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Tenaris Expands Facilities in the U.S., Cuts Pipe Production in Canada

Written by Tim Triplett

Tenaris, a global manufacturer and distributor of energy tubular products, has begun the second phase of its service center expansion in Midland, Texas. The project will add pipe and tube storage and service capabilities for customers in the Permian basin and other key shale plays across the U.S. Phase 2 consists of several stages of construction and is projected to be completed in 2019.

The $18 million investment includes: the development of another 30 acres of pipe storage with a total capacity of about 90 acres; installation of a buck-on unit to assemble pipe accessories; construction of a permanent office building; expansion of warehouse and truck parking; a maintenance workshop; and three new Hyster fork lifts to move and load pipe.

Tenaris is also developing infrastructure to support its sucker rods service center with an additional investment of $6 million. That project will provide storage capacity for 100,000 pieces of sucker rod and accessories, as well as housing a variety of related equipment. The Midland service center expansion will also integrate coiled tubing services, with installs and string swaps performed on site, the company said.

“This second phase gives us the opportunity to raise our value proposition in the region from OCTG products and services to the deployment of sucker rods and coiled tubing,” said Luca Zanotti, Tenaris President, USA.

The Midland service center opened in 2016, offering pipe storage, inspection, inventory and accessories management, and rig preparation with direct delivery of OCTG through the Rig Direct service model. Approximately 65 percent of Tenaris’ sales of OCTG in the U.S. are through its Rig Direct services.

In other news, Tenaris announced it is reducing production levels at its seamless pipe manufacturing facility in Sault Ste. Marie, Ontario, by 25 percent as a result of three main market challenges: a surge in energy tubular imports diverted to Canada by third countries constrained from exporting to the United States due to Section 232 measures; a decline in Algoma Tubes’ export sales to the United States; and export bottlenecks in the oil and gas market that are affecting the price Canadian oil and gas customers receive for energy production.

“These are difficult decisions that have resulted from high volumes of energy tubular imports, trade actions against Canada that remain unresolved, and Canadian oil and gas producers’ activity adjustments due to the widening price differential for their energy,” said Guillermo Moreno, President of Tenaris-Canada. “Our production levels remain above those in 2016 when we resumed operations. We are trying, where possible, to reduce the impact to our employees. We remain committed to domestic manufacturing and serving Canada’s energy industry.”

To adjust to the circumstances, Tenaris’ Algoma Tubes facility will suspend operations for three weeks effective Dec. 15. Operations will resume Jan. 7, 2019.

Tenaris continues to work with industry and governments to defend against steel import surges and to fight for steel access to the United States to get Canada’s energy to market, the company said.

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