Luxembourg-based steel pipe maker Tenaris said last week it’s closed the $1.07 billion acquisition of IPSCO Tubulars from Russian steelmaker TMK, becoming the largest steel pipe maker in North America, Kallanish Energy reports.
Tenaris’s existing U.S. industrial and service center network, located primarily in the south, is complemented by IPSCO’s facilities located mainly in the Midwest and northeast regions of the country.
“The IPSCO acquisition marks a new chapter in our U.S. expansion and represents another milestone in Tenaris’s history. Together, we are uniquely positioned to serve the U.S. oil and gas industry, with an extensive geographic deployment throughout North America and an unmatched product range,” said Paolo Rocca, chairman and CEO of Tenaris.
IPSCO’s steel shop in Koppel, Pennsylvania, northwest of Pittsburgh, is Tenaris’s first in the U.S., and will provide vertical integration through domestic production of a relevant part of its steel bar needs, according to Tenaris.
Its Ambridge, Pennsylvania, also northwest of Pittsburgh, adds a second seamless manufacturing facility and complements Tenaris’s seamless plant in Bay City, Texas.
IPSCO has facilities in the Houston area, and in Arkansas, Ohio, Oklahoma, Iowa, Kentucky, Nevada and Canada.
The deal expands Tenaris’ geographic reach and product lines while adding more steel-making capacity in the U.S. That added capacity will help the company avoid Trump administration tariffs levied on foreign steel.
Including the IPSCO deal, Tenaris has invested more than $10 billion in the U.S. over the past decade.
The deal comes when crude oil prices have returned above the $60 per barrel, but spent nearly a year in the $50 range, making drilling new wells unprofitable for most exploration and production companies in North America, where Tenaris makes 47% of its sales.
Although overall drilling activity in the U.S. is down and is expected to remain so in 2020, Tenaris said that trend is balanced by the increasing length of horizontal wells — some extending for miles — meaning more pipe is required for each well. Pipe consumption per rig since 2014 has jumped by nearly 50% — due to longer laterals, according to Tenaris.
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