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Pipe makers' sales skyrocket along with area's gas boom

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By Rick Stouffer
Friday, June 25, 2010

Natural gas drilling rigs are using thousands of tons of pipe and tubing products every day in the booming Marcellus shale region, experts said yesterday.

Last month, 90 rigs were boring holes in search of natural gas in the Marcellus region, and every day they drill, an estimated 25,000 tons of pipe-related products are placed in the shafts, said Paul Vivian, publisher of the Preston Pipe Report, who spoke at a conference on tubing industry at the Omni William Penn Hotel, Downtown.

The shale formation is about a mile underground and runs through most of Pennsylvania and into New York, eastern Ohio and West Virginia. The formation is estimated to hold enough natural gas to satisfy the country's needs for decades, some experts believe.

The average number of drilling rigs working nationwide last month was 1,513, which used a combined 378,000 tons of down-hole casing to brace the holes' walls, tubing to move the natural gas to ground level, and drill pipe to transmit power to the drill bit, Vivian said.

About 200 representatives of steel and pipeline producers and distributors attended the conference on opportunities in the country's dozen or more shale natural gas formations.

"There's no question the domestic pipe industry has benefited from the increase in rigs," said Vivian.

Executives from U.S. Steel Corp.'s tubular products unit and TMK IPSCO, which has two plants in Beaver County, also spoke at the conference.

Data from Rig Data Inc., of Fort Worth show that last month's nationwide count rebounded from May 2009's 910 drilling rigs in operation on land, but remains sharply down from 2,133 in May 2008. Pennsylvania-only rigs operating last month were above the May 2009 total of 40, Rig Data reported.

Given the cyclical nature of the natural gas industry, Vivian said he's concerned the pipe industry could be trapped in overbuilding, which would result in lower product prices.



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