Good timing and persistence pay off for pipe maker Tenaris

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Is it better to be lucky than good?

Tenaris, which makes piping and steel for oil and gas wells, is perhaps a bit of both - as well as brave.

The Argentinian company began building a $1.8 billion oil and gas pipe mill near Houston when oil prices were booming and then opted to press ahead during the bust. Now the anticipated opening of the state-of-the-art plant in September coincides with the resurgence in onshore oil and gas drilling in Oklahoma and Texas, particularly in the Permian Basin.

"The timing is perfect even beyond our expectations," Tenaris CEO Paolo Rocca said in an interview during the Offshore Technology Conference in Houston last week.

Tenaris is hiring to finish staffing the Bay City mill, which will employ 600. The workforce is smaller than those of older mills because the plant incorporates more automation, using robots to move steel from one station to the next as the seamless piping is manufactured.

Tenaris was founded in Italy by Rocca's grandfather and later moved its main operations to Argentina. It's formally headquartered in Luxembourg for tax purposes. But that's not how Rocca describes it in Houston.

"In light of the $1.8 billion investment in Texas," he said, " I present it as a Texas company."

The 1.2-million-square-foot mill will soon produce 600,000 tons of steel pipe a year. The specialized piping includes drill pipe used for drilling and creating wells; casing pipe that's cemented into place to line the walls of the well and give it structural stability; and tubing pipe inserted into the well through which the oil and gas travels.

In 2017, U.S. shale and other onshore fields represent 35 percent of the global demand for such piping, Rocca said. With the oil bust lingering in other parts of the world, the United States is the biggest reason global pipe demand for onshore wells is growing by nearly 40 percent this year.

"This is the core of the oil industry for the years to come," he said.

Tenaris touts its "Rig Direct" system of supplying pipe to match the exact needs of its customers just when the products are required in the field. That lowers storage, maintenance and inspection costs.

The proximity of the mill to Texas oil and gas production allows Tenaris to directly serve the rigs in the Permian Basin, Eagle Ford Shale and other fields, cutting out pipe distribution companies that typically act as middlemen.

Tenaris was virtually unheard of in Texas until a decade ago when it bought St. Louis-based Maverick Tube Corp. and Houston-based Hydril Co. for a combined $5 billion. In short order, Tenaris grew from about 50 Houston employees to more than 2,000.

Tenaris, however, had to cut jobs at its northwestern Houston and Conroe facilities during the oil bust while it was building in Bay City. Rocca acknowledged the decision to push ahead with the new plant as oil prices plunged was a difficult and stressful. Now, "I'm anxious to see it work," he said.