PARIS (Reuters) - French seamless tube maker Vallourec <VLLP.PA> on Monday said it would invest $650 million in building a new plant in the United States, to meet the needs of the oil and gas industries there.
The new small-diameter rolling mill, in Youngstown, Ohio, will initially produce 350,000 metric tons per year, and provides and annual nominal rolling capacity of 500,000 metric tons of seamless tubes, Vallourec said.
The facility will start operating in the fourth quarter of 2011, creating around 350 new direct jobs. It will include heat treatment and threading facilities. "The exploitation of unconventional gas resources has revolutionized the US gas market and, thanks to new technologies lowering extraction costs, has become a sustainable source of gas supply," the group said in a statement.
Shale gas production requires more wells, horizontal drilling and sand fracturing at high pressures, leading to an increased need for small diameter alloy pipes, Vallourec said.
"We think the growth of the market justifies this new capacity," Vallourec CEO Philippe Crouzet told a conference call. "We are not investing for 2010, but for the long-term. What's important is to synchronize these kinds of investments with the market.
(Reporting by Benjamin Mallet; Writing by Helen Massy-Beresford; Editing by Theodore d'Afflisio)