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V&M star Gung-Ho about U.S. prospects.


One company making an undeniable splash in the North American pipe business is V&M Star, a joint venture between Vallourec, France (80%) and Sumitomo Corp., Japan (20%). On Nov. 5, 2012 the company showed its faith in the long-term development of the shale revolution with the opening of a $1 billion state-of-the-art steel mill in strategically located Youngstown, OH.

On Nov. 29 that good news was followed up with the announcement that VAM USA, a joint venture between Vallourec, Sumitomo and NSSMC, Japan, would expand its Connection Technology Center near Houston to 90,000 square feet. Officials said this would significantly increase VAM USA's ability design, manufacture, inspect and test several premium connections at once. This will enable VAM USA to double its R&D capacity

In an interview, Vallourec officials discussed their strategy toward business in North America.

P&GJ: What facilities does V&M Star have in the U.S. and why has it chosen to expand its energy-related businesses?

V&M: With over 2,500 people in 18 manufacturing facilities and service operations in the U.S., Canada and Mexico, Vallourec in North America primarily serves the local oil and gas markets. Key products include OCTG, line pipe, drill pipe and threading of VAM[R] and Atlas Bradford[R] premium connections.

With three locations, including an integrated steel and pipe-making site, V&M Star produces hot-rolled seamless steel pipe in sizes ranging from 2 3/8 inch to 10.75 inch-in heat-treated or non heat-treated condition --for OCTG with plain end, API, or premium threads, coupling stock, line pipe, mechanical tube.

With its research and threading facilities, VAM[R]USA is the leader in the U.S. market for premium joints destined for deep, difficult, corrosive and deviated wells. Threaded and coupled, semi-flush and flush connections under the VAM[R] and Atlas Bradford[R] brands set reference in the market. A line of connections specially designed for the shale plays is perfectly suited for unconventional production with higher torque, sealability and performance required in horizontal wells.

Another affiliate, V&M Tube Alloy, produces and repairs downhole tubular accessories, and specializes in complex threading and machining for custom-made orders from three facilities in Louisiana, Texas and Wyoming. V&M Tube Alloy offers optimum integration packages for assemblies, guarantying back-up solutions with contingency stock.

Vallourec Canada Inc. supplies quality pipe and premium VAM threading primarily used in deep sour gas wells, and heavy oil steam injection wells.

VAM Mexico in Veracruz is the leader of the Mexican market in the field of premium joints. It developed major business activities in the on-site service sector and produces thread protectors.

As an integrated supplier of quality OCTG and premium connections, the company focuses on supporting the growth of our customers in onshore unconventional and offshore GOM. This commitment to our partners led to new investments in the new Ohio pipe mill and expansion of the Houston connection testing lab to meet the demand for products and services for those applications.

P&GJ: Which particular markets of the oil and gas industry do you target?

V&M: In North America, V&M offers solutions for the oil and gas industry including drill strings, casing and tubing, API or premium connections, especially VAM[R] and Atlas Bradford[R] premium joints.

The company is recognized for its expertise in extreme operating conditions: deep wells, corrosive environments, deviated or horizontal wells, high temperatures, high pressure, offshore drilling. V&M also offers underwater line pipe for transporting oil and gas from wellheads to the surface (risers) or dry land (special line pipes).

Onshore, thanks to the strategic location of its pipe-rolling facilities, and the development of a line of connections adapted to the shale plays, V&M is well-positioned to provide high-performance, competitive solutions to operators.

P&GJ: What motivated V&M to build its plant in Ohio and how has it been received by community and state leaders?

V&M: The boom in the oil and gas shale plays drives an increased demand for small-diameter, premium OCTG products. The plant will produce up to 500,000MT of seamless pipe in sizes 2 3/8 inch to 7 inch. It complements the existing adjacent steel plant and rolling mill that manufactures premium quality OCTG and line pipe in sizes 5 inch to 10 3/4 inch. The integrated site will also provide heat treatment, VAM[R] premium threading lines, storage, and other services.

The rationale for the location was based on several factors. First, the new complex is ideally situated to service all shale plays in North America, especially the emerging Marcellus and Utica basins. The new Fine Quality Mill is located adjacent to the existing V&M Star facility, ensuring fixed-cost synergies and efficient logistics. Moreover, the plant benefits from the talent and skill of the workforce in the region, allowing speed of work and ramp-up.

This initiative revives an area in the country that was hard hit by the economic downturn and had not seen substantial capex investments in decades. The project was welcomed by the community and the development was met with support of federal, state and local authorities for permitting, preparation, and infrastructure improvements. The plant has received visits by many officials and dignitaries, including President Obama.

P&GJ: In meeting with customers, what do they cite as their most important needs, and how is V&M Star working to assist them?

