Vallourec plans to build a new state-of-the-art, small-diameter rolling mill in Youngstown, Ohio. The company says that this decision is supported by the long-term development of unconventional gas production in the U.S., which is driving increased demand for small-diameter OCTG (oil country tubular goods) tubes.
The new mill, which will initially produce 350,000 tonnes per year, provides an annual nominal rolling capacity of 500,000 tonnes of seamless tubes. The project includes heat treatment and threading facilities. The investment will amount to US$650 million, with operations expected to start by the fourth quarter 2011. The project is expected to create around 350 new direct jobs.
Shale gas production typically requires an increased number of wells, horizontal drilling, and sand fracturing at high pressures, according to Vallourec, which implies higher volumes of small-diameter alloy pipes, with an increasing proportion of premium connections.
This new offer will complement the range produced by Vallourec in North America. The new facility will be located close to major shale basins (e.g., Marcellus), just as the Group’s other operations are in the vicinity of shale plays (e.g., Fayetteville or Haynesville).
“This is a strategic investment to support our customers in the development of America’s natural gas resources,” said Philippe Crouzet, Chairman of Vallourec’s Management Board. “We are excited about the opportunities that this new investment brings for the development of the Group.
“This project capitalizes on our long-term commitments to the U.S. market, our local business partnerships, as well as the support of federal, state, and municipal governments,” Crouzet continued. “Specifically, we benefit from the talent and skill of our workforce who have demonstrated their ability and commitment to delivering world-class products and excellent customer service.”
Vallourec is a world leader in premium tubular solutions primarily serving the energy markets, as well as other industrial applications. With a presence in more than 20 countries, Vallourec has 18,000 employees, integrated manufacturing facilities, and advanced R&D.
With more than 2500 people in 18 manufacturing facilities and service operations in the U.S., Canada, and Mexico, Vallourec in North America primarily serves the local oil and gas market. Key products include oil country tubular goods (OCTG), line pipes, drill pipes, and premium threading services of VAM® and Atlas Bradford®. Most other market segments are served by Vallourec’s specialized entities in Europe and Brazil. In 2008, the North American market generated €1.5 billion in revenues, representing 24% of Vallourec’s total sales.