High Pressure FRP Oil Pipes
The Company's current principal products are high-pressure FRP pipes for the oil industry. The Company currently owns 14 production lines with total annual capacity of 3,200 km of high-pressure FRP oil pipes. Hanwei, through its its 91.075% owned susidiary Harvest, can produce FRP products for various specifications ranging from DN40 to DN300, with a pressure rating from 3.5 MPa to 28 MPa. Hanwei's products are mainly used for oil and water tie in transmission pipes in oil fields.
China's largest oil field, owned and operated by CNPC and its subsidiaries, is located in Daqing, Heilongjiang Province, in close proximity to the Company's Daqing manufacturing facility. Currently in China, the market for oil pipes is served largely by domestic and international producers of steel pipes. For certain applications, high-pressure FRP pipes offer a number of benefits over steel pipes including resistance to corrosion, longer service life and lower installation and operating costs. The China oil market for high-pressure FRP pipes includes applications for transmission, exploration and extraction for new developments and for replacement of existing steel pipes. The consumption and domestic production for oil and gas in China are expected to exhibit strong growth during the decade and beyond.
The transmission tie-in and down-hole enhancement market for the oil industry in China is estimated by the Company at 40,000 to 45,000 km of pipe annually (between C$540 million and C$600 million in revenues annually). The Company's estimated production capacity for 2007 would address less than 10% of such market. The Company intends to investigate the potential for developing large diameter oil transmission pipes and storage tanks.
