Tuesday, February 16, 2010

Burgh Energy Report: Mahoning Valley Steel

Steel is making a big comeback in Youngstown. Yesterday, V&M Star made official its expansion of operations in the Mahoning Valley. Why there? Proximity to all the shale gas in the Marcellus Play:

Investing in the Youngstown area made sense because technology has improved to a point where gas companies are now able to tap into vast reserves such as the Marcellus Shale, said Skip Herald, managing director of V&M’s North American operations. The new hot mill would be able to produce tube from as 2 3/8 inches in diameter to 7 inches in diameter.

Demand for these products has increased over the years, he said. “We’ve seen high growth potential over the last several years and we continue to see that demand in the near future.”

He noted that natural-gas exploration is expected to boom over the next decade, as clean energy technology ramps up across the country and elsewhere. And, many of V&M’s customers such as Exxon Mobil, BP and Shell step up their investments in the market. “Based on this change in the market, we see greater demand for small diameter pipes” that are needed to drill in places such as the Marcellus Shale.

The Marcellus Shale extends along the Appalachian range from northeast Pennsylvania and into parts of Ohio, West Virginia and Virginia.

V&M Star has been exploring a $1 billion investment for about two years, considering multiple sites in the United States (e.g. Texas and Oklahoma) and one in Brazil. I understand this news as a substantial bet on natural gas extraction in the region. But you wouldn't know anything about it if you only engaged Pittsburgh-based media.

To offer a critique for Northeast Ohio-based media, coverage of the shale gas boom has been sparse and Westinghouse's growth in Cranberry is off the radar (people who live in Greater Youngstown do commute to Northern Pittsburgh for work). There is scant evidence of TechBelt thinking in terms of regional economic development. Local journalists are dropping the ball.

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