Vallourec Rebounds as Oil Prices, Rig Count Rise

YOUNGSTOWN, Ohio – Vallourec Star, after fighting a tough pricing environment the last two years but now buoyed by rising demand for pipe used in the oil and gas market, is starting to hire again.

“We’ve seen signs of improvement in the U.S. oil and gas market where the rig count and OCTG [oil country tubular goods] demand have increased for the first time since the end of 2014,” said spokeswoman Jean Gaetano in an email. “The increased demand has resulted in increased production volumes at all Vallourec Star locations.”

Accordingly, Gaetano said that Vallourec Star seeks to fill jobs in skilled production, maintenance and electronic technology for all shifts. She did not specify the number of jobs available.

“This progressive market recovery is anticipated for 2017,” she added.

Vallourec Star, a subsidiary of France-based Vallourec, operates a melt shop and rolling mill along Martin Luther King Jr. Boulevard. The complex produces OCTG pipe used heavily in oil and gas exploration.

The company also operates two other production plants in the United States, one in Houston, the other in Muskogee, Okla.

A related company, VAM USA, produces premium thread connections at a plant in Youngstown for pipe manufactured at Vallourec Star.

In July 2015, the company announced it would lay off between 60 and 80 salaried and hourly employees. Another round of layoffs was announced the following October.

Meantime, Vallourec implemented other cost-cutting measures across its global footprint to weather a disastrous oil and gas market that began in late 2014 as oil prices started to plummet.

Drillers active in areas such as Ohio’s Utica shale and Pennsylvania’s Marcellus shale began to pull back exploration in the face of low commodity prices and an unprofitable market.

Oil prices sank to below $30 a barrel early last year, but have rebounded to just more than $53 per barrel. And, according to data provided by Houston-based oilfield services giant Baker Hughes, rig counts – while still anemic compared to three years ago – have slowly, steadily increased.

In May 2016, the rig count in North America, that is, the number of vertical and horizontal drilling rigs operating across the United States, bottomed out at 404, data show. As of Dec. 30, that number had risen to 658, still well below the more than 2,000 rigs active during the early days of the shale boom in 2012.

Rig counts in the Utica and Marcellus shale plays have also increased since the summer, according to Baker Hughes. The oil and gas company tracked 21 rigs in the Marcellus – mostly in Pennsylvania – on Aug. 12. By Dec. 30, that number had improved to 39 and hit a year-high 40 on Dec. 16.

The Utica experienced the same trend throughout 2016. On March 24, there were 10 rigs in action across the Utica, most of them in Ohio. On Dec. 30, the rig count had increased to 20.

Vallourec, based in Boulogne-Billancourt, France, posted a net loss of $176 million for the third quarter. But Vallourec Chairman Philippe Crouzet said in a statement he saw hopeful signs in the U.S. oil and gas market.

“During this quarter, we have seen signs of improvement in the United States where the rig count and OCTG demand have increased for the first time since the end of 2014,” he said. “On the other hand, in the Eastern Hemisphere, ordering activity remained very low and the order book over the next quarters reflect the very tough pricing environment over the past quarters.”

Rig Count Inches Upward in Utica

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