Managing risk in CRA procurement

White Paper

Managing risk in corrosion-resistant alloy procurement for oil and gas projects

Reduce your exposure to poor quality, performance or availability from Alloys 625 and 6Mo.

1. Introduction

In the search for cost-effective oil extraction in ever more complex and challenging locations, operators are increasing their reliance on corrosion-resistant alloys (CRAs).

Instrumentation components manufactured from corrosion-resistant alloys like Alloy 625 (Inconel® 625, UNS N06625) and Alloy 6Mo (UNS S31254) allow companies to drill deeper at higher temperatures, pressures and concentrations of chloride and sour gas than would otherwise be possible.

But, while their balance of strength, corrosion resistance and thermal stability makes corrosion-resistant alloys uniquely suited to drilling in hostile environments, their procurement cost is high, and prices remain volatile.

At the same time, the global marketplace is considering new suppliers that seemingly offer the same products at lower prices. However, the right quality and value proposition are difficult to find and even more difficult to assess.

If suppliers are using lower-quality raw materials or less rigorous production processes, the resulting components may demonstrate reduced corrosion resistance, substandard mechanical performance, embrittlement problems, and poorer high temperature performance.

Even a minor failure can lead to unplanned downtime, costing hundreds of thousands of US dollars per asset, on top of any associated regulatory fines. But a catastrophic failure of pressure-retaining equipment could cost lives, cause enormous environmental damage and result in long-term reputational harm.

In this white paper, we will explain the key aspects of corrosion-resistant alloy quality and availability that ensure your project receives the right material, in the right place, at the right time.

By assessing your procurement of corrosion-resistant alloy instrumentation components against the criteria outlined in this paper, you can ensure improved reliability and long-term profitability for your operation. You can also reduce your – and your company’s - risk exposure in the event of equipment failing prematurely.

Because when it comes to metals and equipment, not everything that looks the same will perform identically under real service conditions.

2. Three factors driving the cost of procuring corrosion-resistant alloys

One: The quality and price of metals have increased over time

In the drive for better reliability and performance of drilling operations, the industry has invested heavily in the research and development of new alloys with improved strength, corrosion resistance and thermal performance. Over the last century, this has led to a dramatic reduction in component failures and the improved safety of drilling operations.

However, with raw material prices rising, oil and gas producers have begun to compromise on the sourcing of Alloys 625 and 6Mo.

Allowing cheaper, less rigorous suppliers may reverse the trend of improvements to quality, performance and safety, causing a significant challenge to the industry.

1. Humphreys, 1988 / European Central Bank, 2017

2. European Central Bank, 2017

3. IMF, 2021

Fig. 1. A timeline of quality and price of metals.

Two: Supply challenges and rising demand for raw materials

CRAs like 625 and 6Mo require high concentrations of nickel, chromium, and molybdenum, along with small additions of niobium, aluminium and titanium.

However, geopolitical instability, climate change and increased competition from other sectors such as electronics and aerospace are all impacting the metals market.

The increasing frequency and severity of disruptions to global supply chains mean that the cost of raw materials will remain high for the medium-to-long term.

A global titanium shortage

Titanium production has been drastically disrupted by the Russia-Ukraine conflict.
Russia is the third largest producer of titanium globally, accounting for 11% of all titanium sponge production in 2023 (Statista, 2024).
Strict environmental regulations are restricting mining in other titanium-rich countries such as China and Japan.
Production is further disrupted by labour shortages, geopolitical instability and factory shutdowns.
Global demand is also increasing from industries such as aerospace (Thomas, 2023).

Competition for nickel

Nickel prices have been on a sustained upward trend since 2020 thanks to growing battery demand and the Russa-Ukraine war, with Russia the third highest producer of nickel worldwide (ISS Insights, 2023).
As an essential component of EVs, battery storage and geothermal energy technology, the IEA predicts that energy transition will increase demand for nickel by 82% by 2030 and 149% by 2040 (IEA, 2022).

Molybdenum market volatility

Molybdenum prices jumped substantially in 2023, with price spikes driving numbers into the triple figures for the first time since 2005.
This was driven by strong demand from offshore drilling, combined with supply deficits resulting from many primary molybdenum mines remaining idled for close to a decade.
Key mining activity in Peru has been disrupted by civil unrest, while production issues in Europe have also added to the squeeze in supply (S&P Global, 2023).

