You have reached the Scan Systems’ OCTG Insider: Fall 2015 Publication. In this quick and easy-to-read newsletter, you will find the most recent evolutionary technology in the OCTG world, as well as breaking oil and gas industry news.

Here at Scan Systems Corp., we strive to keep you in the loop on the important OCTG events and innovations happening around you.

Download the PDF below and enjoy!

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One of the results of the 1970s oil crisis was the U.S. ban on oil exports. The national intent was to push towards energy independence while protecting the domestic economy. This occurred 40 years ago and with the current state of oil prices and our growing independence, many believe the ban has outlived its usefulness.

The goal of the ban originally was to help the economy, businesses, and consumers. Many believe the opposite has taken place over the years and that the lift will allow for a more efficient market that encourages more investments.


With the ban lifted, smaller companies and producers will have the opportunity to expand their marketplace for oil. First Titan Corp. is one company that will be positively affected. The CEO Sydney Jim states, “Right now, we’re limited in what we can do. With the ban gone, we could easily move oil to places more willing to pay a fair price. Free trade is always good business. The domestic oil and gas industry needs this legislation – it would go a long way to easing the current slump and making us more competitive, as well as greatly aiding our revenue stream.”



“Shale producers are justifiably proud of their ability to survive the perfect storm that has hit their industry since the middle of 2014,” comments John Kemp of Reuters.

The hardship that has come along with the collapse in oil prices has forced shale producers to cut costs, sustain their output, and ultimately become more efficient in their operations.

With a pause in the shale revolution, the shift has gone from growth to survival.

“Some analysts question whether the Organization of the Petroleum Exporting Countries (OPEC) is winning its price war against high-cost producers. They point to resilience in shale production in North Dakota and Texas as evidence that OPEC’s strategy has had only limited success.”

Even though this shift has forced an improvement in operations, it does not negate the fact that shale growth is struggling causing a pause in the shale revolution. Prior to June 2014, North Dakota’s oil output was increasing at a compound rate of 2.37 percent per month. Since then, the state’s oil output has shrunk to a .38 percent increase each month.

Some say OPEC’s strategy has had only limited success. “By allowing prices to tumble, OPEC has shut in 300,000 to 500,000 bpd of probable shale production growth in North Dakota.”


OPEC’s strategy, keeping output steady and forcing countries to adjust production, has been reasonably successful. However, it doesn’t eliminate the readiness of shale producers to increase output again when prices rise from $50 to $60 or $70 per barrel, which would actually worsen oversupply in the long run.

“The revolution cannot be reversed. Techniques once mastered will not be unlearned.” Oil prices and production will eventually rise again, and due to the current situation, producers will have learned to operate at a lower cost base than before.


Source: John Kemp, Reuters:



Scan Systems Corp. has digitized the longitudinal inspection system signal from the rotating head to the computer system. This prevents outside noise from interfering with the signal and making it difficult to read. This move away from analog signals is revolutionizing the OCTG industry and making inspection processes more accurate and much clearer.

In this quick and easy-to-read newsletter, you will find the most recent evolutionary technology in the OCTG world, as well as breaking oil and gas industry news. We are excited to announce this as the first of many future newsletters.

Here at Scan Systems Corp., we strive to keep you in the loop on the important OCTG events and innovations happening around you.

Download the PDF below and enjoy!

Click to Download

The largest driver of U.S. economic gains in 2015 continues to be the oil & natural gas industry, according to the most recent mid-year trade report from the U.S. Commerce Department.

“Despite a very competitive global market, the U.S. energy revolution continues to push our trade balance in a positive direction,” said API Chief Economist John Felmy. “Oil imports remain on the decline, and strong exports of petroleum and refined products are creating new opportunities for America to bring wealth and jobs back to U.S. shores.”

Felmy admits to the fact that outdated trade policies are among the biggest threats to America’s continued growth right now. “Accelerating approval of LNG export terminals and lifting the 1970s era ban on crude oil exports would put America in the driver’s seat on trade.” He believes that with America as the world’s largest producer of natural gas, our workers have an important competitive advantage. By lifting the ban on crude exports, more jobs will be created, a downward pressure on fuel costs would be created, and this could reduce the power that foreign suppliers have over our allies overseas.