V&M: They face more demanding environments such as deeper and higher pressure reservoirs which are pushing the limits of current technologies. They also face heightened safety regulations following the Macondo disaster that have further accentuated the need for extra safety margin in design of technical solutions.

This is why VAM permanently designs new connections to fit the next challenges of its customers. We expanded our Connection Technology Center to test new products and qualify existing ones to new performance envelopes.

Onshore customers ask for efficient and readily available solutions. We respond by investing in new domestic capacity (rolling mill, premium threading). We have reduced our cycle times at V&M Star from 42 to 30 days, and we partner with the best-in-class distributors to supply end users just in time in the right location with assorted services. We have also developed more competitive fit-for-purpose connections for the specific challenges of shale drilling such as VAM[R] SG.

P&GJ: What capabilities at the mill is V&M particularly proud of?

V&M: A distinguishing factor is that it will use cutting-edge technology to reach consistently tighter dimensional tolerances, improvements in equipment reliability, safety and quality.

Development in terms of specialized products is an essential part of Vallourec's R&D activities. Of special interest is the development of products for highly sophisticated applications i.e. Arctic regions or anthropogenic C[O.sub.2] transport. Additionally, product development is focused on the needs arising from the subsequent processing of pipes by our customers. Special requirements due to pipe coating, welding or laying are considered in the development of alloying concepts and manufacturing processes. This product development is done in our newly built Boiler & Line Pipe Competence center in Dusseldorf.

P&GJ: Does the variety of products from shale create additional challenges for line pipe manufacturers?

V&M: The shale revolution has affected manufacturers through different angles. First, ODs evolve constantly. For instance, the recent switch from oil to gas affected the OD selection by our customers, since gas wells are mainly connected through 8 inch-12 inch OD pipe while oil wells are using mainly smaller OD 2 inch-6 inch. More recently, with the development of pad drilling, more production comes out of the same site, thus driving an increase in the OD used by operators.

Finally, the high pressures and the sand used for fracking also affect tubular choices, driving up demand for heavier walls and increasing the weight per foot of line pipe.

P&GJ: What factors do you think will be driving oil and gas development?

V&M: Prospects of the U.S. market are very promising as oil and gas production onshore and offshore is expected to continue to grow over the next 10 years. Onshore, operators will continue to look for more efficient ways to drill and maintain profitability. As a result, we expect efficiencies will continue to improve in the future.

We also see activity steadily improving as operators resume greater activity than in past years, mainly in the deepwater areas of the Gulf of Mexico despite increased government regulations. Operators will push forward to minimize the risks involved with these activities. Although the issuance of offshore permits in the Gulf is not proceeding as quickly as operators would like, we continue to provide tubulars as projects are sanctioned.

The outlook for major and independent producers is positive not only in the Gulf. We believe the rest of the world provides ample opportunities and there, also, we pursue a strategy of innovation, local content and competitiveness.

P&GJ: What are some of the energy-related projects that V&M is best-known for worldwide?

V&M: In the Americas V&M has a longstanding relationship with Petrobras and is involved in all of its offshore projects including deepwater and ultra-deepwater. V&M's hot-rolling manufacturing process ensures controlled wall thickness and ovality, minimum residual stresses, while its High Collapse proprietary grades offer properties exceeding the API ratings as required by the demanding wells. This is why V&M was chosen as a supplier of choice for Petrobras America's Cascade and Chinook wells to provide casing and tubing threaded with VAM[R] premium connections.

V&M is also involved in the Petrobras-Papa Terra project, which is going to be the first tension leg platform and dry tree system installed in Brazil. V&M's scope of work includes the design and qualification of a new VAM TTR connector, the production of threaded and coupled pipes for the outer production risers connecting the seabed to the dry tree on the surface of the platform, as well as production of required accessories. The local presence of a V&M field service team in Brazil will also facilitate the installation of the project in the coming months.

The dedicated project organization of V&M for the threaded and coupled risers is particularly beneficial for programs such as the Chevron Big Foot project to be installed in the Gulf of Mexico in 2014. Once completed, the platform will be the world's deepest tension leg platform (more than 5,000 feet).

For this project, Vallourec will design eight new riser connectors of the VAM TOP FE and VAM TTR product line for riser applications within 18 months. The company will then provide threaded and coupled pipes for the inner riser of the drilling phase of the project. In the next phase, riser pipes will connect the seabed to the dry tree on the surface of the platform with inner and outer production risers. Finally, a whole range of accessories required by the project will also be supplied by V&M.
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Author:Share, Jeff
Publication:Pipeline & Gas Journal
Article Type:Interview
Geographic Code:1U3OH
Date:Jan 1, 2013
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