PITTSBURGH Access to affordable natural gas will help ensure that U.S. steelmakers remain competitive in a global environment, with some domestic companies having already capitalized on its benefits, according to a number of industry executives.
"With natural gas in our country, thats nothing short of what oil did 100 years ago for the manufacturing environment," Mario Longhi, vice president and chief operating officer of U.S. Steel Corp., told attendees May 8 at the Association for Iron and Steel Technologys AISTech 2013 conference in Pittsburgh.
"Were producing products that are enabling new technologies to be put in place and to extract and distribute natural gas throughout the nation. Natural gas is ... a transformational event, not just for the steel industry but for manufacturing in general," he added.
A number of U.S. steelmakers are taking advantage of low-priced natural gas in the shale plays by building direct-reduced iron (DRI) projects and finding new ways to utilize the low-cost energy in their processes.
For example, Nucor Corp., which already operates a DRI facility in Trinidad, is now constructing a 2.5-million-ton DRI facility in Louisiana, with the opportunity to expand further as it looks to capitalize on the natural gas boom, according to Chad Utermark, vice president and general manager of Nucor-Yamato Steel Co. and Nucor Castrip Arkansas.
"Were excited about the opportunity in Louisiana. The strategy at Nucor is that we want to have some 6 to 7 million tons a year of high-quality scrap substitutes, which will be fulfilled through our plant in Trinidad and Louisiana," he said.
Nucor also entered into a long-term agreement in November with Encana Oil & Gas (USA) Inc. for an onshore natural gas drilling program that it expects will provide the Charlotte, N.C.-based steelmaker with a steady stream of abundant, affordable natural gas (amm.com, Nov. 6).
Last week, U.S. Steel announced that it was also mulling a potential DRI project. Its facility would be a joint venture in Lorain, Ohio, with Republic Steel (amm.com, May 1).
"DRI is a typical example of where manufacturing is benefiting from gas. As recently as 10 years ago, no one would consider investing in this type of enterprise. Youll remember natural gas being $12. Now, its $2 to $3," Longhi added.
But building new DRI plants isnt the only way to capitalize on natural gas, with a number of steelmakers also opting to inject natural gas directly into their steelmaking processes to cut costs. ArcelorMittal USA LLC, for example, has saved some $67 million already in fuel costs since 2010 by offsetting natural gas with more expensive fuels in its blast furnaces, according to Andrew Harshaw, executive vice president of operations.
"Were moving towards 70 percent self-sufficiency through iron ore. So we use DRI where it makes sense as a scrap substitute," he said. "We continue to use natural gas as a flexible fuel alternative."
"The thing about natural gas is that we hope its a catalyst in the re-emergence of manufacturing in the U.S. I think its an exciting time for the U.S. and North America," he added.