Endangered niobium availability

Listed as a critical raw material by the European Union since 2011, the supply of niobium is at high risk of disruption due to 90% of its total reserves being located in Brazil and its production being mainly performed by a single company.
With a relatively low recycling rate of just 20-30% and no valid substitute, demand for this endangered material will nevertheless increase by 8% annually according to the European Commission (Springer, 2024).

Slowdown of chromium supply

While world chromium resources are enough to meet centuries of demand, 95% are concentrated in Kazakhstan and the south of Africa, leaving the market vulnerable to fluctuations in geopolitics, climate and internal supply pressures.
As the world’s leading chromite ore producer, South Africa saw production decrease in 2023 due to electricity supply disruption and issues with transporting ore via rail (USGS).

Three: 80% of corrosion-resistant alloy production costs come from raw materials

Raw material constitutes an estimated 80% of the cost of a high-quality instrumentation fitting and this applies especially in corrosion-resistant alloys. It is therefore very unlikely that large savings can be made without compromising on the quality of the raw material.

This compromise leads to significant operational risk. Cheaper raw materials simply do not perform as well in exacting services.

Fig. 2. Global metal supply challenges: key disruptions in the production and availability of essential metals like titanium, nickel, molybdenum, niobium, and chromium are driving up costs and impacting the supply chain for corrosion-resistant alloys.

3. How to check the material quality

The performance of your corrosion-resistant alloy instrumentation component is directly linked to how well its raw materials are processed and heat-treated.

For example, while Alloy 6Mo requires tightly controlled material processing, Alloy 625 is exceptionally difficult to process and forge. Just like baking a cake, you can mix the right raw materials and still burn the final result.

Over the last 50 years, Parker has worked to perfect the complex chemistries and processing of Alloys 625 and 6Mo – because the consequences of getting it wrong can be severe.

Lower quality or improperly processed material has a high impact on performance, inevitably contributing to increased corrosion failure and galling on mating surfaces.

At best, this might just result in a leak. In the worst case, it's a catastrophic incident.

This is why supply chain traceability is also critical. Regulatory bodies demand effective material verification and validation because quality control is central to operational safety, reducing the risk of such an incident occurring.

Without unambiguous documentation to prove the origin and quality of your component’s materials, your risk exposure grows by an order of magnitude.

3.1. The impact of poor processing and heat treatment

Fig. 3. Microscopic image of carbide precipitate stringers and sigma phase in alloy 6Mo, formed due to incorrect hot working temperatures and improper heat treatment.

Alloy 6Mo

Incorrect heat treatment increases the risk of carbide precipitation and sigma phase (Fig. 3.) – reducing the stability of the alloy so it loses ductility, toughness and corrosion resistance, resulting in increased risk of failure.

Fig. 4. Microscopic image of carbide precipitation at grain boundaries in Alloy 625, formed due to improper processing and insufficient heat treatment.

Alloy 625

Poor processing increases the risk of carbide precipitation and other intermetallics, weakening the structure of the alloy (Fig. 4.). This directly impacts corrosion performance and causes embrittlement – a reduction of the material’s ductility and toughness.
If the processing temperature is too low, there is also a high risk of the component cracking, in addition to other potential defects in its material.

3.2. Four documents that prove quality and traceability

Your manufacturer should be able to prove they work to exceptionally high standards using tight controls, and that they only work with established mills with strong reputations for quality.

That means demonstrating full traceability to the source by:

Proving the origin of materials through material certificates / original mill certificates
Providing a material certificate for the converted product
Supplying an accompanying certificate of testing of the converted material
Documenting the material’s cast number, mill run and heat treatment batch

Learn how to evaluate material certificates with examples of both bad and comprehensive ones.

6Mo Alloy

We tightly control our material specification and source from 100% NORSOK mills, meaning they follow some of the most stringent standards in the world.
This removes the chance of incorrect heat treatment and processing while adding extra quality assurance on witnessed and validated manufacturing routes.
Our material certificates illustrate each critical element of material processing and offer full traceability.
Quality control and safety compliance are further established through positive material identification, a non-destructive testing method for verifying the chemical composition of metals and alloys.

Alloy 625

We source only from established and respected mills, with material certificates that establish the same complete level of traceability as our 6Mo components.
We also maintain strict statistical process controls to ASTM standards including additional ASTM G28 corrosion testing to ensure excellent corrosion performance and the correct processing and heat treatmen

4. Ensure your components are properly manufactured

The high concentrations of molybdenum and niobium in Alloy 625 makes it an exceptionally tough material that causes substantial tooling wear when you're trying to manufacture parts. Not only does this make it a very difficult material to work with, but it also impacts the rate of production.

