Appalachian Basin

UPDATE: Steel Seeing Resurgence in Ohio Thanks to Shale

UPDATE (11/5/2012, 11:00 am ET):  As we reported almost a year ago, companies throughout Ohio have seen a new resurgence in the need for steel thanks to the shale development.  Since then, Ohio’s steel plants have been busy building or retrofitting plants to retool their products for the increased demand due to expanding oil and gas development throughout the United States.

Just today, V&M Star announced they have produced their first tubular steel pipes to be used in oil and gas development.  The state-of-the-art mill cost $350 million and will create new 350 jobs.  The new mill will have initial production capacity of 350,000 tons of seamless pipe per year.

With the first continuous production achieved on October 26th, V&M Star is on target to begin sales early next year.

This is great news for the citizens of Youngstown, who have been anxiously awaiting the project coming to fruition since it was first announced in 2010. When the project began, V&M was concentrated on Marcellus development in Pennsylvania.  Now, with exploration of Ohio’s own Utica Shale, V&M will also be supplying Ohio-made steel for Ohio energy development.

—Original post from November 25th, 2011—

Two articles ran this weekend touting the reemergence of the steel industry in Ohio and the thousands of family-supporting jobs it supports — in large part thanks to the development of American energy resources from shale.  The articles were appropriately titled “Republic Steel to add 450 jobs to Lorain as oil and gas exploration booms” and “TMK Plant Poised for Shale Drilling Boom”.  Steel has always been an important component of Ohio’s economy.  It is what made the Cleveland area and Ohio River communities thrive during the 20th century until the 70’s and 80’s when America’s steel industry declined.

Over the past 30 years, Ohio has seen many of its steel jobs moving overseas.  Plants have closed in Steubenville, Youngstown, Lorain and Cleveland.  Mingo Junction, a town that was built around its steel mill, saw their mill shut down completely in 2008.  What is left is a shell of its former self.  I recently stopped by Mingo Junction and was taken back by the scene there.

Thankfully shale exploration has helped companies like V&M Star, US Steel, Republic Steel and TMK Steel find a resurgence in their industry.  With the exploration of shale in both Ohio and Pennsylvania, Ohio’s steel plants seem like a natural fit to produce their pipes and fittings.

Steel piping is perhaps the most important component of shale development.  Through out exploration it can take over 10,000 feet of steel to reach the shale formation.  With over four thousand wells already drilled in Pennsylvania, that is over 40 million feet of piping in just one state.

TMK Steel started its threaded pipe division in May 2010.  TMK manufacturers steel fittings and connectors for steel pipes.  At that time it ran only a single production line and employed roughly 20 employees.  Fast forward to today and they are producing two lines of threaded fitting and connectors with over 70 employees.  TMK is even debating installing a third production line due to product demand.

Republic Steel shares a similar story.  After shutting down the blast furnace at its Lorain plant in 2008, many did not anticipate Republic making steel there again.  Today, Republic is looking to invest 85.2 million dollars in an electric arc furnace to recycle scrap metal back into fresh steel.  This investment is estimated to produce over 400 jobs at the plant that was shuttered just a few years ago.

With ongoing shale development Republic may expand even further, Governor Kasich hinted.

Shale development played a major role in the reopening of the plant.  As noted in the Plain Dealer article, Mr. Vigil said “growth in the oil and gas industry was a major driver for the decision to expand in Lorain”.  Republic Steel is not the only steel manufacturer expanding in Lorain.  In February last year, US Steel announced plans to expand their tubular steel plant.  The $95 million investment was heavily based on development of the expanding Marcellus Shale in Pennsylvania and New York.

Over in Youngstown, V&M Star is a shining example of shale’s role in expanding the steel industry.  V&M Star, North America’s largest producer of seamless tubular products for oil and gas development, are currently looking to expand their operation in Youngstown with the addition of a $650 million seamless pipe mill.  The new plant is expected to create 350 jobs.

I would be neglectful if I didn’t mention Timken’s current contemplation of expansion.  Timken has been in Ohio since 1901 and is one the largest employers in Stark County.  During recent contract negotiations with their steelworkers union, it was announced that they were considering a $225 million expansion to one of their steel plants.

It is the shale underneath our feet that ultimately is reviving this critical industry and bringing these once lost jobs back to Ohio.  Because without shale exploration occurring in Ohio and Pennsylvania these steel jobs may have never happened.

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