Pipe Waterproof is used to craft Waterproof Pipes. This is the only function that it serves. It is made by putting cactus Dye in a crafting interface. Cactus dye is made by smelting cactus blocks in a Furnace.
Please note that Pipe Waterproof cannot be crafted in the bottom three squares of any crafting bench; rather only in the top six.
Video TutorialEditTekkit Technical Tutorial - More Advanced Pipes & Steam Engines(27:44)