Shale Plays Drive New Pipe Mill Construction By Foreign Investors

December 2013, Vol. 240 No. 12

U.S. market demand for high quality oil country tubular goods (OCTG) and steel line pipe products is growing due to the development of shale oil and gas reserves. The shale play has also given life to new pipe mills focused on reducing lead times and serving U.S. customers with a full range of locally manufactured seamless, welded and premium products, in a market where imported products account for more than 50% of total consumption.

Concerning new mill construction, foreign investors seem keen to cash in on the growing line pipe market, accounting for six newly planned U.S. mills and a seventh that came on line in 2012.

Mexico’s Tenaris recently broke ground on its first U.S. seamless pipe mill in Bay City, TX. With an estimated investment of $1.5 billion, the new facility will have an annual production capacity of 600,000 tons of high quality seamless pipe.

Construction is expected to last about 30 months. The facility is expected to be fully operational by mid-2016. Once completed the TenarisBayCity facility is expected to create 600 direct jobs.

Borusan Mannesmann, a Turkish steel pipe manufacturer and major player in the European market, is building its new $150 million ERW (Electric Resistance Welded) pipe mill and accompanying heat treatment plant in Baytown, TX. This will be the first Turkish-owned plant in the U.S.

The plant will produce OCTG in American Petroleum Institute (API) grades N80 through Q125, as well as in custom-engineered grades, and will reportedly displace about 85% of Turkey’s exports of the products to the U.S.

According to the company, construction is ahead of schedule on the 300,000 ton-per-year oil country tubular and line pipe mill expected to be completed in Q3 2014.
The Prolamsa Group, headquartered in Monterrey, Mexico, plans to build a 300,000-plus ton-per-year pipe and tubular products facility in Bryan, TX. The mill, which will cost $120 million, is scheduled to produce ERW energy tubular products in diameters up to 16 inches, with wall thicknesses up to l.625-inch. It will also produce API grades and ASTM specified products.

Commissioning is set in Q2 2014. The plant will receive and ship by both truck and rail. It will operate under a newly formed company, Axis Pipe and Tube Inc.
On Sept. 16, the ground breaking for the first production plant of Benteler Steel/Tube in the U.S. took place in Shreveport, LA. Based in Paderborn, Germany, Benteler Steel/Tube is a business unit of privately held Benteler International AG, which is based in Salzburg, Austria.

The project’s first phase – a hot-rolling seamless steel tube facility – will be completed in the Q3 2015. A second phase will lead to the opening of a steel mill with an electric arc furnace in 2020. When complete, the project will span 1.35 million sq-ft on 330 acres at the port.
The output of the new Louisiana facility will be destined for such locations as Illinois, Indiana, Ohio and Texas. The $975 million facility will be capable of producing up to 320,000 tons of steel tube product annually.

Alita USA Holdings, a Dubai-based startup company, plans to build a 340,000 sq-ft mill in Buffalo, NY that will produce 150,000 tons of steel pipe for the oil and natural gas industry. The $102 million facility will include a separate 16,000-sq-ft building for a laboratory, office space and storage. No completion date has been announced.

The Chinese steel company, Tianjin Pipe Corporation America, is building a 1.6 million sq-ft facility in Gregory, TX, which will be the largest manufacturing investment by a Chinese company on U.S. soil.

When fully operational in 2015, the plant is expected to produce and ship 500,000 metric tons of seamless steel pipe each year.

In Youngstown, OH, French-based Vallourec dedicated its $1 billion-plus pipe mill that delivered its first pipe in December 2012 and has been ramping up production throughout 2013. The plant has an annual production rate of 350,000 tons of small-diameter seamless tubes of 23/8 to 7 inches.

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