Perma-Pipe Clinches $60 Million Contract for Cairn India's Pre-Insulated, Heat-Traced Pipeline

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Researched by Industrial Info Resources (Sugar Land, Texas)--Perma-Pipe Incorporated (Niles, Illinois), a subsidiary of MFRI Incorporated (NASDAQ:MFRI) (Niles), recently clinched a $60 million deal to provide factory insulation and jacketing services for the Balmer Salaya Pipeline project, a heavy crude oil pipeline project in India. Perma-Pipe, one of the largest manufacturers of specialty piping systems in the U.S., will conduct pre-insulation services at its newly erected facility in Mundra in the Kutch district of Gujarat. This unit is located at the premises of Jindal Saw Limited (New Delhi), a subsidiary of India's $6 billion Jindal Group and one of the largest manufacturers of submerged arc-welded pipes.

Perma-Pipe's deal is a part of Jindal Saw's $200 million contract with Cairn India Limited (Gurgaon, Haryana). The contract includes insulation materials to be procured by Jindal Saw as well as services to be provided by Perma-Pipe. Jindal Saw will manufacture and fabricate the longitudinal submerged arc-welded line pipe and will procure the 8-inch electric resistance welded pipe from other vendors. The company expects to execute the project by December 2008.

The 600-kilometer, 24-inch-diameter pipeline is owned by Cairn India, a subsidiary of Cairn Energy PLC (LSE:CNE) (Edinburgh, Scotland), in partnership with the Oil and Natural Gas Corporation (Dehradun, Uttarakhand). The pipeline will transport heavy crude oil from fields in Mangala, Rajasthan, to a terminal at Salaya in the Jamnagar district of Gujarat. It is expected to be one of the world's longest pre-insulated, heat-traced underground pipelines. Heavy crude oil exists in a solid state at ambient temperature. Therefore, the pipeline will need to be electrically heated and insulated to maintain a temperature high enough for the fuel to flow.

Following the success of its first regional factory that was set up in March 2006 in Fujirah, Perma-Pipe has begun to expand its operations by building factories in regional markets to tap the growing demand for pre-insulated pipes for district cooling, chemicals, gas and oil transportation and liquefied natural gas terminals. The company is looking to establish a local presence in emerging markets to ensure economic viability that cannot be achieved by shipping the required materials from the U.S. to serve regional oil and gas industries. The manufacturing facility at Fujirah has the unique capability of insulating and jacketing pipes with diameters ranging from 2 inches to 72 inches and has a daily throughput of over 2 kilometers of pipes. For related information, view February 27, 2008, article - India's Skin Effect Heated Pipeline Will Keep Oil Flowing.

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