Oil and Gas Impact On Manufacturing Utica 2014 Summit Tom Moline Vice President – Steel Manufacturing October 23, 2013
About The Timken Company Manufacturer of specialty steels and industrial components serving: • • • •
Agriculture Light Vehicles Military Power Generation
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2012 sales: US $5.0 billion •
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Established in 1899
Construction Medium/Heavy Truck • 20,000 •people • Mining • Based in • Rail Canton, Ohio
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Our Business Segments
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Steel
Process Industries
Mobile Industries
Aerospace
Our Product Portfolio Bearings
Engineered Steel
Power Transmission
Related Products
Industrial Services
Tapered
Bars and Billets
Gears
Seals
Bearing Repair
Chain
Reliability
Augers
Condition Monitoring Systems
Housed Units
Lubrication
Cylindrical Spherical Ball
Tubing Steel Components Value-added Solutions
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Lubricators
Inspection Chock and Roll Repair
Our Steel Business
Industrial
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Mobile On-highway
Oil and Gas
Delivering Custom-Melted Solutions 450 grades of carbon and alloy steels Well suited for power transmission applications Special bar quality steel
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Seamless mechanical steel tubing
Value-added solutions
Offering A Very Broad Size Range
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Focusing On High-Performance Applications Steel Applications
Non-Timken
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Fasteners Hand Tools Leaf Springs Reinforcing Bar Shopping Carts Table Legs
PERFORMANCE
Bearings Bearing Races Crankshafts CV Joints Energy Fuel Injectors Gears Gun Barrels Production Transmissions
HIGH
LOW
Serving The Oil & Gas Industry
Steel Oil and Gas Business Drilling Equipment
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Value Added Service
Completion
Horizontal Drilling
Serving The Oil & Gas Industry
Bearings & Power Transmission Business Oil and Gas Highly engineered bearings and related solutions that keep equipment running continuously, safely, reliably Offshore & Onshore Drilling • Crown and traveling blocks, draw works, drill bits, hoists, mud pumps, rotary tables, top drives and swivels • Jacking systems, mooring buoys and winches • Fracking pumps/trucks, mobile rig, wire line/coiled tubing 10
Note: source EXXON Mobile
World Total Energy Consumption 1990-2035(Quadrillion Btu) Figure 13. World marketed energy consumption: OECD and Non-OECD,1990-2035 quadrillion Btu 500
400
Non-OECD 300
OECD 200
100
0 1990 Source: EIA / Annual Energy Review 2010
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2000
2007
2015
2025
2035
Market Fundamentals/Trends
• Offshore drilling goes deeper • Deep and shallow water – Gulf of Mexico • Under salt – Brazil 14
Market Fundamentals/Trends
• Shale Drilling – Localized source of natural gas • Marcellus Shale – PA, WV, OH, MD, NY • Barnett – TX • Haynesville – LA, TX, AR 15
Market Fundamentals/Trends
• Shale Drilling – Domestic and North America crude oil • Bakken – ND, Canada • Eagle Ford – TX • Utica – OH, WV, PA, NY 16
Market Fundamentals/Trends
• Migration of oil tool manufacturing worldwide (away from TX, OK, LA) • Supply chain transformation – effort to reduce cost 17
Why Is Shale Drilling Important? • Shale formations across the U.S. hold natural gas and crude oil deposits
▲ Oil Rigs
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Natural Gas Rigs
Baker Hughes – 8/24/2012 – Horizontal Rigs 18
Drilling Activity: Marcellus and Utica Shale
▲ Oil Rigs
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Natural Gas Rigs
Baker Hughes – 8/24/2012 – Horizontal Rigs 19
Natural Gas – Supply/Demand Natural Gas (bcf/day) 80 70 60 50 40 30 20 10 0
2000.0 US Production
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2010.0 US Demand
2020.0 From Shale
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
US Crude Oil Production/Imports US Production hit 7.5 Million Barrels per Day – As Of July 2013
Estimate
12000 10000 8000 6000 4000 2000 0
37072.0 37802.0 38533.0 39263.0 39994.0 40724.0 41455.0 42185.0 36707.0 37437.0 38168.0 38898.0 39629.0 40359.0 41090.0 41820.0 US Production (thousand barrels/day) Imports (thousand barrels/day) EIA and Raymond James 21
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US Average Rig Count
Timken Steel Volume
US Drilling Rig Count vs. Timken Steel Supply
Why does Timken care? • The U.S. oil and gas industry supports more than 9 million jobs throughout the economy and contributes more than 7 percent of total GDP
• Proven technology: used safely for more than 60 years in West Texas and Barnett Shale
• Highly regulated: DOE, EPA, state and local agencies
• Low-cost, environmentally friendly energy sources are key to U.S. competitiveness
• Shale plays help the US to become a net exporter of natural gas, as well as being less dependent on oil from volatile countries
• Timken sales: direct correlation to drilling rig count
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Our Steel Oil & Gas Applications
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Our Steel Oil & Gas Applications
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Our Steel Plants and Warehouse Raw Material Manufacturing Faircrest Steel Plant, Canton, OH Harrison Steel Plant, Canton, OH Gambrinus Steel Plant, Canton, OH