The focus should be on accelerating America’s growth as an energy superpower. This can be done with a strong, bipartisan legislation in Congress that pushes free trade in energy.


Source: PennEnergy

Scan Systems Corp. takes our customers’ businesses very seriously. When it comes to EMI inspection equipment, we offer customer service accessibility 24 hours a day, 7 days a week, regardless of where you are located. With over $2 million of inventory on hand, we are able to get you what you need, when you need it.










In May of this year, imports of OCTG surged and greatly exceeded the lagging demand, leaving stockpiles of OCTG and lowered spirits. However, the past 90 days have shown that inventories of “prime” U.S. OCTG have, in fact, decreased due to the cuts in shipments made by domestic mills. This reflects the watchful attention distributors are placing on inventory, something critical to keeping the ratio of supply and demand in sync.

The ideal scenario would reflect crude prices stabilizing in the mid 50s to 60s while overall OCTG inventory continues to whittle down. These large inventory cuts must happen in the coming months in order to make up for the beginning of the year surplus in supply.

Given WTI prices currently and the low confidence in a rebound this year, E&P’s have understandably stopped spending. Most have flown through majority of their budgets in the first half of 2015, leaving a strained cash flow for all. While this time is anything but enjoyable for E&P’s and OCTG, history tells us to keep your head above water and the reward will equal the effort.

Source: The OCTG Situation Report

One of the major advancements that has raised the bar for EMI inspection capabilities focuses around solid state hall sensors. When inspecting OCTG tubing and casing, it is a common practice to utilize magnetic flux leakage inspection techniques. The primary objective is to fill the entire pipe body with enough magnetic flux, that any flaws on the ID or OD pipe surface will cause a disturbance in the magnetic field that can then be detected by sensors and reported through software to the quality personnel for further investigation.

The magnetic field moves from north to south poles through the tubing or casing. When the magnetic field encounters a break of some kind in the material under inspection, i.e. an imperfection in the ID or OD surface of the pipe, the magnetic field will jump from one side of the imperfection to the other, in order to return to back to the ferrous material on the other side and continue its journey to the opposite pole. This jump, referred to as a perturbation, is the magnetic flux leakage that ultimately escapes and what will need to be picked up by the sensors, and reported to the operator, notifying them that further investigation is needed on that joint of pipe.

Over the years, Scan Systems has helped further technological advances in the NDT inspection industry by continually updating and innovating their products and equipment, specifically our PITCO inspection equipment, to help achieve more efficient and accurate solutions. Through these advances in the industry, different variations of sensors were created to detect and report on the flux leakage created by the imperfection in the pipe.

The most common sensor type is a wound induction coil, sometimes referred to as a wound coil or PC coil. The wound coil has been used in the industry for over 60 years and has a solid track record of performance. While consistently used, there are limitations to this 60 plus year old sensor technology:

  1. To achieve the best results with his type of sensor, the angle of intercept of the potential flaw and the sensing coil must be at a 90º angle. Meaning if the flaw or imperfection itself is off the axis being inspected by more than a few degrees, many EMI inspection systems will never detect that flaw.
  2. Wound coils are speed sensitive. The size and amplitude of signals detected are surprisingly dependent upon the speed the flaw intersects the sensor coil. This makes repeatability tolerances difficult to narrow as the same flaw can exhibit totally different characteristics with only a small variance in linear speed. This technology has a greatly diminished value in slower production lines.

In the early 80’s, the NDT (Non-Destructive Testing) industry explored several alternatives to the PC coil. Magnetic Diodes, Emats, and hall elements being the primary subjects of study. All of which proved to have substantial drawbacks when used in daily operation. But advancements were made, and in the mid 1990’s there were some major changes, to hall element sensor designs in particular. The greatest drawback to the early hall sensors was their heat sensitive nature. If they got too hot, they gave erroneous data, or simply failed.

