Industry insight

Australian manufacturing: securing domestic pipeline construction

The domestic manufacture of steel line pipe in Australia has a long and impressive history in the evolution of Australian industry. Recently, the increasing uptake of foreign-manufactured steel has threatened the viability of the domestic industry. However, there are still numerous benefits to domestic supply that cannot be met by international businesses.

The OneSteel Oil and Gas pipe mill (now Australia's only domestic API pipe mill), and Australia's largest steel maker BlueScope Steel, with Bredero Shaw, play vital roles in the supply chain to provide essential pipe for Australia's pipeline constructions.

The flow-on effects of a sustainable domestic manufacturing industry involved in pipeline coating, construction, operations and transportation, as well as the communities and personnel that support them, cannot be underestimated. An effective domestic supply chain can offer unique on-hand and readily-accessible solutions to meet critical supply requirements for line pipe.

The benefits of the domestic supply industry were well demonstrated in the support given to ensure the success of Epic Energy's South West Queensland Pipeline Expansion (QSN 3) Project. The supply chain commenced with hot-rolled coil from BlueScope Steel and pipe manufacturing by OneSteel and Orrcon, and finally, pipe coating by Bredero Shaw. To minimise the supply chain risks and to supply pipe thicknesses outside the Australian capability, pipe was also manufactured in Japan by JFE with a portion coated in Malaysia. By splitting supply of critical components in the project, Epic Energy could be confident it had a shared supply chain risk strategy if any issues occurred. 

An outline of the QSN3

The QSN 3 Pipeline Project involved the looping of both the South West Queensland Pipeline and the recently constructed QSN Link pipeline. Associated pipeline facilities and hot tap cross-connections were also installed.

The QSN 3 Pipeline Project was required to transport natural gas an d coal seam gas from the Surat Basin at Wallumbilla to Moomba. The 457 mm diameter QSN3 pipeline stretches 937 km in length and comprises API 5L X70 grade line pipe. The pipeline required 9.1 mm, 10.8 mm, and 12.7 mm wall thicknesses and a maximum allowable operating pressure of 15,300 kPa.

BlueScope Steel supplied the hot rolled coil for the manufacture of 550 km of 9.1 mm thick pipe to domestic pipe manufacturers OneSteel and Orrcon. OneSteel manufactured 350 km of the line pipe and Orrcon Operations manufactured 200 km.

JFE manufactured 450 km of pipe which included all of the 10.8 mm and 12.7 mm thick pipe outside the local manufacturers' capability.

Bredero Shaw Australia coated 750 km of the pipe while Bredero Shaw Malaysia (BSM) coated approximately 200 km.

Local steel delivery commenced on January 2010 and concluded in January 2011.

Domestic industry collaboration

The construction of the QSN 3 Pipeline Project required a significant level of inter-industry collaboration to ensure the pipe for the project would be delivered on-time and on-budget. This was achieved through excellent ongoing communication and close cooperation.

Members of the local supply chain were able to work together to support Epic Energy's requirements throughout the project. This was no more evident than when storm conditions in Queensland led to extensive flooding which meant it was necessary to reverse pipeline construction direction in order to bring the project in on time. Local manufacturers worked together to adjust their schedule and deliver domestic finished pipe on time proving the value of domestic supply to mitigate project risk. 

This support was critical to Epic Energy as the pipeline needed to be completed on-time so that it could meet its gas contract obligations.

Local team development

Another factor in the success of this project can be attributed to the project team developed by Epic Energy. Local pipe manufacturer, OneSteel, played an integral part in this team. Part of the project plan was to share pipe supply which included domestic pipe manufacturing by OneSteel and Orrcon Pipe Mills (both supplied hot rolled coil by BlueScope Steel Australia) and pipe from JFE Steel Corporation via Marubeni-Itochu Tubulars Oceania (MITO). MITO was the prime contractor co-ordinating pipe supply for the QSN 3 Project, with pipe being supplied by the three pipe manufacturers. Tonnage splits across the project were:

• JFE Corporation – 40,000 tonnes of finished pipe
• OneSteel – 35,000 tonnes of finished pipe
• Orrcon Steel – 20,000 tonnes of finished pipe.

All line pipe was externally coated with fusion-bonded epoxy, as well as fixed with an epoxy lining to deliver long life performance.

MITO contracted Bredero Shaw Malaysia to complete 200 km of pipe coating services offshore. Meanwhile OneSteel was responsible for co-ordinating with Bredero Shaw Australia, the coating activity for the remaining 750 km of pipe supplied by OneSteel, JFE and Orrcon.