Component Manufacturing Timken Boring Specialties, Houston, TX St. Clair Plant - Eaton, OH Virtual supply chain network
Warehouses Tryon Peak Plant - Columbus, NC Shanghai – China Cuautitlan Izcalli – Mexico Monterrey – Mexico
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Bar Manufacturing: Faircrest Steel Plant
Opened in 1985 Located in Canton, OH, USA
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Capabilities: State-of-art large bar facility EAF - LRS - BP 28” Sq. (711mm) Ingot Finish sizes 5.5” - 16” (140mm – 406mm) rds/rcs; 11 x14-3/4 bloom cast 1,000,000+ TPY capacity
Transforming The Faircrest Plant
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Transforming Faircrest: New Bloom Caster • • • •
Vertical Mold Design Up to 18” x 24” Cross Section 11 x 17” Secondary Section Size World’s Largest Vertical Bloom Caster
Factor Quality
Benefit -
Capacity Investment 29
Internal cleanness consistent with B.P. Ingots Superior segregation control
125,000 tons additional capacity $200M
Transforming Faircrest: New Bloom Caster
As of Monday, October 14, 2013 30
Improving Quality, Capacity At Faircrest Second Ladle Refiner Functions • • • •
Adjust Chemistry Vacuum Degas Argon Stir to Remove Inclusions Adjust Temperature Alloys Electrodes Vacuum
Factor Refining Cycles Quality
- Exotic Grades (Hi-Cr) - Extended Cycles -
Superior Internal Cleanness Tight Chemistry Control
Capacity
- 40,000 tons additional capacity - Breaks Refiner Constraint
Process
CC & BP Coordination
Investment 31
Benefit
$25M
Argon Ladle Refining Station (LRS2) Vacuum Arc Degasser (VAD)
Innovation Leads To New Capabilities FORGED-ROLLED PROCESS • • •
Forged for internal soundness Rolled for improved size and shape control Creates engineered solutions for targeted applications
Factor
Benefit
Center Soundness
Class B UT (1/8” FBH): 16” vs. 8”
Capacity Investment 32
40,000 tons additional capacity $35M
A Sound Approach: Forged-Rolled Process
Forged
Rolled
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A Sound Approach: Large Bar Inspection • Ultrasonic internal inspection • Eddy Current surface inspection • Utilizes reflection transducers and multi-element phased array probes • Expands inspection size range up to 24” O.D. Factor
Benefit
Sound Center Bar
- Enables confirmation of center soundness via ultrasonic testing
Quality Capacity Investment
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UST internal inspection Eddy Current surface inspection
- Expands automated UST size range to 24” (610mm) $5M
Tube Manufacturing: Gambrinus Steel Plant
Opened in 1928 Located in Canton, OH, USA
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Capabilities: Tube making, thermal treatment, finishing, inspecting and shipping operations One of the most advanced continuous thermal treatment facilities in the world Three tube piercing mills producing products from 1.9” to 13” (48.5mm – 330mm) in diameter New intermediate finishing line advances testing quality and reduces processing times
Streamlining At Intermediate Finishing
Factor
Benefit
Safety
- 600k Fewer Touches - 300k Fewer Crane Moves - 160k Fewer Straddle Moves
Quality
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Customer Service
Cycle Time: 2 hrs vs. 3 days
Environment
Elimination of Acid Pickling
Investment
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Advanced Inspection Process Control Surface Quality Internal Quality
$50M
Bar Manufacturing: Harrison Steel plant
Opened in 1916 Located in Canton, OH, USA
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Capabilities: $100 million in upgrades EAF - LRS - bloom cast Finish sizes 1” – 7.5” (25mm – 191mm) rds/rcs; round corner squares 3.188” – 6” (81mm to 152 mm) 750,000+ TPY capacity
Rolling Capabilities: Harrison Steel Plant
Harrison Rolling Mill (HRM) • Fed by transfer billet coming from #2BM • 10 separate stands; only one direction • Small reduction at each stand
#2 Billet Mill • Fed by caster blooms or blooms rolled down from FSP ingots • Rolls reverse direction and moves closer together after each pass
Precision Sizing Mill (PSM) • Fed by HRM output • Outputs 1” RD to 5” RD • One roll block w/ 5 sets of 3 rolls • Better size tolerance
Timken Boring Specialties For Oil & Gas
Opened in 1972 Located in Houston, TX, USA
Capabilities: Over 100,000-square-foot boring specialties operation Industry leader in precision machining and hole-finishing for metals, bars or tubes Worldwide reputation in surface finishes and delivery performance
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Investing To Meet Demand, Increase Performance >$500 Million Committed Through 2014 COMPLETED
Ladle Refiner UT Inspection Line In-Line Forge Press Quench & Temper Heat Treat Intermediate Finishing Line (IFL) Small Bar Rolling Mill IN PROGRESS
Bar Peeler Jumbo Bloom Vertical Caster 40
Transforming Faircrest: By The Numbers Steel • • • •
Structural Steel: Reinforcing bar: Steel Piling: SMS Equipment:
9,073 tons 4,438 tons 2,389 tons 4,100 tons
Total Steel: ~20,000 tons
Concrete • • • • • • •
Bottom slab: Basement: Tower: Tundish Rebuild: Runout: Water Building: All Other: Total Concrete:
2,200 cu. yds. 23,758 cu. yds. 3,590 cu. yds. 1,178 cu. yds. 2,795 cu. yds. 1,064 cu. yds. 1,555 cu. yds. ~36,000 cu. yds.
A Look to the Future
Utica Capital of the World
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