Connecting Saudi Arabia
The Global Pipe Company is a combined business enterprise between Erndtebrücker Eisenwerk GmbH & Co. KG (EEW), a highly concentrated and experienced German manufacturer of submerged-arc welded (SAW) pipes and three shareholders based in Saudi Arabia; Saudi Steel Pipe Company (SSP), Pan Gulf Holding (PGH) and Mr Ahmed Hamad Al-Khonaini.
All shareholders have a vast amount of experience in both the oil and gas sectors. Erndtebrücker Eisenwerk GmbH & Company is a global LSAW pipe production company founded in 1974, specialising in carbon, low alloy, stainless steel and clad pipes as well as the pre-fabrication of piping associated components. The Saudi Steel Pipe Company is Saudi Arabia’s premier manufacturer of welded steel pipes for both the oil and gas industries since 1980. It’s the first steel pipes manufacturer in the country and the largest producer of welded steel pipes manufactured by high-frequency induction welding for the oil and gas, water and construction sectors in the region. Founded in 1978 the Pan Gulf Holding Company provides steel and building materials, steel fabrication, valves and piping systems, welding solutions and fabrication of steel grating for Saudi Arabia and Mr Ahmed Hamad Al-Khonaini is a leading businessman in the eastern province of Saudi Arabia specialising in oil, gas and petrochemicals. He also owns Global Anti Corrosion Techniques Company Limited (Globetech) that provides anti corrosion coating services to industry throughout the Arabian Gulf region.
The Global Pipe Company was founded in late 2010 in Jubail, Saudi Arabia, with an investment of SAR 660 million, to manufacture thick-walled steel pipes for Saudi Arabia and The Cooperation for the Arab States of the Gulf (GCC) markets. A year later, in 2011 the company started plant construction and commenced operations from its manufacturing facility in late 2012. The company that was originally set up to serve the oil and gas sector has grown quickly and now also manufactures pipes for the water, petrochemical, drilling and offshore industries. It specialises in the production of large-diameter and heavy wall thick longitudinal submerged-arc welded (LSAW) line pipes with outside diameters ranging from 16 to 62 inches and thicknesses ranging between of 8 and 51mm, and structural tubular large-diameter pipes of up to 200 inches with thicknesses of up to 130mm.
In a short space of time it seems as if there’s no holding the Global Pipe Company back. In 2013 it has reached an impressive number of milestones. It took its first pipe delivery, gained approval from the American Petroleum Institute (API), was awarded ISO 9001 2008 accreditation for its Integrated Management System (IMS) and gained official supplier status by Saudi Aramco for non-sour pipes and structural tubular. Saudi Aramco is the state-owned oil company of the Kingdom of Saudi Arabia. It is the world’s largest crude oil exporter, producing an extraordinary one in every eight drums of the world’s oil supply. It has a robust international presence in the United States, the Republic of Korea, Japan, and China. Currently Saudi Aramco is investing billions of dollars in increasing its gas production for domestic usage.
The Global Pipe Company received its first order from Saudi Aramco in August 2014 to provide 150 kilometres for pipes for the Shedgum gas project for the East West Gas and Natural Gas Liquids (NGL) pipeline in Saudi Arabia. It was responsible for producing up to 84,000 metric tonnes of steel pipes for the contract.
The first Saudi Aramco project was shortly followed by a second, supplying 27 kilometres of pipeline for the Fadhili Gas Project. When it’s completed in 2019 Fadhili will become a key player in the Saudi Arabian Master Gas System, processing gas from the Fadhili Gas Plant. It will add more than 2.5 billion standard cubic feet (SCFD) from onshore and offshore fields of non-associated gas processing capacity. It is expected that the increase in the supply of natural gas from the Fadhili Gas System will grow above 17 billion SCFD by 2020 and enhanced the capabilities of Saudi Arabia’s steel, aluminum and crude oil industries. The project provided the Global Pipe Company with excellent training for what was to follow and in doing so it has earned its status as a preferred supplier to Saudi Aramco.
Today the Global Pipe Company is delivering pipeline to expand the second phase of the Master Gas System (MGS-II) across the Eastern, Western and Central regions of Saudi Arabia. The increased gas production will result in more raw materials for industries to expand, and new ones to appear that will help to create jobs, which is a key goal of the Saudi Vision 2030.