With the invention and implementation of solid-state devices, which mitigates the issues with heat, solid-state hall sensors became a product that could be brought into production environments. The benefits include:

  1. The hall sensors have a 360-degree sensing area, as opposed to the 90-degree sensing area of the PC coils. This allows imperfections disturbing the magnetic flux to not have to be at 90º to achieve acceptable results. Now flaws can lay as much as 30º of the inspection axis and still be reliable identified.
  2. Hall sensors are not speed sensitive and thus allow for significant variations in the production line speeds. Without speed affecting the frequencies and amplitudes of the signals repeatability is now greatly enhanced and more reliable.
  3. Hall sensors have unique signature. The frequency and amplitude of the signal that is picked up by the sensor, is a unique signature that allows us to employ software algorithms that now can be easily identify and separate the signal for further processing and reporting. This has lead Scan Systems Corporation to greatly reduce many of the limitation of EMI inspection that we have been battling for decades.

The evolution of the sensors is a testament to the fact that standard technologies in any industry, specifically the EMI inspection industry, should be challenged and evaluated all with the goal of seeking more efficient and more accurate technologies. Scan Systems’ PITCO Division has improved and evolved their equipment over the years to better serve the OCTG industry’s inspection needs. Through these enhancements, Scan Systems is paving the way for more advanced equipment providing for a safer industry.

We can all agree with Investopedia that quality control is “the process through which a business seeks to ensure that product quality is maintained or improved and errors are reduced or eliminated.” This definition spans all industries, but the criteria by which companies pass or fail a product is a different story.

Many OCTG MFL (magnetic flux leakage) inspection equipment manufacturers claim their machines detect flaws on 0.545” (13.84mm) walls and greater during the inspection process, but often these claims ignore a key component of a quality inspection – repeatability.

API 5CT specifications require a minimum of 20% repeatability on all inspection runs. Oftentimes the detectability specifications given by EMI vendors to the steel mills, processors, or inspection companies are a reflection of the equipment manufacturer’s upper limits of detection capabilities, or best case scenarios—and they hope to address the repeatability of their equipment much later in the vendor selection process. “In our opinion, there needs to be more focus on repeatability much earlier in the technical evaluations” said Danny Uselton, President of Scan Systems Corp.

In EMI inspection, repeatability comes down to the equipment’s hardware and software capabilities to identify the signal given by an imperfection or artificial reference indicator and report those imperfections at a similar amplitude… consistently and repeatedly. The long and short of it is, the equipment must have the capability to pick up the flaw and break the alarm threshold each and every time in order to provide the level of confidence in the inspection that API requires. If the signal from a flaw falls within an area of significant noise generated from the pipe, it may stand out during one pass (detected), but get lost “in the grass” during the next run (repeatability). Using advanced signal processing algorithms combined with proprietary sensors and cutting-edge signal detection hardware, Scan Systems’ PITCO M-Series with ESP upgrade has dramatically improved the ability to separate a flaw’s signal from the background noise offering the best S:N ratio on any given pipe in the industry.

For Matt Rutledge, General Manager/VP of Scan Systems, repeatability is a top priority and something customers should ask about sooner in the vendor selection process. “Surprisingly, many steel mills, processors, and third party inspection companies neglect to inquire about the inspection equipment’s capabilities in regards to repeatability until much later in the selection process.”

While 0.400” (10mm) pipe wall thickness has historically been the limit for existing EMI/MFL inspection equipment, Scan Systems’ PITCO M-Series with ESP upgrade can reliably detect and repeat on N5 ID notches up to 0.545” (13.84mm) wall thickness and N10 ID notches up to 0.625” (15.875mm) walls. This ability to accurately detect and repeat on these types of indications is truly a remarkable accomplishment by the employees in the R&D department of Scan Systems Corporation.

When equipment vendors quote specifications that exceed the known capabilities of EMI equipment currently in operation, the best thing for you to do is ask the vendor to demonstrate their claims. Danny Uselton commented, “At Scan Systems, that is how we separate ourselves from others who claim similar capabilities who don’t think they will ever have to prove it. We love demonstrating our systems’ capabilities and explaining the processing software and sensor technology we have developed to advance our industry.”