For these reasons, running Alloy 625 components in high quantities is extremely challenging. If you are seeing promises of high productivity, this may be a sign of compromised quality in the material or its manufacturing.

A reduction in either will have a detrimental impact. Poor tooling increases the risk of contamination and surface roughness, significantly reducing corrosion performance.

Signs of high Alloy 625 production standards:

The tooling required for Alloy 625 is at least 600% more expensive than the equivalent for 316 stainless steel. As a result, manufacturers of Alloy 625 components should be able to demonstrate a high level of investment in high-quality tooling.
They should also be able to show a high level of investment in the right production techniques and procedures to maximise effectiveness and efficiency. This requires a particular level of financial stability and established manufacturing experience working with corrosion-resistant alloys.
Finally, new tooling requires high-pressure coolant machinery, which means manufacturers should have dedicated production support equipment.

We have invested millions of dollars in manufacturing and support equipment for Alloy 625.
This includes a new turn-mill centre, which delivers outstanding flexibility and performance density to exacting quality requirements.
We have also invested in high-quality carbide tooling with a central cooling system to increase tool life and improve cutting efficiency.
We regularly review and adjust our manufacturing programme and procedures to maintain outstanding production quality standards, including monitoring of feeds and speeds, scrap reduction, material control and quality inspections.
As a result, we are one of the few manufacturers capable of delivering consistently high-quality Alloy 625 instrumentation components on time and in high volumes.

Watch the video

5. Confirm global availability

Getting the right material at the right time is not just a matter of materials and manufacturing, but logistics. Just as the supply of raw materials has been disrupted for component manufacturers, the same geopolitical, economic and climate instability has directly impacted the supply of components to oil and gas projects.

To remain on schedule, you need to be clear that your supplier can deliver what you need, in the right volumes, on deadline - wherever in the world your project is located.

How to ensure supply consistency

Actions speak louder than promises. Make sure your component supplier has a proven history of similar order types and values delivered on deadline.
There should be no question of any issues with quality or performance. Check for a demonstrable track record of high levels of investment, expertise and support for CRAs like 625 and 6Mo.
With production and supply chain disruptions becoming a universal norm, your supplier should be able to demonstrate they have the global manufacturing locations, capacity and lead times to deliver in the right volume to your project location.
They must also be able to prove that robust contingencies are in place to ensure supply chain consistency.

As part of a $19 Billion turnover organisation, we have the capacity and stability to guarantee the consistent supply of any volume of Alloys 625 and 6Mo components worldwide.
With zero quality and performance issues reported, multiple global locations and a dedicated team to assist on large projects, we provide a unique breadth of reach and support.
Thanks to four decades of investment and expertise in the supply of CRA instrumentation components, we have a long-term track record of meeting the high expectations of global oil and gas producers.

Dedicated project support across the globe

Fig. 5. Example Project: This map illustrates the distribution of shipments from Parker’s manufacturing location in Barnstaple, UK, to multiple international destinations supported by dedicated project management team.

6. CONCLUSION

The safest choice for Alloys 625 and 6Mo component manufacturing and supply

Depending on project application conditions, instrumentation components made from Alloys 625 and 6Mo are expected to last longer and deliver more consistent, leak-free performance than alternative materials. This is especially true when comparing the performance of high-quality products to lower-cost options of the same alloy types.

While the cost of their procurement remains high, this reflects their ability to cut the risk of failure and unscheduled downtime costs over the lifetime of your project, improving worker safety and reducing the risk of environmental damage.

However, your ability to rely on these components to perform under tough service conditions depends on the reliability of your supplier. As new offerings enter the marketplace at a seemingly lower price point, it’s important to remember that any short-term savings will quickly turn into additional costs should your components fail to perform to the expected standard.

With more than 40 years of experience in processing, manufacturing and supplying Alloys 625 and 6Mo, Parker represents the safest, most reliable choice for instrumentation components that need to meet the highest standards of quality, performance and availability.

We continually invest millions of dollars in equipment, training and monitoring to ensure that the components we forge, process, manufacture and tool meet the highest standards in the world.

Our dedicated division project team is available to support operations wherever they’re based on the map. And having managed projects worth more than $24 million per client, we are trusted by the industry’s producers to deliver the volume they need, on time, every time.