We love to hear about companies born in the Marcellus/Utica grow up and expand to other regions. One such company is Deep Well Services, which expanded from our region into the Permian, and now, to another country (see SWPA’s Deep Well Services Going International w/Unit in Argentina). Steel Nation, another of our favorite companies, is expanding into the Southwestern U.S. by partnering with James Resources.
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According to one Appalachian producer, small operators of conventional oil and gas wells in Appalachia are facing “an economic Armageddon.” Prices for natural gas are so low operators can’t afford to do anything but the most critical maintenance work. Yet our intrepid operator is hopeful nonetheless. He’s using a new method of “acidizing” wells that (in at least one case) triples gas output. How’d he do it?
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Pipeline builder Otis Eastern, headquartered in Wellsville, NY (western part of Upstate) has built a lot of pipelines throughout the northeast since its founding in 1936. In recent years the company has worked on a number of Marcellus/Utica projects, including Energy Transfer’s Mariner East 2 project and National Fuel Gas Company’s Marcellus Gas to Market project. Otis is selling itself for an undisclosed amount to a much larger company, Artera Services, LLC, based in Atlanta, Georgia.
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It’s been a tough past five months in the shale industry. While it’s been tough in the gas-focused plays like the Marcellus/Utica, it’s been tougher in the oil-focused plays like the Permian. Employment in the O&G space has shrunk, by one account, by some 86,000 jobs. We’re now at the same employment level as we were following the downturn in 2014-2016. “But everyone knows this industry is cyclical. It’ll bounce back again, right?” This time it may be different. According to analyst John Kemp, this time some of the jobs (and companies) leaving the industry will be gone for good…
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We love a good supply chain story. Crozier Welding, founded in 1980, started by servicing coal mining operations. Eventually, the company, located in Coshocton County, transitioned from coal to welding pipelines for the oil and gas industry. Today the focus of the company is on welding pressure vessels (holding tanks) for the shale industry. The company is moving and expanding, thanks to an abundance of work coming from the M-U.
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Tri-Point, LLC is an oilfield services company (OFS) specializing in products and services for drillers and pipeline companies. Tri-Point is headquartered in Houston, Texas but has a number of field offices, including an office in Towanda (Bradford County), PA that services the Marcellus industry. Sadly the company is in bankruptcy. We spotted an announcement about a virtual auction later this month to sell off/liquidate all of the company’s assets.
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While shale oil producers are suffering mightily during the current oil price crash, brought on by both the COVID-19 coronavirus travel restrictions and the Saudi price war, the oilfield services (OFS) companies that do all of the drilling and fracking for the oil producers are suffering even more. Companies like Schlumberger, Halliburton and Baker Hughes (among many others) are laying off employees and writing down billions of dollars worth of assets. On Monday Baker Hughes said it will write down $15 billion in value. While this carnage is not affecting the Marcellus/Utica per se, all of the aforementioned companies taking it on the chin in other plays also drill here in the M-U.
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Vallourec, headquartered in Boulogne-Billancourt, France, manufactures steel pipes used in the oil and gas industry. The company employs some 19,000 people in 20 countries, including the U.S. In fact, Vallourec employs more than 750 at three Youngstown, Ohio units: Vallourec Star, VAM USA and Vallourec USA Corp. Yesterday Vallourec corporate headquarters announced it will reduce (layoff/eliminate) some 900 positions “across all plants as well as support functions.” That number, 900, represents over one-third of Vallourec’s total workforce and contractor positions in North America. The announcement implies all 900 of the positions being eliminated will happen in North America.
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If you operate a company that sells a product (particularly a commodity product) you only have two ways of making a profit: Sell the product for more money or cut expenses (or both). For oil drillers, the price of the product sold is pretty much fixed. Some drillers have “hedged” their production, pre-selling future production at a specific price. But many don’t hedge. And hedging contracts typically don’t extend beyond a year. In the case of oil, the world market sets the price, and the price this week is about half of what it was last week. That means most shale oil drillers won’t make a profit–unless they can trim costs. One of the ways drillers are attempting to cut costs is by asking the companies that do the actual drilling and perform services for them (oilfield services companies, or OFS) to cut the rate they charge.
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Phoenix Logistics, headquartered in Milwaukee, Wisconsin, targets supply chain companies in a number of industries with warehousing, distribution, and transportation. One of the industries they target is the oil and gas sector. Phoenix has just opened a new 400,000 square foot warehousing facility in Athens (Bradford County), PA, targeting companies in the Marcellus.
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Yesterday MDN brought you an article about the supply chain in Ohio–companies that sell goods and services to upstream (drilling), midstream (pipeline) and downstream (petrochemical) companies (see Ohio’s Non-Drilling Counties Look to Profit from Utica Shale Too). That article talked about businesses located in counties just west of the Utica shale in Ohio and whether or not they can get in on some of the economic action. We spotted another story, this one in the Wall Street Journal, about supply chain companies serving the oil and gas industry. If yesterday’s article was the positive/up side of supply chain, the WSJ article is the flip side–the down side of depending too much on our cyclical industry.
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Drilling is great for local counties when it arrives. Especially for the “supply chain” in those counties–companies that sell goods and services to drilling companies. Everything from retail to convenience stores to restaurants to hotels to trucking companies and more. But what about businesses in nearby counties without any drilling activity? Is there any way they can share in the bounty too? There sure is!
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Last week Shale Support, a frac sand producer and shipper headquartered in Louisiana, filed for Chapter 11 bankruptcy. The company is not able to deal with $128 million in debt it has accumulated, hence the filing. Shale Support maintains three frac sand terminal facilities in the Marcellus/Utica region.
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Little by little, piece by piece, the evidence continues to mount that PTT Global Chemical and their partner Daelim Chemical will make a positive final investment decision (FID) to build a multi-billion dollar ethane cracker in Belmont County, OH. On Monday we told you the State of Ohio is investing another $30 million in the project, even though the project is not officially a done deal, yet (see Ohio Pays Another $30M to Kickstart PTT Belmont Cracker Project). Our latest bit of evidence that the Belmont cracker will indeed get built: PTT is holding a “supplier fair” for companies to win contracts to provide various supplies and equipment for the facility. Oh, and the supplier fair is being held in London–as in the United Kingdom!
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Competitive Power Ventures (CPV) finally broke ground and began to build a new Marcellus gas-fired power plant in Cambria County, PA in October 2017 (see CPV Marcellus-Fired Power Plant in Cambria, PA Breaks Ground). Located 60 miles east of Pittsburgh, the CPV Fairview Energy Center is a 1,050-megawatt natural gas and ethane-fueled two-by-one combined-cycle electric generating plant expected to begin commercial operations in early 2020. An Indiana company supplying scaffolding to work on that plant was so impressed with the project, and others like it popping up in PA, that the company has decided to establish a branch operation in Johnstown, PA.
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We love reading about entrepreneurs–young or old–who take a risk and achieve success. Particularly in the Marcellus/Utica industry. We have another such story to share–of a young man who began with a mini excavator (bought with tax refund money) and an old bulldozer donated by his grandfather–and turned it into 125 employees, 20 dump trucks, 10 tractor trailers and 80 pieces of excavating equipment.
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