both coal and nuclear because of their important role as baseload producers, in contrast to wind and solar that cannot provide consistent power to the system. But it seems doubtful that regulatory mechanisms will overcome market forces.

Falling Prices

The collapse of oil and natural gas prices led to the elimination of hundreds of thousands of jobs worldwide and slashing capital budgets, especially for higher-cost production such as deepwater, the Arctic, and other frontier environments. The shale play was led by small independent companies, but many of them took on too much debt, spent too much money to buy leases from mineral-rights owners, and drilled but often didn’t complete wells because of a focus on future growth. A number of them have failed financially or sold off properties. Even giants like BHP Billiton, which entered the US shale market with a USD 20 billion investment, wrote off USD 13 billion within six years. Although there continues to be substantial financing available from Wall Street, the focus has shifted from growth to cash flow. This has important implications.

But cheaper natural gas has had a positive impact in four areas:

Natural Gas and Oil Pipeline Projects

Natural gas and oil pipelines (midstream) have had a resurgence of activity, both proposed and built. To be sure there have been and continue to be strong challenges by environmental organizations. However, many pipelines have gone forward and others have been suspended because of economics rather than protest.

The U.S. went from an importer to an exporter of liquified natural gas. (Source: The Globe and Mail)

New LNG Facilities

LNG exports are a new phenomenon for the US. For years the US faced a deficit in natural gas, leading to proposals for nearly 40 LNG import facilities. Fortunately, most of them were not built, and those that were have largely become LNG export terminals. These required massive capital investment across the value chain. Greenfield facilities are now planned or under construction in multiple locations.

Expansion of Pipelines to Mexico

Pipeline gas to Mexico is little noticed by the public but the expansion has been dramatic. Despite the liberalization of the energy system in Mexico the demand for natural gas for industry and consumers, especially in Northern Mexico, is likely to continue. There is even talk about an LNG export terminal in Mexico’s Baja peninsula, to be supplied from US sources. The shadow over this is anti-immigrant policies of the Trump Administration and uncertainties related to the renegotiation of the NAFTA trade agreement. There is concern that the upcoming Presidential election in Mexico will result in an anti-US tide that might impact progress on the energy value chain.

Resurgence of the Petrochemical Industry

The petrochemical industry in the US has had a resurgence with low-cost natural gas. Approximately USD 100 billion of investment is currently underway or recently completed in the Texas and Louisiana Gulf Coast.

What we see here are currents moving in very different directions in the extended and complex energy supply chain in the US and internationally.

What does this mean for the steel industry?

Pipelines

Steel is literally the backbone of the US oil and gas system. Hundreds of thousands of miles of pipelines form a complex web across the continental US, in Alaska, to Canada and Mexico, and out to the Gulf of Mexico. Though mostly unseen, these pipelines enable the production and consumption of resources reliably and at affordable prices. New activity will be limited in the Gulf of Mexico for some time, with most of it focused on completing projects that were already underway. There may be some new activity in Mexican waters in the Gulf as the political opening there results in development, much of it in proximity to known fields on the US side of the border.

For example the Keystone XL pipeline, planned to bring more heavy oil from Canada, has been contentious for years for a variety of reasons including the higher carbon content of the crude and the route of the pipeline. Opponents have recently adopted a new strategy suggesting that the project is no longer economic – this is a way to undermine political support. TransCanada, the developer, insists that it is viable and on track. However, in Canada itself, plans have been abandoned for a massive oil pipeline to connect the producing area of Alberta in Western Canada to the east coast.

The Keystone XL pipeline was planned to bring heavy oil from Canada to the U.S. (Source: Horizon Supply Company)

Platforms

The offshore industry has been a major user of steel, both for platforms often built in Korea, and also for the related supply chain. Capital investment has been hardest hit in this area, and may not resume for 3-5 years until global demand increases and production growth slows.

LNG Facilities

LNG is a relative bright spot. The value chain includes the production of gas, transportation to newly-built liquefaction facilities, LNG ships, and import/regasification facilities. Lithuania recently built an LNG import facility to promote its independence from Russia. In other cases, majors like Shell, are now discussing building infrastructure in countries as diverse as South Africa and Vietnam so that they can become gas users. Japan shut its nuclear facilities after Fukushima and has been slow to reopen them. It lacks a domestic pipeline system because of the mountainous terrain and has relied on two dozen LNG import terminals. Will that create demand for new facilities?

