NEW YORK Anticipated growth in the global energy market was a major factor behind energy tubular distributor MRC Global Inc.s recent acquisition of two international companies, executive vice president of supply chain management Gary A. Ittner told AMM.
"(We want) to position ourselves so that we can better service customers that are looking for more global solutions. We anticipate that roughly 75 percent of (capital expenditure) dollars (on oil and gas exploration and production) are going to be spent outside of North America, (and) were looking to position ourselves to participate in more of that activity," Ittner said.
In addition to the acquisition of Norwegian pipe, valve and fittings (PVF) distributor Stream AS and English pipe, flange and fittings distributor Flangefitt Stainless Ltd. (amm.com, Dec. 10), MRC also made the strategic decision last year to rein in its oil country tubular goods (OCTG) sales, particularly in the volatile spot market, and focus on large supply contracts tied in with other products.
"The margin and the risk associated with that business is such that while we wanted to continue to be a player, we wanted to be more strategic in picking our spots and our customers," Ittner said. However, "OCTG is still a nice piece of business for us."
Last year turned out to be good for OCTG and line pipe consumption domestically. "Originally we were anticipating somewhere in the range of 5.5 million tons, but the latest number indicates over 6 million tons of OCTG consumption in the United States in 2013," Ittner said. "The line pipe market was also very good in 2013, though there was a lot of pressure on the price side with imports. In terms of tons, 2013 was a good year."
Houston-based MRC expects the trend toward more-complex energy tubular goods to continue this year in light of the evolution of drilling technologies in domestic shale plays.
"There are certain complex environments our customers are running into that require more-sophisticated services and products, for example sour gas services among other things. These environments continue to evolve our customers demands from a metallurgy side, heat-treat side, connection side, etc. Were going to continue to see that," Ittner said.
Meanwhile, "rig efficiency gains, especially in shale basins, contributed to putting more tons in the ground in 2013, and we expect this trend will continue in 2014," he said.
The domestic shale gas boom has international firms increasingly looking to gain a foothold in the United States, explaining the recent acquisitions of large domestic energy tubular distributors Sooner Inc., Houston (amm.com, Sept. 9), and Baton Rouge, La.-based Edgen Group Inc. (amm.com, Oct. 1) by Japanese firms, Ittner said. "(Foreign firms) see their route to the U.S. market through the acquisition of companies like Sooner and Edgen and their associations." He noted that the U.S. market accounts for more than 40 percent of global OCTG consumption in the exploration and production industry.
In addition to international competitors, MRC is keeping a wary eye on the proposed spin-off of National Oilwell Varco Inc.s distribution business (amm.com, Nov. 15). "They offer a full package of line pipe and PVF products and services. Were keenly aware of them and their capabilities," Ittner said.
On the energy tubular supply side, the company is unperturbed by the outcome on its supply base of a pending OCTG trade case against nine countries. "Here in the U.S. and North America we feel good about the availability of supply," Ittner said. "Regardless of what happens with the trade suit, we anticipate supply will be adequate."