Work originally started on the Master Gas System network in 1975 to process associated gas to produce sales gas, ethane for feedstock, Natural Gas Liquids (NGL), sulphur and the delivery of the finished products to customers. As a result of the ever-increasing domestic demand it become imperative to add additional facilities. “For the last year we have been working on the Master Gas System extension major project for Saudi Aramco. We’ve been commissioned to manufacture a total of about 550 kilometres of pipelines and so far we’ve supplied about 350 kilometres of that quantity. Due to the considerable size of the project, when I talk to plate mills and other parties in our sector, I get the impression that they are thinking that the Global Pipe Company will be busy with MGS II for an unforeseeable time. However, we’ve managed to increase our output and optimise our manufacturing line and expect to be completed by June 2017. We are very ready to start new projects,” said Mr. Ahmed Hamad Al-Khonaini, Shareholder and Managing Director at the Global Pipe Company.
Saudi Aramco has required to deliver 550 kilometers of pipeline, which is a significant amount and on a much larger scale than the Global Pipe Company has previously manufactured. “The project was quite a challenge in terms of quantity, 550 kilometers is a significant amount of pipeline. Also in terms of dimensions, the pipes need to be 56 inch with a thickness range of between 14 to 25 mm. The manufacturing of these sizes as Longitudinal Welded Pipes is a very challenging task. During the planning phase for this project, we have developed an action plan to adjust our equipment to the challenging size targeting a higher output. We have added new conveyer systems to our manufacturing line to improve plate and pipe logistic before, during and after the manufacturing process. For the same purpose, we have also added new overhead cranes with vacuum extensions for transfer of steel plates during the receiving and inspection process. We have also added a new X-Ray bunker to speed up the NDT inspection that used to be a bottleneck during the execution of other projects in the past. It was also necessary to have a look at our forming process and speed up this manufacturing step. The forming of a plate to a pipe with the press bending machine has been identified as a bottleneck during the first days of the project. For the manufacturing of 56” diameter pipes a plate width of about 4.5 metres is required. For the bending of such a plate, with the original setting for the bending machine, more than 59 strokes have been required. With support of our machine suppliers GRAEBENER and WELDEC from Germany, we have developed a new forming procedure based on a wide shoe for the bending sward. After this change, the number of strokes required is reduced to 39 and the output was increased by about 40 to 50 per cent,” explains Maher Fkaier, General Manager of Global Pipe Company.
“As we started the project, in June 2016 we managed to complete 90 pipes per day and on the rare occasion when we managed 100 pipes a day we considered ourselves to be very lucky. Nowadays we average between 140 and 160 pipes per day. We have increased productivity by about 50 per cent, which has had a big influence on the project’s timeframe. That is a huge increase,” adds Maher.
“The improvement that we achieved in our internal manufacturing processes shifted the bottleneck out of our facilities to other entities in the supply chain. Procurement had to work out a way to get the plates ready on time for the manufacturing line and logistics didn’t have enough room in the pipe yard to accommodate the increased number of pipes. We had no choice, but to move quickly and build an additional storage area for the project with the extra total storage capacity of about 10,000 pipes. A new reach-stacker was also sourced to secure logistic activities in the new pipe storage yard. Now, we can guarantee the supply of bare pipes for the project even if we experience unexpected machine break down at plant or a technical issue with the manufacturing line,” he continues. “After increasing the storage capacity for the raw material, it was necessary to speed up the supply for steel plates. With support of Baosteel, our steel plate supplier for Master Gas Project, our logistic department increased the quantity of plates on monthly basis and hired charted vessels targeting the port of Dammam directly.” The fast moving plan of action and investments delivered by the Global Pipe Company has established it as a major pipe supplier to Saudi Aramco.