An interesting twist is that Kinder Morgan, a leading pipeline company, has defined itself more broadly as an energy transfer organization. It had been frustrated in trying to build a natural gas pipeline from the Marcellus field in Pennsylvania to Boston, where natural gas prices are often the highest in the US. So they have decided to build LNG vessels to transport gas from terminals in Louisiana and Texas to Boston, despite restrictions imposed by the protective Jones Act that requires US vessels and crews for transport between US destinations.

LNG vessels transport LNG between terminals. (Source: World Maritime News)

Shale Gas Wells

The US shale play has been compared to a manufacturing process. Traditional development wells were expected to produce gas for years and oil sometimes for decades. But the fracking operations have a rapid decline curve which means that companies are constantly drilling new horizontal wells and are doing so for greater lengths. More than a dozen horizontal wells may stretch from a single pad. Budgets are now focused on cash flow, which means spending less on acquiring leases and more to produce oil – this results in more spending on steel.

Crude Oil Vessels

The US is now exporting about 2 million barrels of oil per day. US producers had been largely banned from exporting oil until two years ago when outdated legislation was changed. Increased domestic production and the ability to export dramatically changed shipping patterns. Nigeria had been a major exporter to the US but has forfeited the market. Saudi Aramco bought out Shell’s interest in the Motiva joint venture and took complete control of the Port Arthur refinery, the largest in the US. Many observers believe this was to assure a market for Saudi crude. Thus increased trade in oil and shifting markets may create demand for new vessels.

Petrochemical Facilities

Finally, low-cost natural gas has been a constant in the US. In addition to the new construction of petrochemical facilities along the US Gulf Coast mentioned previously, it adds the potential for a reindustrialization of the US economy that was unimaginable just a few years ago. This can cut across many industries for which power costs are a major factor. This may seem inconsistent with e-commerce, but the two may go together as mega distribution centers are built so that a growing fleet of trucks can provide same-day delivery to consumers.

There are many paradoxes in the American energy system and supply chain. For the steel industry, the key is to determine where those opportunities are located.

Bill Arnold is a professor in the practice of energy management at Rice University’s Jones Graduate School of Business. Previously, Arnold was Royal Dutch Shell’s Washington director of international government relations and senior counsel for the Middle East, Latin America and North Africa for 16 years.

Cover photo courtesy of Petroleum Economist.

His beginnings at Gwangyang Steel Works

After entering the company, Kim Yong-hoon directly operated the hot-coil production line at the No. 2 Hot Rolling Mill’s operation cabin. At the time, all of the hot rolling equipment had to be operated manually, and Kim operated the speed drive which controlled tension during the rolling process and the reduction operation which determined the thickness of the sheets of steel and the actual rolling itself. Because everything was done manually, workers learned through experience, and new workers made lots of costly mistakes. Dealing with the aftermath of accidents was another physical burden on the workers.

Kim Yong-Hoon working at an operation board at the No. 2 Hot Rolling Mill in 1993

Kim recalls, “One time, a foreign guest visited the mills. He approached me for a handshake, but I couldn’t take my hands off of the operation board for even a second to shake his hand. That’s how focused you had to be to operate the mills back then. After 13 years of doing that, I knew we needed an automated system. That’s why in 2003, I willingly joined the Finishing Mill No Touch Operation Task Force Team (TFT).” The TFT worked to implement an automated system, but when they could not produce the desired results in a year, the team was dismantled.

Following the TFT, Kim Yong-Hoon worked in facility management and quality assurance. In order to produce high-quality products and minimize the number of defects, workers had to be flawless in facility management and operations. Again, Kim knew that the only way to achieve this was through automated operations, but it was too difficult to implement an automated system in an existing mill.  

A New TFT, A New Opportunity

As demand for high-strength steels surged in 2012, including for automotive steel sheets and API steel sheets (oil pipelines, oil-related structural steel products, etc.), POSCO decided to establish a TFT for the construction of the No. 4 Hot Rolling Mill at Gwangyang Steel Works.  Kim Yong-hoon, who was eager to apply automated systems and enhanced the quality of steel products, joined the TFT.

The Opening of the No. 4 Hot Rolling Mill at Gwangyang Steel Works in 2014

The construction of the No. 4 Hot Rolling Mill was special because it was the first mill to be built independently, without relying on Japanese firms that previously provided all the technology and equipment. In order to become technologically independent, the TFT had to research everything from scratch. That way, they could work in the automated operations systems from the design stage. In the end, the No. 4 Hot Rolling Mill opened in Gwangyang on October 30, 2014. The automation technology Kim and the TFT applied to the mill greatly increased the quality and quantity of production of high strength steels. However, Kim Yong-Hoon didn’t stop there and continued to enhance the mill’s technology.

