Tuesday, December 15, 2009

Natural Gas Boom Spillover

Yesterday, I offered some evidence that the best of the Marcellus Shale boom is yet to come. Today, those bulls are running in Youngstown:

Exxon Mobil Corp.’s plan to buy XTO Energy Inc. bodes well for the U.S. steel pipe market and, by extension, prospects for V&M Star Steel’s proposed local expansion, said city Finance Director David Bozanich.

The $41 billion deal, announced Monday, shows that big oil companies like Exxon -- or at least their scientists and economists -- recognize that natural gas is going to be a big component of future energy use, and V&M’s proposed mill “is being built to supply a lot of natural gas pipe,” Bozanich said.

V&M has been moving toward a $970 million expansion near its existing Brier Hill site, although the company has yet to announce whether they are going ahead with the project. One of the factors company officials are weighting are the conditions in the steel pipe market.

“We believe economic conditions are right that the project will go forward in Youngstown,” Bozanich said.

I've been talking about the links between the V&M Star expansion deal and the Marcellus Shale Play for the last few months. I wasn't sure how the pipes were used in the natural gas industry, but I suspected that the proximity to all the drilling was/is an important factor in the decision of where to expand. All the dots I connected pointed to Youngstown landing the $1 billion investment.

I keep telling my Youngstown friends to follow the puck of Marcellus Shale news. I should also tell my Pittsburgh friends to take stock of all the doings in the Mahoning Valley. All the parochial omphaloskepsis doesn't bode well for TechBelt consciousness. This larger view paints a dynamic picture of a region on the upswing.

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