American Industrialists Prepare for a Rise in Shale Gas Production
The shale gas revolution in the United States is not only transforming the energy sector but also driving growth and investments in the steel industry. According to a report titled "Shale Gas and U.S. Manufacturing," steel accounts for 21% of shale gas capital investments, with shale gas development expected to account for $1.9 trillion in capital expenditures between 2010 and 2035, as reported by IHS Global Insight.
This growth is primarily driven by the rising demand for oil country tubular goods (OCTG)—specialized steel pipes used in well casing and tubing for unconventional wells. Each shale well requires 2,000 to 3,000 meters of casing and tubing, necessitating extensive OCTG volumes. Technological advances have introduced high-performance steel grades designed to withstand sour environments and extreme conditions, further increasing steel demand.
Key players in the steel industry are capitalizing on this growth. Nippon Steel and U.S. Steel have finalized a $14 billion partnership aimed at domestic investment and enhanced production capacity in the U.S., including jobs protections and government oversight. This partnership targets better serving the oil and gas sector, including shale-related steel demand.
Cleveland-Cliffs has also launched a $150 million investment in a hydrogen-powered stainless steel production line, signaling expansion in advanced steel products relevant to energy industries. Regional producers and manufacturers in the U.S., particularly those near shale plays like the Permian Basin and Eagle Ford, are also benefiting from the strong steel material demand.
In addition to steel producers, chemical companies are also planning expansions related to the shale gas boom, taking advantage of lower-priced feedstocks. The Williams Cos. is expanding its Geismar, La., olefins production facility, and Royal Dutch Shell is planning a world-scale ethylene cracker in the Marcellus Shale region.
Noteworthy expansions include TMK IPSCO's Wilder, Ky., facility expansion, a partnership with Ferrous Metal Processing Co. The partnership will install a slitting line at a new 43,000-square-foot building leased by IPSCO to Ferrous. Steel pipe producer V&M Star has also announced plans to build a new threading facility in Youngstown, Ohio, to accommodate increased demand from shale gas drilling. The new V&M Star facility will be located next to another planned mill, a subsidiary of French company Vallourec is currently building.
On Nov. 30, the National Association of Manufacturers and PricewaterhouseCoopers will release a report analyzing the major economic benefits associated with the abundance of shale gas, including cost savings, U.S. plant expansion, and jobs growth. The event will take place in Washington, D.C. The report will provide further support for the development of shale gas resources.
The increase in steel production for the oil and gas industry due to shale gas development is expected to continue, with the OCTG market expected to grow from USD 25.7 billion in 2025 to USD 43.8 billion by 2033. Global regional markets like China, India, the Middle East, and Latin America (notably Brazil and Argentina) are also experiencing growth in steel demand tied to oil and gas infrastructure development, including unconventional gas exploitation.
[1] Source: IHS Markit [2] Source: American Metal Market [3] Source: U.S. Energy Information Administration [4] Source: Bloomberg Government [5] Source: Platts
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- The steel industry, with steel accounting for 21% of shale gas capital investments, is financially benefiting from the shale gas revolution in the United States.
- Technological advancements in high-performance steel grades have increased steel demand in the oil-and-gas industry, particularly for oil country tubular goods (OCTG), due to the rising demand for specialized steel pipes in unconventional wells.
- Key players in the steel industry, such as Nippon Steel, U.S. Steel, Cleveland-Cliffs, TMK IPSCO, and V&M Star, are expanding their businesses to serve the growing demand for steel in the oil-and-gas sector, leading to investments in advanced steel production and oversight.
