Tenaris to build $1.5bn pipe plant in South Texas
By ANGEL GONZALEZ
BAY CITY, Texas -- Tenaris plans to build a $1.5 billion facility to make seamless pipe, a new sign of rural Texas's rising fortunes in the wake of the oil boom unleashed by fracking.
The facility is expected to produce 600,000 tpy of casing and tubes used in drilling as well as pipe used to move oil and gas. The company said Friday it would break ground on the facility in 2014 and complete it in 2016.
It is expected to generate 600 manufacturing jobs with an average salary of $66,000 a year.
Tenaris's move underscores the increasing activity in the Texas oil patch, where advances in drilling techniques such as hydraulic fracturing have spurred a production boom in areas such as the Eagle Ford shale, one of the world's fastest-growing oil fields.
Texas Gov. Rick Perry, who announced the project at an event here, told journalists the state is talking with "a substantial number of entities" interested in setting up other energy investments. But he added the scale of this project "is a bit extraordinary."
The Texas Enterprise Fund, a state economic-development agency, is contributing $6 million to the project.
German Cura, Tenaris's president for North America, said this is the company's first major investment in the US since 2006-2007, when it bought two companies here. The move underscores Tenaris's belief in America's industrial renaissance as a consequence of the energy boom, he said.
"There is a structural transformation in the world's energy picture," Mr. Cura told The Wall Street Journal. "The US is absolutely less dependent than it has been" on foreign energy, he said.
Bay City was chosen as the site of the pipe-making plant because of its proximity to deepwater ports in the US Gulf of Mexico and oilfields such as the Eagle Ford Shale, as well as there being plenty of land for expansion, Mr. Cura said.
Bay City is about 80 miles south of Houston and is the seat of Matagorda County, near the bay of the same name. About 37,000 people live in Matagorda County, and its economy relies on rice farming, fishing and energy.
Dow Jones Newswires
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