OneSteel was also responsible for all Australian-based road and rail pipe transport logistics which was contracted to Neil Mansell Transport.

Ensuring quality deliverance

Project quality was closely monitored by OneSteel Oil & Gas Pipe throughout the project. OneSteel took on the role of quality assurance for imported pipe overlaying its own strict quality control processes for all aspects of the pipe supply chain. Quality management systems at BlueScope Steel and Bredero Shaw assisted OneSteel by managing the quality for the hot rolled coil supply and quality assurance for pipe coating.

Bredero Shaw's Kembla Grange loadout racks were used for all inspection and holiday detecting, with Bredero Shaw inspecting every individual pipe leaving their Kembla Grange facility in NSW. Bredero Shaw's Australian operation was also responsible for co-ordinating its Malaysian coating operations to simplify coating management for MITO and OneSteel by providing one point of contact. 

Due to the large volume of pipe involved and the extended supply period, Bredero Shaw's yard was identified in the planning stage as a being critical to the project's success. However OneSteel and Bredero Shaw representatives were in constant communication regarding yard space and logistical movements to ensure these risks were mitigated.

This highly successful domestic industry collaboration held throughout the construction of the QSN3 Pipeline Project is testament to the typically healthy, at-ease relationships held by various Australian manufacturers. It is this close and positive relationship held between all personnel and companies involved in the construction of a pipeline that facilitates successful completion of a project, such as in the case of the QSN3.

The success of this project was critical for all the businesses involved. To be successful, this required open and honest communication between all parties, and a willingness to work together to solve any issues that arose.

Easy delivery of the QSN3

The risk management services provided by the domestic industry to Epic Energy, and in turn Epic's confidence in the Australian supply chain to deliver the exacting requirements of this project, is the culmination of over 40 years and over one million tonnes of pipeline experience in Australian pipeline projects .

OneSteel provided a 'one-stop-shop' shop and a Project Manager, who was the single point of contact and worked closely with the rest of the Epic QSN3 Project team and was based in the Project Team Office in Melbourne a couple of days per fortnight. This arrangement enhanced project communication between Epic Energy, MITO and OneSteel.

In order to provide a more reliable supply solution, some pipe was batch-produced while BlueScope Steel's hot rolled coil supply was used to provided a flexible supply option to OneSteel who could offer certainly through two supply approaches:

• Continuity of supply for part of the project supply.
• Flexible, guaranteed supply to cover any project issues (and proved to be essential when the construction plan was reversed due to Queensland storms).

Throughout construction, BlueScope Steel provided weekly hot rolled coil production reports to the domestic pipe manufacturers for inclusion in their project product supply reporting program to Epic Energy.

Responding to change

The flexible domestic manufacturing solution offered by OneSteel and BlueScope Steel proved invaluable when unseasonable rains twice resulted in major changes to pipe delivery requirements.

Prolonged wet weather threatened to impact project installation. However, OneSteel were able to alter the supply of pipe and its manufacture so that the flow of delivery, from the supply chain to local steel production, ensured the project would come in on time.

Furthermore, the need to reverse the direction of construction as a result of the heavy rain in early 2010 was achieved by OneSteel changing the production schedule, which required BlueScope Steel to adapt the steelmaking and coil delivery schedule to meet the revised pipe delivery plan. This change was required to ensure that the pipe storage capacity at OneSteel and Bredero Shaw was not exceeded.

The future of domestic steel supply

As exemplified by the construction of the QSN 3 Pipeline Project, there are numerous advantages to domestic steel supply and manufacturing in the pipeline construction industry, as well as to other industries.

The ability to respond quickly and successfully to complications that arise during pipeline construction, such as in the case of QSN3, validates the strength and purpose to the Australian steel supply and manufacturing industry. The collaboration on productivity and quality operations ensures the longevity and security of a pipeline for future generations.

The Australian domestic pipeline industry delivers excellent risk managements solution to pipeline owners by offering expert project management and continuity of supply to support pipeline projects that incorporates oil and gas transmission line pipe inside and outside domestic manufacturing capability.

Benefits of Domestic Supply

• Consistent quality from steel through to finished pipe supply
• Guaranteed supply
• Shorter lead time delivery to support project completion
• Small project supply as needed (quickly delivery via local manufacturers)
• Ability to flex supply to meet project schedule changes
• Confidence that two experienced partners can deliver a strong local solution
• Strong local project management skills
• Technical assistance on the ground when needed