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Valerus Studies Mahoning Valley for Potential Plant
PITTSBURGH --Valerus, a mid-market gas-services company based in Houston, is the latest company related to the oil and gas industry to report it's looking for a site in the Mahoning Valley from where it hopes to capitalize on Utica shale exploration.
“We see particularly Youngstown and eastern Ohio becoming a major manufacturing hub for the Utica and Marcellus," Peter Lane, president and CEO of Valerus, tells The Business Journal. “We've done several exploratory missions -- especially to Youngstown.”
Lane, who attended Hart Energy's Marcellus Midstream Conference this week in Pittsburgh, reports his company is considering the Mahoning Valley to locate of a manufacturing plant that could employ from 50 to 100 people. Valerus manufactures compression equipment, provides engineering services, power generation components and compression services for the industry.
“We have a turnkey business that brings all of these solutions to our customers,” Lane says.
The regional plant would serve as a manufacturing base that supplies Valerus customers operating in the Utica shale in eastern Ohio and the Marcellus shale in western Pennsylvania. It would eliminate the high shipping costs associated with transporting compression equipment from the South, the CEO says.
“The Utica is clearly a new and exciting play,” Lane says. “So, as the Utica develops, we'd like to sell our products and services to the producers there.”
Any expansion is still in the planning phase, Lane qualifies, adding that an announcement on where the new plant would be built could come within six months. “We're in every shale play in the country,” he points out.
In June, Valerus opened an aftermarket service operation in Smithfield, Pa., a town in Fayette County in the southwestern part of the state. The Smithfield plant serves energy companies in the Marcellus wet-gas region by providing them with field application and repair services for their oil and gas equipment.
Valerus initially projected it would employ 100 workers by the end of 2011, but today employs just 30. The company attributed the slowdown to the competitive hiring in southwestern Pennsylvania and the lack of skilled workers.
“We employ about 30 in Pennsylvania,” Lane says. “I think that number is going to grow dramatically in the next two, three and four years.”
In just the last two years, the CEO reports, Valerus has added 400 jobs to its U.S. operations. “We've grown at a compounded rate of 25% over the last eight years,” he says.
The Mahoning Valley is no stranger to manufacturing related to shale development. In late February, ground was broken at the Salt Springs Road Business Park for Houston-based Exterran, which is spending $13 million to build a 65,000-square-foot fabrication plant. Officials expect that plant to employ about 100, much like the project Valerus is proposing. Equipment produced at the Exterran plant will be used in the gas processing and fractionation plants that Chesapeake Energy and its partners plan to build in Columbiana and Harrison counties, an executive with one of the venture partners tells The Business Journal.
Valerus has seen its annual revenues grow to $524 million in 2010 from $14 million in 2004, its first year of operation, according to reports.
Lane says Valerus employs 1,300 people worldwide, the majority of whom work in the United States. “We have a large presence in Latin America, and we're growing in the Middle East and Southeast Asia,” he adds.
All of Valerus' products are manufactured in the United States, its CEO says, and are exported to sites around the world. T
“We have lots of growth in Pennsylvania, Ohio and West Virginia,” Lane says. “We’re at the top inning of a very long game. It’s going to be exciting.”
Copyright 2012 The Business Journal, Youngstown, Ohio.