Saturday, August 2, 2014
Inquirer Daily News

Marcellus can help boost Pa. steel

By Robert F. Powelson

Pennsylvania is home to the highest-producing natural-gas shale play in the United States, and Marcellus Shale wells continue to break records. During the last six months of 2013, the commonwealth produced 1.7 trillion cubic feet of gas, or an average of 9.2 billion cubic feet per day - enough to satisfy about an eighth of the nation's daily natural-gas demand.

The continued safe and responsible development of Marcellus Shale natural gas presents a great opportunity to create new jobs and provide economic prosperity in the commonwealth.

With this prosperity, Pennsylvania is taking center stage in helping the United States achieve energy independence and reduce our need to rely on foreign energy sources. In addition to capital investments and job creation in energy, the development of the Marcellus Shale has the potential to greatly benefit Pennsylvania's manufacturing sector, in particular the steel industry. Perhaps the single most important product used to ensure the safe development of this abundant natural resource is high-quality steel pipe.

Pennsylvania steel mills manufacture different types of pipe used by the energy industry, including a product known as oil country tubular goods (OCTG). These safe, high-quality steel products are critical for natural-gas exploration and development infrastructure, and have been in high demand with the acceleration of natural-gas development in the United States, including from the Marcellus Shale play.

Although the demand for OCTG products has risen dramatically over the last several years, U.S. steel mills have been unable to fully capitalize on this opportunity. The problem is an oversupply of OCTG products caused by a surge of what appears to be illegal imports from a number of foreign countries, chiefly South Korea.

The illegal dumping of manufactured products occurs when a product is brought into the United States and sold at a price below its cost of production. The Pennsylvania Public Utility Commission's concern about this issue is the main reason we pushed to have included in the Pennsylvania Gas and Hazardous Liquids Pipeline Act (Act 127) the requirement that companies report to the PUC the country of manufacture of the steel pipe used to transport natural gas from unconventional wells in the commonwealth. The PUC believes this requirement would create an awareness of the issue and encourage companies to use domestically produced steel.

Although laws like Act 127 are beneficial, the primary means of preventing the illegal dumping of steel is through the federal government's enforcement of U.S. trade laws. Unfortunately, many foreign competitors do not adhere to those laws, and, in fact, some go to great lengths to circumvent them.

In an effort to stop illegal "dumping" practices, in July, several domestic OCTG steel producers filed a critical trade case against nine countries (India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, Vietnam, and South Korea). In February, the U.S. Department of Commerce announced preliminary findings on this case. Unfortunately, the preliminary findings resulted in no duties being imposed against South Korea - by far the largest exporter of OCTG products. In fact, South Korea exports 98 percent of its OCTG steel pipe into the United States.

The U.S. Department of Commerce is now undertaking investigative work in the final phase of the case. It is important that all of the facts are uncovered so steelworkers in Pennsylvania and across the country can compete on a level international playing field. Enforcing our trade laws forces foreign producers to compete fairly, import their products legally, and create true market competition. I am confident that given a level playing field, Pennsylvania steel companies and steelworkers will thrive, sharing in the benefits of our energy revolution.

On July 8, the Department of Commerce will make its final determination on the OCTG case. The outcome is critical for the future of Pennsylvania's steel industry and for steel manufacturing in the United States. It is of grave importance that our elected leaders in Washington ensure that the Commerce Department uses all of the tools at its disposal to expose the truth about this dumping and render a fair, well-reasoned decision.

This is a battle that our state and our nation cannot afford to lose.

 


Robert F. Powelson is chairman of the Pennsylvania Public Utility Commission (www.puc.pa.gov).

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