Tenaris announces $1.5B Eagle Ford pipe plant

Tenaris announces $1.5B Eagle Ford pipe plant
February 18, 2013 | posted by The Institute

Source: mysanantonio.com

By JEANNIE KEVER

BAY CITY — An international manufacturing company with operations around the globe said Friday it will build a $1.5 billion plant in Matagorda County — near the bustling Eagle Ford Shale — to produce piping for use in shale drilling operations throughout the United States.

Germán Curá, president of North American operations for Tenaris, said the company was convinced by the incentives offered by Gov. Rick Perry and local economic development officials — including a $6 million grant from the state's Texas Enterprise Fund — and by the workforce and infrastructure in Matagorda County, about 90 miles southeast of Houston.

The county's proximity to the Eagle Ford oil and gas play was a plus.

“It is one of the most promising fields in the industry,” Curá said. “The Eagle Ford has a lot to produce.”

But pipe milled in Bay City also will be used in other shale plays across the country, he said, making the new plant a complement to Tenaris operations already in place in the United States.

Low-cost natural gas, a result of shale drilling, has sparked a manufacturing renaissance in the United States, and Curá said Tenaris clearly plans to be part of that.

Tenaris expects to complete the plant in 2016 and will employ 600 people, with an average annual salary of $66,000, according to the company.

The plant will be a boost to the Matagorda County economy, where unemployment routinely tops the state average and was 9.4 percent in December, according to preliminary figures from the Bureau of Labor Statistics.

The announcement Friday morning drew Perry and an auditorium filled with local politicians and economic development officials, who stood to applaud Curá's promise to open an office in Bay City on Monday morning.

The plant will have an annual production capacity of 600,000 tons of seamless pipe used in drilling, producing or transporting gas and oil.

Tenaris, which has its North American headquarters in Houston, operates globally. Its predecessor, Dalmine, began manufacturing pipe in Italy in 1909 and began operations in Mexico and Argentina in 1954.
Its U.S. operations include plants in Houston and Conroe.

Perry said the $6 million grant was among the largest ever from the Texas Enterprise Fund, one of two funds his office operates to generate economic development.

Both — the other is the Emerging Technology Fund — have spurred calls from legislators for more oversight after accusations that Perry has used the funds to reward political supporters.

But Perry and Matagorda County Judge Nate McDonald said the money from the fund was crucial to closing the deal with Tenaris, even though $6 million was only a fraction of the price of the plant, estimated at $1.3 billion to $1.5 billion. At that price, the grant is only about 0.5 percent of the total.

Perry said a number of other states were in the running but the ultimate choice came down to Matagorda County and Louisiana.

McDonald said local taxing entities offered tax abatements along with special deals for handling wastewater and other issues.

The $6 million grant was something Louisiana couldn't match, he said.

Curá said he and other Tenaris executives first met with Perry about seven months ago.

“You often talk about the benefits of doing business in Texas, and you and your staff have helped us see that,” he told Perry during the announcement. “We were very impressed after that first meeting.”

Perry said his office is working on other deals — he also talked briefly about his recent business recruiting trip to California — but said he's not sure any as large as the Tenaris deal will be completed by the end of the year.

“We don't win them all, but we win our fair share,” he said.