All employees in the oil industry, including drill pipe protector suppliers, have been affected by the COVID-19 pandemic. Companies have been forced to change their long-term plans or shift contracts, and employees have even lost jobs because of this. Offshore oil rigging companies are no exception, as construction and maintenance have slowed significantly. This is partly due to delays in the production of essential drilling products. Keep reading to learn a bit more about how the oil and drill pipe protector industries have dealt with these global challenges.
Issues With Demand
At the beginning of the pandemic, there was a sharp drop in demand for oil. In the first few months of 2020, transatlantic travel between the U.S. and Europe was banned, and there was generally far less travel across the globe. Because of this, there was less of a need for the precision piping products sold by drill pipe protector companies.
Industries like energy and oil are used to the rise and fall of the market, but no one could have predicted just how much would be on hold in the past few years. In the United States, millions of people work in the oil and gas support industries. It’s an unfortunate truth that some jobs were lost during the pandemic due to a lack of demand for products. There are 62,500 jobs indirectly supported by the offshore industry. This accounts for about 3.3% of all employment in Louisiana, so it’s clear how much COVID-19 impacted jobs in the United States.
While there was a lack of oil demand, there was an increased demand for home products. The panic caused by the COVID-19 pandemic had people buying necessities like toilet paper and canned goods in bulk. There was such a difference between the demand for production in different types of products. This was one contributor to the backstop in the supply chain.
Delays and Contract Changes
Because of issues with the supply chain, products were not making it to clients on time during the beginning of the pandemic. Companies had to learn to expect higher prices, delays in delivery, and global uncertainty. This was a true issue, even with the lack of demand, as contracts could not be completed as promised. Contract terms between manufacturers and suppliers were rewritten like never before.
Companies are requesting provisions for existing and potential future contracts in fear of a future pandemic or epidemic. New contracts include something called “force majeure”, which is a legal provision that releases companies from contract agreements due to unforeseen circumstances.
This is, understandably, an issue for clients that want the products they ordered on time. They don’t want to work with companies who have an excuse for being late. This pandemic has created a large focus on the force majeure clause in contracts, declarations tripling in contracts from 2019 to 2020 according to Everstream Analytics.
While the pipe protection industry recovers along with the oil industry, that recovery doesn’t mean a compromise on quality or service. Like many industry changes during the pandemic, this was an incredibly difficult situation to navigate. While this was a difficult time for manufacturers, they’d been given the opportunity to re-learn how to negotiate contracts with companies that need transportation for pipes. And these are not the only changes they’ve had to deal with. COVID-19 has also brought along serious changes that needed to be made within their companies.
The use of face coverings and social distancing are encouraged but no longer required at facilities where the county COVID-19 community level is Low or Medium. Face coverings & social distancing requirements remain in place for unvaccinated individuals in counties where the COVID-19 community level is High. Employees should be given the choice of in-person or virtual meeting attendance, when possible, including the option to remote in from their NOV facility work area with no adverse consequences for remote attendance.
Employees must stay home and notify their manager if they feel sick and/or exhibit symptoms of COVID-19. Employees must inform their manager and HR if they test positive or have been exposed to COVID-19. Visitors and guests must complete the COVID-19 Preemptive Screening Form.
Employees working at customer sites must follow all customer-required COVID-19 protocols.
These changes are as important to the daily functioning of MSI Pipe Protection Technologies as anything else. Even as the world recovers from COVID-19, it’s important to prioritize health in the workplace. Employees are also encouraged to stay home when sick at some companies. This is a good step that many companies can take to keep their businesses up and running, keeping employees safe and healthy so our customer’s products are shipped and delivered on time.
How Are the Oil and Drill Pipe Protector Industries Recovering?
In 2022, the U.S Energy Information Administration reported that the price of crude oil will drive the production of oil in the United States. It is projected that production will reach 12.6 million barrels per day in 2023. With this growth, drill pipe protection products will only be in higher demand. It’s even expected that 80% of drilling will happen in the continental United States, which is one reason that reshoring manufacturing choices will work well in 2022.
Employment in the manufacturing industry has also risen again after the major fall in 2020. Though unequal, there is a definite positive trend. Oil and pipe protection companies are focused on returning to the state of the industry in 2019. With people returning to work and global travel, these industries are only getting busier. This is a good sign for all manufacturing companies.
Contact MSI Pipe Protection Technologies Today
To stay up-to-date on all the changes that have come about in recent years, reach out to MSI Pipe Protection Technologies. We have gone through the worst part of the COVID-19 pandemic while continuously striving to meet the drill pipe protector and OCTG protector needs. Keeping our clients happy, keeping our employees safe, and maintaining high standards for our quality have been our main areas of focus over the past several years. MSI Pipe Protection is working to help drilling companies return to their product demands.