IPSCO Inc. today announced that it is proceeding with a $52.5 million expansion of its existing Regina large diameter pipe making facility. This expansion will include an additional pipe forming mill and related finishing equipment which will increase the capacity, productivity and flexibility of the existing facility. Together with its previously announced capacity increase currently under construction, IPSCO's large diameter spiral pipe capacity will be increased by two thirds to 500,000 tons by early 2008.
IPSCO is a leader in the production of large diameter oil and gas transmission pipe with an integrated steel and pipe supply backed by extensive production experience and technology developed at its Frontier Pipe Research Unit. In addition to supplying all of the major oil and natural gas transmission companies, IPSCO has extensive advanced Grade 80 line pipe installed in North America, completing 306 miles of the El Paso Cheyenne Plains Project in 2004. In addition IPSCO has supplied Grade 100 line pipe which was successfully installed in TransCanada's Stittsville project in August 2006. Both the steel and pipe for this cutting edge project were produced at IPSCO's facilities. IPSCO has the capability to produce these advanced grades of steel from its mills in Regina, Saskatchewan; Montpelier, Iowa; and Mobile, Alabama.
The demand for large diameter energy gas transmission pipe tends to vary significantly, based on specific projects developed and approved for installation. As a leader in the North American market IPSCO monitors available projects carefully and has invested appropriately where there is an opportunity for additional sales, recognizing the peaking nature of this business. Over the next few years the demand for such pipe appears to be at the peak of a cycle and near term capacity is heavily booked.
IPSCO currently has firm commitments for over 300,000 tons of large diameter line pipe which will require its mills to operate at capacity through to April 2008. Beyond that period the Company has firm options on over 500,000 tons of large diameter line pipe, which would commit part of presently available capacity into 2010. The Company believes that there are opportunities to commit additional capacity if it is available from a proven source within the current peak cycle. This project is timed to fit that market opportunity.
IPSCO previously announced a 25% increase in spiral mill capacity through the installation of a coil preparation line, to come on-stream in the second half of 2007. This expansion adds an additional 33% capacity by early 2008, for a combined increase of 67%. The project announced today is expected to be available earlier than an equivalent greenfield expansion through adding the necessary equipment that has been previously acquired to an existing site with an excellent and experienced workforce. This will enable IPSCO to commit to orders to capitalize on the current peak market requirements from pipeline transmission companies.
"IPSCO will continue to invest in the pipe and steel technology and appropriate capacity to keep the Company at the forefront of the large diameter line pipe industry on a globally competitive basis," said David Sutherland. "Our footprint in North America and relationships with key oil and natural gas transmission companies give IPSCO an unparalleled opportunity to continue to be the leader in this business."
IPSCO is a leading low cost producer of energy tubulars and steel plate in North America with an annual liquid steel making capacity of 4.3 million tons. The Company operates four steel mills, eleven pipe mills, nine product finishing facilities and nine scrap processing centers in 25 geographic locations across the United States and Canada. IPSCO's pipe mills produce a wide range of seamless and welded energy tubular products including oil & gas well casing and tubing, line pipe, drill pipe, large diameter transmission pipe, standard pipe and hollow structurals. The Company also manufactures premium connections for oil and natural gas drilling and production under its ULTRA(TM) brand name.