Shell and Chevron are the first oil and gas industry players granted waivers from President Trump’s 25% tariff on steel imports, after the administration agreed the specialty steel they were importing isn’t manufactured in the U.S.
The U.S. Commerce Department approved tariff exclusions for 2,760 tons of steel casing and production tubing Shell said it will use when drilling wells in the U.S. Gulf of Mexico, Argus reported. It also gave a tariff waiver to Chevron for 80 tons of corrosion-resistant stainless steel tubing.
The exemptions will last one year and are exclusive to the two companies, Kallanish Energy understands.
The Commerce Department has been working through a backlog of more than 20,000 steel tariff exclusion requests. The agency has processed a total of 280 requests since it began issuing waiver decisions on June 21, Argus reported.
Commerce separately rejected Shell’s requests for waivers on another 1,630 tons of steel products and rejected Chevron’s requests for waivers on 309 tons of steel tubing, Argus reported. The agency said the applications were incomplete but could be resubmitted.
Shell and Chevron did not immediately respond to Argus for comment.
None of the tariff waivers processed last week were subject to objections. That differentiates them from other, more complicated oil and gas sector applications that have attracted protests from U.S. steel companies that say they already make, or could start making, the products the companies are importing.
Kinder Morgan, for example, has requested a tariff waiver on 151,000 tons of steel for its $1.8 billion Gulf Coast Express natural gas pipeline. That led to objections from U.S. pipeline manufacturers Berg Steel Pipe and Stupp, which submitted competing bids on the project.
Plains All American Pipeline’s request for a waiver on 155,500 tons of steel for a Permian Basin oil pipeline has drawn objections from JSW Steel, Berg and Dura-Bond Industries.
Oil and gas companies are “cautiously optimistic” undisputed waiver requests will be approved but are “highly uncertain” what will happen with requests that received objections, an oil industry source told Argus.
The source said there should be a more rigorous process to verify American steel companies making objections can quickly start to manufacture the products at issue.
U.S. Commerce Secretary Wilbur Ross last month said there was a high probability his agency will approve “relatively few” waiver requests because many had no substance and others had “objections that are well grounded posted against them.”
The steel tariffs are already starting to impact the oil industry. BP CEO Bob Dudley has said the tariffs could increase its costs by $100 million. That amount could be reduced depending on how the administration responds to its request for waivers on roughly 14,000 tons of steel imports.
Shell is waiting on waiver decisions on another 28,700 tons of steel that would mostly be used for its proposed 107,000 barrels per day Falcon ethane pipeline which will supply Shell Chemicals $6 billion ethane cracker project 30 miles northwest of Pittsburgh, Argus reported.
