Valerus, Brilex Take First Step in Shale's First Wave
YOUNGSTOWN, Ohio -- Step inside the huge section of the Brilex Industries plant on Andrews Avenue dedicated to fabricating vessels for Valerus and you see a huge open space, fresh paint and new concrete flooring awaiting the start of full-scale production.
It’s a sight indicative of the economic potential that accompanies the emerging oil and gas industry, an analogy that comes to mind after interviewing Chris Scheve, the Valerus vice president for the northeast region.
“This is the first step,” Scheve says as he stands in front of the first of three high-pressure, horizontal coalescing filters made by Brilex as part of its new partnership with Houston-based Valerus. “This shop floor will absolutely be covered up with a wide variety of products that [oil and gas] companies are going to need, and it’s all going to be made here.”
Valerus, which began doing business in 2004, is among the first wave of midstream manufacturers following oil and gas exploration companies into the Utica shale play. The company makes the “equipment that gas producers need to make sure, once they get the gas to the surface, that it’s clean, that the water and contaminants are taken out, so they can then take that gas to market,” Scheve says.
“Our initial forecast is we’ll create 30 jobs here but this is only one product of 30 or so [that Valerus makes],” he adds.
Last March, Valerus was scouting the Mahoning Valley for its own manufacturing site, its CEO, Peter Lane, told The Business Journal. “We have lots of growth in Pennsylvania, Ohio and West Virginia. We’re at the top inning of a very long game,” he said.
In November, crediting assistance from the state of Ohio, the city of Youngstown and the Team NEO development agency, Valerus announced it had formed a partnership with Brilex.
Both companies are privately held; the terms remain undisclosed.
In its announcement, Valerus said it would “manufacture equipment that is in high demand” in the Utica and Marcellus shale regions. In addition to various sizes of coalescing filters, its partnership with Brilex would produce separators, gas processing units, glycol regnerators and absorber towers, the company said.
To turn out the first Valerus products at the Andrews Avenue plant, Brilex employees “poured the raw material – steel, welded it, pressure tested and painted” the coalescing filters, each of which takes about six weeks to complete. Costs range from $40,000 to $85,000 for each vessel, “depending on what the customer specifies and how much gas they need to move,” Scheve says.
According to the company’s website, Valerus fabricates its products at “five major U.S. factories – including the industry’s only ISO 9001 certified facility in Bay City, Texas – and we operate from multiple regional service centers around the world.”
The company employs more than 1,300 worldwide.
Valerus announced in December that was awarded a contract to provide compression and onsite supervisory services for processing plants being developed in Iraq. And in November, the company reported receipt of a contract to provide compression
services for “two mature onshore fields in Mexico.”
An aftermarket service operation in Smithfield, Pa., a small town in Fayette County, opened in June 2011 with projections that 100 workers would eventually find jobs there. Less than a third of that number actually did although the company says the operation continues to grow.
“Our main customers are the Chesapeakes, the Range Resources – and the midstream companies like Mark West, and the big companies like Chevron, Shell and Exxon,” says Scheve. “With the Utica play up and going, theres going to be a need for this vessel and many other products.”
The coalescing filters made at Brilex were ordered by a company Scheve declined to name. The vessels are a “critical component” at compression stations and processing plants.
“This is our first partnership to create these vessels locally. It cuts down on fabrication and frieght costs – and it creates manufacturing jobs here, which is important to us and to our customers,” he adds.
The Valerus/Brilex partnership also positions both companies among the pioneers.
Shale plays evolve in waves, Scheve says. “You’re already seeing in the countryside the trucks and the welders putting in the pipelines that allow the product to move. The compressor stations are the next logical step, and then with the Utica being so rich in natural gas liquids, the processing plants and the cryogenic gas plants, which Valerus builds as well.”
Copyright 2013 The Business Journal, Youngstown, Ohio.
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