When a project manager for a pipeline construction project is faced with material acquisition, traditionally, they order newly manufactured pipe. When an asset manager is looking to recover value from their idle assets, they want an end user as a buyer but may not have the network readily available to facilitate the transaction.
The peer-to-peer sourcing model is a streamlined sourcing solution for both parties. Peer-to-peer sourcing is “re-sourcing” pipeline assets originally meant for Project A so that the assets now may be used for Project B. Project A may have unused assets for a variety of reasons, including cancellation, scope changes, or excess inventory, that have nothing to do with the quality of the assets themselves. The assets are fully documented, traceable, never used, and ready for service.
From the Seller’s Side: Greater Value Recovery
Asset managers looking to sell idle pipeline assets due to project changes or cancellations seek optimal value recovery. Peer-to-peer sourcing is specifically designed to optimize the investment recovery process. Here are some key factors that determine what return sellers see from utilizing a peer-to-peer network:
Timing
When the price has peaked for newly manufactured pipeline material or pipeline components, asset recovery managers can optimize the selling price for their idle assets. Typically, the market valuation for pipeline assets is set by demand and direct and indirect competitors. For example, even though your assets may be straight seam pipe manufactured from plate, spiral welded pipe manufactured from coil can play a significant role in pricing the market. Likewise, high demand will push up prices, which was evident when economies opened back up as the COVID-19 pandemic evolved in mid-to-late 2021, and the demand for natural gas skyrocketed.
Type of Buyer
According to the Investment Recovery Association, the best type of buyer for maximum value recovery is an end user. After an end user, the second best type of buyer is a broker, followed by selling for scrap. An end user is most valuable because they can use the asset directly, while the broker incurs inventory costs, commissioning fees, and logistics expenses that drive down the value in the asset recovery process.
Benefits of Peer-to-Peer Selling
The peer-to-peer model is specifically built to maximize asset recovery because it is structured to deliver assets directly to the end user for use in another pipeline project, putting those formerly idle assets in the ground for their intended purpose.
ARS Global has a centrally located 29-acre distribution center (including a 150,000sq ft climate-controlled warehouse) in Oklahoma, as well as a 39-acre distribution center (including 50,000 sq ft of climate-controlled warehouse) in Texas, that together adhere to the industry’s highest safety policies and standards.
From the Buyer’s Side: Reduce Costs with Immediately Available Inventory
Project managers looking to save time and resources for streamlined project completion can use peer-to-peer sourcing to access immediately available inventory for a better price.
Time Savings
Lead times for manufacturing can be substantially delayed depending on market conditions, especially since the COVID-19 pandemic and resulting supply chain effects. Buyers in a peer-to-peer model can take advantage of immediately available materials, which will accelerate when their newly constructed pipeline can come online for service.
Better Pricing Alternatives
When manufacturing new pipeline assets is expensive, peer-to-peer sourcing can reduce project expenses. In recent projects where ARS Global facilitated the “re-sourcing” of ready-to-use assets, the owner-operators saw 15-30% cost savings compared to their next best sourcing alternatives.
Benefits of Peer-to-Peer Buying
ARS Global’s peer-to-peer sourcing solution provides assets that are fully documented, traceable, and never used for pressurized service. The assets that are purchased through vetted, peer-to-peer transactions are designed, manufactured, and intended for pressurized transmission. Project managers have immediate access to these assets through this streamlined sourcing solution.
Take advantage of peer-to-peer sourcing as a resource for better projects or better investment recovery. ARS Global facilitates these transactions, so both buyers and sellers benefit, while also mitigating any additional project or logistics management to coordinate the exchange.
To learn more about peer-to-peer sourcing, contact us.
