Tariff Exemptions

The U.S. Commerce Department has received over 20,000 requests seeking exemption from the 25% tariffs on steel imports and 10% duties on aluminium imports, and pipeline companies and producers have filed more than 500 of these, relating to pipes and materials. The submissions were received since March 8, 2018, when President Trump enforced the tariffs legislation angering steel manufacturers across the globe and the U.S. oil & gas industry. The first responses from the government are expected this month, Kallanish Energy learns. Firms such as Plains All American Pipeline, Kinder Morgan and Hess Corp. claim U.S. steel and pipe manufacturers can’t meet their demand and they rely on imported material. Around 77% of the steel used in U.S. pipelines is imported. The problems cited by these companies in their exclusion requests include incompatible specifications, unavailability for volume and timeframe, and safety concerns. Kinder Morgan is seeking exemption for its Gulf Coast Express gas pipeline, which will run from West Texas to the U.S. Gulf Coast. Turkish steelmaker Borusan Mannesmann will supply 47% of the specialized pipe needed for the $1.75 billion project. In a filing, Kinder said only one U.S. manufacturer could meet its needs, but it could not meet the volume required within the necessary timeline. Oil and gas producer Hess requested to use Japanese pipe for its Stampede offshore project in the U.S. Gulf of Mexico citing safety concerns, Reuters reported. “Without the ability to use this product, we will not be able to guarantee corrosion resistance in deepwater operations using other currently available steel products – potentially compromising both safety and environmental protection,” it said. Pipeline developer Plains All American Pipeline is asking for its 500-mile Cactus II oil pipeline to be excluded from the tariffs. The line, connecting West Texas oilfields to export docks near Corpus Christi, Texas, will be built with pipes from Greece’s Corinth Pipeworks. The first shipments are expected to arrive this month, the firm said in its request. Plains added that there’s no U.S. mill that could produce the pipe for its line, with the specifications needed. The 585,000-barrel per day (BPD) line is planned to enter operations next year. Only three mills in the world make such pipe, and delivery delays could exacerbate infrastructure constraints, Plains said. Last Friday, API’s CEO Jack Gerard said the oil institute is concerned with the lack of transparency leading up to the newly announced tariffs on China, as well as the impact on the U.S. energy renaissance and consumers. The new Section 301 tariffs on a wide range of industrial parts and products used in the U.S. natgas and oil industry will have a “detrimental effect,” he said. “We have very vocally opposed the implementation of Section 232 tariffs under the guise of national security concerns, and we are now also troubled with the Administration’s process around the implementation of Section 301 tariffs on China,” Gerard said. He claims the tariffs on China, steel and aluminium “will have a real impact on current and future U.S. energy projects, and could ultimately harm our energy renaissance which provides high-paying jobs and affordable and reliable energy to Americans.” Joseph F. Barone ShaleDirectories.com 610.764.1232 jbarone@shaledirectories.com www.shaledirectories.com

https://www.shaledirectories.com/blog/tariff-exemptions/