Steelmakers benefit from natural gas boom

Oct 31, 2012 | 07:00 PM | Gregory DL Morris

Tags  natural gas, Devon Energy Corp., Barnett shale, Nucor Corp., DRI, Daniel Whitten, America’s Natural Gas Alliance, The Potential Gas Committee PricewaterhouseCoopers LLP

More than 30 years ago, Mitchell Energy (now part of Devon Energy Corp.) brought the C.W. Slay No. 1 well into production in Wise County, Texas, just north of Fort Worth. The well, considered the first production in the Barnett shale, marked the dawn of an unconventional era. The shale boom that the well heralded was made possible by technology in the form of three-dimensional seismic surveys, directional drilling and hydraulic fracturing--all of which, in turn, depended on high-performance steel.

The steelmaking industry is now reaping the benefits of what it helped sow in the hard, dry soil of north Texas. The shale boom has made natural gas--the cleanest-burning fossil fuel--significantly less expensive, and orders of magnitude more plentiful than at any time since the hydrocarbon era began. With expectations that natural gas will be readily available and at a less-volatile price than in the past, steelmakers are planning new facilities to use natural gas directly at the burner tips, to fire electric power generation, and even as a source of carbon in melt.

For example, Nucor Corp.’s $750-million, 2.5-million-ton-per-year direct-reduced iron (DRI) plant nearing completion in St. James Parish, La., will convert natural gas and iron ore pellets into DRI to be used by Nucor’s steel mills, along with recycled scrap, to produce sheet, plate and special bar steel. The DRI facility is the first of a multiphase plan that may include additional DRI facilities, a coke plant, a blast furnace, a pellet plant and a steel mill. The Charlotte, N.C.-based steelmaker’s total investment at the site could reach $3 billion and create as many as 1,250 jobs.....