Maher also elaborates on another major development at the Global Pipe Company, this time in the form of technology: “One of the main achievements during the start phase of the Master Gas Project is the installation of our Manufacturing Execution Software System. Indeed it was our plan from the beginning of the company to put an MES software in place covering all main processes in our company. We are dealing with a complicated manufacturing process with at least 15 manufacturing steps for each pipe and a complicated supply chain with sourcing of steel plate material, welding consumables and release of manufacturing orders for production. The inspection and release process of the final product, pipe, is also complicated and involves not only the manufacturing process but also the lab testing activity. We have evaluated several systems and realised that most of them were designed as ERP systems covering basically the commercial aspects of the business but neglecting our specific manufacturing processes for longitudinal welded pipes. For this reason we decided to buy a standard software and adapt it to our needs. We have selected the SMS system from the company Smart Management Software GmbH in Germany. This system is covering the main commercial processes in our company providing extendable interfaces for implementation of the manufacturing processes. The programme code was also provided as part of the package. The customisation and adaptation was done by our own team as an internal in-house project. This helped us to save time and reduce cost for the whole project.
“The installed software covers the whole work flow in our company starting from the offer and order management to the purchase request and purchase order. But the main focus is on the manufacturing activity and the supporting processes like the technical specification, the planning and scheduling of the manufacturing orders, the work instruction development for each manufacturing step of our manufacturing orders, the maintenance activity for preventive and breakdown maintenance and the QC reports with the related records from the Lab Testing and the pipe release activity.
“The traceability is one of the major requirements for our manufacturing process. The complete chain of evidence for the steel plate and welding consumables used for the manufacturing of a particular pipe is absolutely required for each pipe produced in our yard. Even years after the pipes are delivered this information has to be available to us. This requirement is not easy to implement using the manual paper process. With our MES software this feature not only covers the material used for each pipe but also the name of the operator and the execution date for each manufacturing step.
“The data collection module in the shop floor as one of the major features of the MES software allowed us to establish a paperless process in the manufacturing. Using barcodes on the pipes and on the Route Card allows us to collect manufacturing data based on simple scans. The work instructions, like Material Data Specification, Welding Procedure Specification, NDT Instruction, and Hydro Testing Instruction are available on the terminal in the shop floor. Paper distribution is not required anymore.
“The Lab Testing activity as per API requirements is also integrated in the MES Software. The definition of Test Units and Sample selection can be monitored by the system. The results of the Lab Tests can be collected by the system through software interfaces to the lab testing machines. This feature reduces the manual work during the data collection and reduces the risk of typing mistakes.
“The pipe release activity is also one of the major features in our MES Software. Since all manufacturing activities and all lab results are reflected in the systems, it is easier for our QC team to release pipes through the MES Software. Pipes ‘On Hold’ or subject of a Defect Memo will be blocked during the pipe release process. The release documents are also generated automatically through the MES Software. The manual documentation work was blocking a lot of resources in our QC department. With the implementation of the release process in the system it is possible for us to allocate these resources for other productive tasks instead of the less productive documentation work.
“The system is also providing other smart features like the manufacturing activity monitor for the real time visualisation of all manufacturing activities at all machines and working stations. The monitor shows the quantity achieved for each working station vs. the targeted quantity. The monitor also shows the machine status in real time: ready for operation, under breakdown, under maintenance. Another interesting feature is the email notification service sending emails to notify dedicated persons about important events in our manufacturing process such as the creation of defect memos, breakdowns of machines and jams on the manufacturing line.
“The installed MES Software optimises the communication between all involved departments in our company and reduces the manual internal reporting. In a second stage we are considering extending the coverage of the system and including our main suppliers. We currently spend a long time evaluating offers for steel plates. Submitting these offers online through the system will help us to speed up the commercial and technical evaluation and reduce the long email communication with our suppliers to evaluate the technical deviations.”
It is clear that this major IT implementation is bringing substantial efficiency gains to the Global Pipe Company and it is able to build on these in order to continue to develop its operations. Saudi Arabia is a great location for the Global Pipe Company to build a name for itself as a key player. Both Saudi Aramco and other companies in the oil and gas markets have adopted a very localised view to business. “In line with this localisation policy, major parts of the supply chain are done locally. To meet demand we are going through a diversification program of our products. We would like to provide not only commodity products for pipe line development, but also high-end pipes with heavy thickness and pipes for sour material applications as well as well casings for drilling strings that only a small number of limited providers can supply worldwide,” says Mr. Al-Khonaini.
