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Utica Shale Revives Youngstown, OH's Flagship Steel Plant

Youngstown, OH, long a Rust Belt poster child, now is watching the phoenix-like revival of its flagship steel plant, Youngstown Iron Sheet & Tube, thanks to the Utica and Marcellus shales. The 100-year old plant, once one of largest in the world before it foundered in the 1970s collapse of the nation's steel industry, will be making steel pipe to serve the state's burgeoning shale gas and oil development.

It's not a return to its glory days, but expanded use of the old plant is just one of new and expanded manufacturing ventures in the surrounding area sparked by the growing development of oil and natural gas from the Utica Shale that underlies much of eastern Ohio, and that portion of the Marcellus Shale spilling over the border from Pennsylvania.

Vallourec SA, a French company that has taken over the old Brier Hill Steel Works in Youngstown, said progress is continuing on a $650 million steel mill it is building to produce seamless pipes for use in hydraulic fracturing (fracking). The seamless hot rolling pipe mill of subsidiary V&M Star will create about 350 direct jobs and have initial production of 350,000 tons/year, but it can be expanded to 500,000 tons/year. Production is expected to ramp up in the next few months.

According to Vallourec, the new mill will produce 2 3/8-inch to 7-inch diameter pipe for use in fracking operations. The company said it wants to support customers in shale plays across the continent; it has field offices in the Marcellus, Utica, Haynesville and Barnett shales and in the Piceance Basin.

U.S. Steel Corp., another familiar name in the iron and steel business, is seeing a booming business for its Lorain Tubular Operations just outside of Cleveland. The potential size of the Utica and Marcellus shales suggests decades of production growth, Doug Matthews, senior vice president of tubular operations for U.S. Steel, told the audience at the Ohio governor's energy conference last September (see Shale Daily, Sept. 28, 2011). After decades of watching domestic production move south and west, its Ohio facility is now poised to be a competitive regional source of pipe and tube, he said.

"It gave us a business certainty to be able to make a significant capital investment," Matthews said.

Karen Wright, CEO of Ariel Corp. in Mount Vernon, OH, a natural gas compressor manufacturing firm, told the same audience the Utica development is bringing her company "a tremendous amount of business." She noted that every well eventually needs a compressor as pressures drop.

"We're currently having some difficulty in finding the workforce that we need to grow at the rate that the market is requiring us to grow," Wright said, leading the company to partner with a local technical college to help train and expand the workforce.

She pointed out that Ohio is still the third largest manufacturing state in the country and said her company maintains works with 73 existing suppliers in the state that would also benefit from the Utica. "You have a tremendous ripple effect."

Vallourec's foray into Youngstown -- a city with a long history of steel production -- closely mirrors that of TMK IPSCO, which said in February 2010 it would build a threaded pipe manufacturing facility in Brookfield, which is near the city (see Daily GPI, Feb. 24, 2010). TMK IPSCO, the North American division of Russian steel tube manufacturer TMK, said its facility would have a capacity of up to 100,000 tons/year and would initially employ 50 people but expected 120 jobs to ultimately be created.

Meanwhile, Ohio got another boost Monday when Honda announced that its new sports car -- the Acura NSX, a V6 hybrid "supercar" -- will be built at a new facility near its current facilities in central Ohio. The company did not specify where the new factory would be built but did say it would be "at a unique, advanced manufacturing operation" and that production would begin within three years. Honda has auto manufacturing plants in Marysville and East Liberty, an engine plant in Anna and a transmission plant in Russells Point.

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