Steel Nation pivots amid slump in natural gas
Mark Caskey founded Steel Nation Inc. eight years ago to take what he learned building structures for coal mines and apply it to the shale gas business growing around his Washington County home.
The company has constructed an estimated 360 buildings, most of them designed to protect and limit noise coming from the compressors and processors used to move gas along gathering lines. It is now working more on larger transmission pipeline projects.
As the industry has evolved and low gas prices bring drilling activity to its lowest level in a decade, Steel Nation has pivoted. The company last year bought an environmental service firm and on Jan. 1 reorganized into three divisions focusing on buildings, engineering and environmental work.
Caskey, the company's president, talked to the Tribune-Review about those changes, his work with the Department of Environmental Protection's Citizens Advisory Council and advocating for the oil and gas industry. The following are excerpts from the conversation.
Trib: How much has the downturn in gas drilling hurt your business?
Caskey: Our midstream (gathering) compression building business is way down because there's not the amount of wells being drilled. If there's nothing being drilled, the flow of gas is staying more constant. It's not necessary to build new compression stations.
Trib: How about the transmission projects?
Caskey: We're getting business there. We've got the new Spectra Energy line, Nexus. That's a project that will start later this year. There's a lot of engineering involved. We landed the Rover pipeline, which is Energy Transfer ... across Ohio into Detroit and into Canada. That's a line that's truly exporting, which I think is what America needs right now.
Trib: Did you focus more on transmission projects because of the slowdown in gathering midstream?
Caskey: It was a fairly natural (decision) starting three-plus years ago. There's only so much midstream that's going to be built. Let's go to the next level: bigger buildings, bigger projects, more long-term. We didn't see the downturn would be as bad as it would.
Trib: Have you made other changes because of the slowdown?
Caskey: Starting about this time last year, we started getting letters from our clients on the midstream side asking for discounted pricing. We certainly had to bring our pricing down quite a bit. We'll stay profitable on these jobs, but the whole market has changed. On the flip side, all these transmission projects involve a lot of man-hours in both project management and engineering. We've actually added people. This year, we've put six new people on. Our buildings continue to rise, not at the rate of the first eight years. Most of those hires were on the engineering side to handle these big transmission and gas processing plants.
Trib: Does that mean you get a bigger share of the work on these projects?
Caskey: It does. We are now able to go to our clients — they would have to farm out the engineering — and say let us do your foundations, let us do your electrical design. We think it will speed up the time it takes to get everything to either (the Federal Energy Regulatory Commission) or local townships. No. 2, we think we'll be more cost-competitive than big engineering firms in Houston. No. 3, we're local. We're right in your backyard.
Trib: Has anyone helped to guide you through making these changes?
Caskey: A lot of it was self-learned. I'm a guitar player. I think I had three months of guitar lessons, and I couldn't do anything with lessons. But if I did it by ear, I could learn on my own. It's like any other Western Pennsylvania companies that jumped in and learned from mistakes, adapting fast, try to pick up as much as you can from our friends in Louisiana and Texas ... the people who have been doing this for generations. They were instrumental in helping us out.
Trib: Despite that fast pace, you became active in industry roles outside the company, such as the Citizen Advisory Council. Why?
Caskey: I'm a huge believer in advocacy. There's not enough advocacy for oil and gas. These are real jobs. This is a huge impact on Pennsylvania's economy.
Trib: So you see a need for individuals in the industry to fight?
Caskey: Correct. I've spoken pro-advocacy for oil and gas probably 15, 20 times in the last couple years. I think it's important for business owners that have had success, that can show jobs. With the Citizens Advisory Council ... we need someone in the industry who can go there and speak their mind. I can go up there and answer the ones who want to slap our industry.
Trib: Is there a risk to putting yourself out there?
Caskey: Yeah, I have to bite my tongue sometimes because I'm almost speaking for the whole industry. But at the end of the day, I don't care what other people think because I can't get fired. I won't fire myself.
David Conti is the assistant business editor at the Tribune-Review. Reach him at 412-388-5802 or email@example.com.