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Analysis

Mexican Technology Made in the USA

Wed, 01/25/2012 - 14:17

Due to a growth in global energy demand, the pipeline industry has been booming in recent years, and companies involved in manufacturing oil country tubular goods (OCTG) have been profiting as a result. OCTG products include three types of seamless tubes: drillpipe tubes, which rotate the drillbit and circulate drilling fluid in the well; casing pipe, used to line the hole; and tubing, through which oil or gas is transported from the well.

Taking advantage of the growing market for OCTG products in the US, Mexican pipe manufacturer Tubería Laguna founded a subsidiary company in the US to focus on marketing high value OCTG products such as N80, L80, and HCP-110, fabricated from high-frequency electric resistance welded (ERW-HF) carbon steel pipe that are manufactured in Mexico for the US market, particularly for sour service oil and gas wells.

Tubería Laguna’s manufacturing plant in Gómez Palacio consists of two tube-producing mills, a coating plant (FBE, 3LPE and 3LPP) and a finishing plant dedicated specifically to the water market. The manufacturing facility that Tubería Laguna uses to supply the US market uses the Thermatool high frequency automatic weld with a seam normalizing method, and as a result is one of the most advanced OCTG manufacturing plants in Latin America.

Most of the company’s quality inspectors are certified by the American Society for Nondestructive Testing (ASNTC1 Level 1 and 2). Furthermore, the company’s OCTG products are inspected by external companies, such as Tubular Services Incorporated (TSI) in Houston, and are API 5CT, as well as ISO 9001:2008 certified.

Tubería Laguna’s most important exports go to the United States and Canada thanks to their large energy markets; nevertheless, the company still frequently exports products to Guatemala, Colombia, Peru and Venezuela for both the energy and water industries. The company’s sales channels in the US come from alliances with major American pipe distributors. Laguna Tubular Products, the company’s US arm, is also a regular member of the National Association of Steel Pipe Distributors (NASPD) in the US.

One of the major advantages of having production facilities located in Mexico is the fact that the company can keep production costs relatively low while maintaining quick turnaround times in the US market. The company keeps a good supply of alloy hot rolled band ready to convert to select green tube sizes while Laguna Tubular Products, Houston, maintains demand proportionate levels of green tube and finished OCTG. Upgradeable J-55 Green Tube is ready to convert to N80, L80, or HCP-110 products to service the Gulf coast & Canadian markets.

The cost-market analysis proves that exporting from Mexico, at the moment, is the right choice for Tubería Laguna but according to Mario Villareal Ochoa, Director General of the company, “the possibility of initiating pipe manufacturing outside of the country in a near future has not been eliminated.

“The market dynamic doesn’t allow you to be left out and it forces you to improve, to invest and to keep growing. This keeps us motivated to continue the search for new opportunities.” Currently, there are not many Mexican companies that manufacture in the United States and with this in mind, Villareal Ochoa explains the business model for the Mexican company: “We have recently been looking at companies that do joint ventures, in which the pipeline is manufactured and the American company provides the necessary finishing for the American market. In our strategy as a group, we have decided to vertically integrate this manufacturing and commercial process with the same work philosophy that allows us to make quick decisions to adjust to the constant market changes.”