FM Full-Length Hydraulic Oil Application Technology

Kim was the first in Korea to come up with the finishing mill (FM) full-length hydraulic oil application technology and applied it to the No. 4 Hot Rolling Mill. This new technology ensures the quality of high-strength steel surfaces in its finishing stage.

Traditionally, the rolling process for high-strength steels is more difficult because when the tough material passes through the rollers, it causes severe rolling fatigue and vibration due to high resistance. However, there is a way to eliminate rolling fatigue and vibration. By spraying oil on the rolling equipment, an oil film is formed between the roller and the rolled material. This oil film can transmit a large amount of force with less effort, meaning the steel will roll with less fatigue and vibration. While using hydraulic oil is common, what is different about this technology is that the oil can be applied to the full length of the rolled material, without worrying about slippage.

Kim Yong-Hoon checking on the equipment at the No. 4 Hot Rolling Mill

“I worked closely with the research department and equipment engineers to develop this technology. We ultimately came up with a way to remove the oil as soon as one roll is finished, before the next one begins to eliminate slippage. We got rid of the misconception that you can’t spray oil on the full length of the rolled material. As a result, we decreased the occurrence of scales from 0.83 percent in 2015 to 0.23 percent in the first half of 2017. The number of times irregular replacements occurred decreased from 20 times in 2015 to 7 times in 2017. We also expanded giga-grade steel production from 20 steel grades in 2015 to 30 steel grades in the first quarter of 2017. Due to the impressive results, the technology was chosen as a second-grade proposal this year.”

No Touch Operation Technology

Kim then went on to find implement the use of big data at the mill for increased efficiency and performance. He took the settings that the operators inputted manually for the operation equipment and turned it into big data in the form of an operations table, and continuously accumulated data for the automatic operations equipment program, or No Touch Operations.

“I vowed to implement the No Touch operations technology to the  No. 4 Hot Rolling Mill from its early construction stage. Because it was my first time, I made numerous mistakes. However, after a year of accumulating data on the shape of the rollers and on the final crown, we are now entering the stabilization phase. Even now, we are gathering significant data to increase the accuracy and efficiency of operations and we are updating the information whenever we have to apply it to a new material. The data table is really the key to the No. 4 Hot Rolling Mill’s success.”

Kim further applied the No Touch operation technology to speed operations to keep the tension of the rolled material constant and prevent the material from leaning to the left or right using loopers.  Kim says, “This process also took one year of research and failures to develop. The new hydraulic looper is 5 times faster than traditional motor loopers. The increased efficiency allowed us to go from needing 2 operations desks to only one and we allocated the remaining speed driver to quality improvement work. As a result, we have increased the added value of high strength steels produced at the No. 4 hot strip rolling mill.”

Equipped with all the new technology, the No. 4 Hot Rolling Mill surpassed the record production capacity of 3.5 million tons and reached 3.9 million tons in 2015 and 4.1 million tons in 2016. To add, the production share of POSCO’s World Premium products for the No. 4 Hot Rolling Mill increased from 44.3 percent in 2015 to 67.3 percent in the fourth quarter of 2016 and reached 71.2 percent in the first quarter of 2017. The work rate also increased from 92.42 percent in 2015 to 96.02 percent this year and the quality nonconformity rate dropped from 1.67 percent to 0.64 percent in the same time span.

The Mindset of a Master

Kim Yong-Hoon was able to come up with numerous improvements to the operation systems at POSCO’s No. 4 Hot Rolling Mill because he views everything as a potential problem. He is always looking for ways to improve the production process and equipment, even if things appear to be working fine.

Kim’s goals for the future are straightforward. “We will do our best to make a sustainable POSCO by lowering the cost of products and raising the quality and production of high value-added steel.” His consciousness of potential problems and solutions is what lead to his achievements that include 18 proposals for representative registration and 11 proposals for joint participation. He also obtained a patent for his Variable Hot-Rolled Bite Cooler Header, which was awarded the A-grade by the POSCO Research Institute. This year, he is a POSCO Master of Korea, and he shows no signs of slowing down in his search for new technology and innovations to prevent accidents and improve POSCO’s products.