The innovative nature of the Global Pipe Company is what is pushing it forward. “We want to expand our activities to members of the Cooperation Council for the Arab States of the Gulf,” adds Mr. Al-Khonaini. Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates as well as Saudi Arabia are all members of the Cooperation Council for the Arab States of the Gulf. Even though the price downturn of the oil and gas industries is something that is expected to affect members for the foreseeable future, the markets remain massive contributors to its members. Although Bahrain’s oil sector has declined since its peak in the 1970s, it still accounts for a staggering two thirds of the government’s total revenue. Kuwait holds the fifth largest oil reserves in the world, amounting to an estimated total of 101.5 billion barrels according to the 2015 BP statistical review and Oman’s oil and gas industry is the largest economy in the country. Oil and natural gas account for about 55 per cent of Qatar’s domestic product and the United Arab Emirates (UAE) is a major oil producing and exporting country.
Another area that the Global Pipe Company aims to expand into is the mining sector. It is the right time to start building up relationships in the sector in Saudi Arabia as the country is investing into mining infrastructure, licensing, funding and international relationships as part of Saudi Vision 2030. The government believes that the industry should contribute an annual turnover of SAR 97 billion by 2020. “We are watching both the oil and gas and the mining industries very closely at this time,” says Maher.
“We would like to serve the Oil Country Tubular Goods (OCTG) sector by providing well casings based on LSAW pipes,” he adds. Oil country tubular goods (OCTG) consist of drill pipes, casing pipelines and tubing that is subjected to heavy loading conditions, according to its specific application. The drill pipe is a heavy tube that rotates the drill bit and circulates drilling fluid, the casing pipeline relies on axial tension from its weight and internal and external pressure by surrounding rock formations and tubing is used to transport oil and gas through the pipe.
The company is already making progress with its ambitious plans. “These pipes are complicated products, that contains not only the mother pipe, but also pin and box connectors at the end of the pipe to connect joints together and build the drilling string. We have recently established a new manufacturing line on our plant for the welding of threaded connectors on the mother pipe. For the sourcing of pin and box connectors, business cooperation agreements have been put in place with qualified and approved suppliers. The line received Saudi Aramco’s approval in February 2016. The first trail order is under execution right now, ” elaborated Mr. Al-Khonaini.
To further highlight the Global Pipe Company’s presence it has received recent approval and accreditation from The Abu Dhabi Company Limited (ADCO), Abu Dhabi’s longest running oil and gas operator, with 75 years history of achievements. ADCO is a market leader when it comes to the development of Abu Dhabi. “We think that accreditation from ADCO will make it easier for us to get approval from other oil and gas companies in Abu Dhabi,” Mr. Al-Khonaini noted. The company also expects to announce approval from Kuwait Oil Company (KOC) and Petroleum Development Oman (PDO). Kuwait Oil Company (KOC) is an independent oil and gas company engaged in its exploration, development and the production of hydrocarbons. Established in 2005, Kuwait Oil Company (KOC) goes beyond its country of origin. It has built a diversified portfolio of oil and gas assets in the Middle East and North Africa in Yemen, Oman, Iraq and Egypt.
Petroleum Development Oman accounts for 70 per cent of the country’s crude oil production and the entirety of its natural gas supply. The primary objective of Petroleum Development Oman is to engage efficiently, responsibly and safely in the exploration, production, development, storage and transportation of hydrocarbons in Oman.
“We think that new opportunities in UAE, Kuwait and Oman will lead us to international recognition and that is what we are concentrating on for the foreseeable future,” highlights Mr. Al-Khonaini. “GPC is well-established on the Saudi Market. In the near future, we will concentrate on the implementation of our diversification strategy there and roll out the same concept with KOC and PDO and other customers in the GCC area,” he concluded.
In order to keep pace with the demand of the market and cover quantities for different types of LSAW pipes required by the customers, the Global Pipe Company has signed recently a contract for the construction, erection and commissioning of a Pre-Bending machine to be added to its facility in Jubail. “This new machine is part of GPC’s plan to diversify its product portfolio and to reinforce its position as supplier of heavy walled LSAW pipes in the region,” highlights Mr. Al-Khonaini.
“In our GCC region and especially in Saudi Arabia activities are completely different, there is no sign of a downturn here. The business with Saudi Aramco is going well, we don’t get any delay on projects or even worse cancellation of projects. We are happy to work with such a strong customer and will continue working for Saudi Aramco,” explains Mr. Al-Khonaini
Global Pipe Company
Services: Manufactures pipes for the oil and gas, water and construction sectors