Stalled Louisiana energy projects, including refinery and petrochemical expansions, are rebounding after a 2003 oil price crash. But the lack of qualified steel manufacturers has slowed project completions, according to analysts and energy managers.

“More Louisiana energy products are being green-lighted than ever before,” said John Anton, director of steel services at Watham, Mass.-based investment firm Global Insight. “But they are literally being delayed from the lack of capacity to make steel. It’s a big problem.”

In 2003-04 when oil prices plunged to an average of $27.73 a barrel after surging to nearly $37 in 2002, work for steel pipeline and manufacturing companies tapered off.

Wary of the market, energy companies stalled expansions, forcing steel companies into the red, Anton said. Additionally, President Bush in 2002 imposed tariffs of 8 percent to 30 percent on several types of imported steel, ultimately slowing production until it was repealed in 2003.

“Many (steel companies) came very, very close to padlocking the doors and turning off the lights,” he said.

Now, with oil prices rebounding to $56.76 a barrel on the New York Stock Exchange as of Thursday and the steel tariff long removed, expansions are rumbling forward.

Marathon Oil Co. is working on a $2.2-billion expansion of the company’s 245,000-barrel-per-day Garyville refinery despite the Bush administration’s push for 35 billion gallons of renewable fuels annually by 2020.

Midland, Mich.-based Dow Chemical Co. announced plans in April to build a new integrated vinyl methyl ether facility at its St. Charles Parish facility in Hahnville, replacing an existing plan in West Virginia.

And Valero Energy Corp. is in the midst of a $400-million expansion at its Norco facility.

“There is definitely a surge in work because the margins of gas prices are so good,” said Ron Guillory, investor relations president for Valero Energy Corp., which operates a refinery in Norco. “But in order for us to get steel pipelines we have to actually wait in line. There are just a limited amount of steel manufacturers out there to get the work done.”

Some oil companies such as The Shell Group, which operates an exploration and production division in New Orleans, anticipate the backlog and planned ahead.

“Our projects tend to have a long lead time so we plan well in advance,” said Stan Mays, spokesman for Shell’s pipeline division.

The Shaw Group Inc. of Baton Rouge, the nation’s largest oil and gas pipeline producer, last week acquired El Dorado, Ark.-based Mid States Pipe Fabrication Inc., one of the top five pipe fabricators in the nation, for an undisclosed amount. The deal gives Shaw a 150,000-square-foot pipe fabrication shop with radiographic and painting facilities on a 48-acre site.

“Overall, piping capacity is increasing. Consumers want more,” said Chris Sammons, Shaw vice president of investor relations. “There are more people and higher standards of living. People need power and all these industries need pipelines.”

Shaw anticipates a shift in energy-producing methods from natural gas plants to coal plants and eventually to nuclear power plants, all of which are “pipe-intensive,” Sammons said. Late last year, after a 30-year hiatus, several energy companies, including Entergy Corp., filed 22 letters of intent to build 31 separate reactors. The previous year, no letters of intent were filed.

“It’s these types of projects that have put the pipeline industry in an upswing of work. The pipeline industry is gaining steam. More people are building. There is going to be more work for years to come. We are hitting an upswing in this business that could last indefinitely,” he said.

But energy companies need specific types of steel able to withstand corrosive conditions to make pipelines. Yet, “there are only so many furnaces in the country to keep up with demand,” Anton said.

In Louisiana, German industrial steel giant ThyssenKrupp has pitted Alabama and Louisiana in a head-to-head competition for a $2.9-billion steel complex.

Sites near Convent in St. James Parish and in Mobile County, Ala., are rivals for the 2,700-employee plant slated to begin operations in 2010.

The 150-acre site on 3,000 acres will sport a roof more than 15 times the size of the Superdome covering a 7-million-square-foot building. It will produce about 5 million net tons of carbon steel and more than 1 million tons of stainless steel annually.

The plant would shave a lot of waiting time for energy projects, Anton said.

As one of the nation’s largest steel manufacturers, Pittsburgh-based U.S. Steel has seen how a qualified steelmaker can profit energy projects. Revenue for its energy segment surged to $631 million in 2006, up from $400 million in 2003.

“It’s definitely been stronger,” said John Armstrong, public affairs manager for U.S. Steel. “It has been a money maker.”

Anton expects the trend to continue.

“New capacity to make (pipelines) will be added in the steel business,” he said. “There’s just too much money in it.”

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