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Joe Alvarado Vice President-Tubular Operations
USS Tubular Products United States Steel Corp. Tubular Products NASPD Convention Boston, MA October 10, 2008 Joe Alvarado Vice President-Tubular Operations
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COMMITMENT USS Tubular Products
TUBULAR PIONEERS COMMITMENT U.S. Steel has long been associated with the “Tubular Products business” . . .
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USS Tubular Products Working with the energy industry for over 100 years Made first steel pipe in the US Introduced welded casing prior to 1913 Introduced seamless drill pipe prior to 1913 Introduced seamless casing in 1924 Original API specifications developed from USS’s National Tube Specifications in 1926 Originated combination casing strings Introduced first pipe with seamless couplings Introduced first upset drill pipe and tubing Introduced first round thread Introduced “deep-well” casing – P110 Introduced buttress thread for casing and tubing Developed V150 casing
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USS Tubular Products The Beginning
1869- John & Harvey Flagler build a 20 x 125 ft. lapweld pipe mill in Boston, MA - primarily produced boiler tubes 1870- National Tube Works Company is created and moved to the center of the iron and steel industry- Pittsburgh, PA 1895- First seamless tube is produced to be used to construct bicycle frames 1899- National Tube Works is consolidated with other pipe manufacturers to form the National Tube Company 1901- USS acquires National Tube Company (NTC) Post Automobile demand increased creating a demand for higher quality steel tubing- Secondly, the rapid increase in auto production created a demand for gasoline 1914- NTC produces first seamless steel drill pipe in the oil industry followed shortly by the development of the first seamless steel couplings
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USS Tubular Products National Tube Company Comprised of multiple steel making facilities as well as tubular manufactures Installed the first integrated pipe mill in the U.S. Installed the first seamless tube mill in the U.S. Developed the double piercing process and the rotary rolling process which extended the commercial size range of seamless pipe from 8” to 26” O.D. At one time owned the largest pipe mill in the world
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USS Tubular Products Evolution
National Tube Works National Tube Company (Pittsburgh) Johnson Company National Tube Company (Lorain) Christy Parks Works National Tube Company (McKeesport) National Tube Company United States Steel Texas Works – Baytown Geneva Works Gary Tube Works Fairless Pipe Mills Oil Well Supply Company Fairfield U. S. Steel has always been committed to Tubular Products After 1981 USS sold tubular assets USS closed facilities Several facilities are operating today under another name Others have been relocated Until Lorain, Fairfield & Camphill operated mainly as a pipe producer with limited Threading & Q&T capabilities.
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Electric Resistance Weld
USS Tubular Products Evolution Pre Post 1981 Lorain National Gary Geneva Lorain Fairless Fairfield Oil Well Supply Camp Hill Baytown Christy Park Seamless Electric Resistance Weld Continuous Weld Dbl. Submerge Arc Weld Mechanical Tubing Pressure Vessels Bomb casings Galvanizing End Grooving Coupling Shops Tubing Upsetters Threading Units Heat Treat Facilities Sold assets U. S. Steel has always been committed to Tubular Products After 1981 USS sold tubular assets USS closed facilities Several facilities are operating today under another name Others have been relocated Until Lorain, Fairfield & Camphill operated mainly as a pipe producer with limited Threading & Q&T capabilities. Lorain Pipe Mills 1894 Broke ground as the Johnson Company and later became part of U. S. Steel Corporation in 1901. 1904 becomes part of National Tube Company 1930 #3 Seamless begins production 1943 Lorain supplies 1,254 miles of 24 inch diameter pipe for the “Big Inch” pipe line, which brought oil from Texas to the East coast during World War II. 1948 #4 Seamless begins production as world’s first continuous seamless pipe mill 1932 #2 Seamless begins production 1984 #2 Seamless shut down due to new Fairfield Pipe Mill 1962 Continuous Weld Mill opens 1965 ERW Mill opens Christy Parks Work Closed Facilities
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Capable of producing pipe from 4 ½”-16” diameter & 20”-40” diameter
Christy Parks Works Established in 1897 in Mckeesport, PA First named the United States Seamless Tube Works, but at the turn of the 20th century became part of the National Tube Company Made an integral part of U.S. Steel in 1964 under the name Christy Park Main production consists of seamless pressure vessels Produced over 10,000,000 pieces of weapons and munitions during the Korean War Produced projectiles for the U.S. troops fighting in Cuba during the Spanish War Provided 5 ½ million shell forgings and projectiles during WWI Produced bomb lines during the Viet Nam War Sold to CP industries in 1986 Texas Works – Baytown Construction in Baytown, TX began in 1967 and took more than 1400 people four years to build initial plant Pipe mill added as an extension to plate mill in 1978 Pipe mill was the first domestic source capable of producing 48” diameter pipe Pipe was made using the U-O process Pipe mill was constructed to supply line pipe for the transportation of oil and gas Closed in 1987 Geneva Steel mill was constructed with federal funds in 1941 to insure the nation’s steel industry would be able to meet the increased demand for steel by both military and industrial users Plant was located in Utah far inland as a precaution against steel shortages in the West in case of a Pacific Coast invasion during WWII U.S. Steel purchased Geneva from the government in 1946 for $47.5 million with an estimated value of $144 million Pipe mill installed in 1954 to take advantage of demand for large diameter pipe in the West and the growing market for smaller diameter pipe Integrated with a ready supply of plate and coil products being produced at Geneva Small diameter pipe was electrical resistance welded. Large diameter pipe was produced through submerged-arc welding using the U-O- process Capable of producing pipe from 4 ½”-16” diameter & 20”-40” diameter Marketed 80’ sections of double-jointed large diameter pipe for the energy sector Gary Tube Works Originally planned in 1916 to supply welded pipe & casing Located in Gary, Indiana and began operations in 1926 producing lap weld and butt weld pipe Constructed a seamless mill in 1931, but all production was stopped that same year The plant was reactivated in to manufacture alloy tubing for defense equipment USS Tubing Specialties was organized in 1976 as a separate operation to combine sales efforts between Gary, Christy Park, and Lorain Works Fairless Pipe Mills Originally installed at Fairless Works in Fairless Hills near Philadelphia, PA in 1953 Consisted of one skelp mill and two continuous weld mills capable of producing black and galvanized pipe 2.375” to 4.5” diameter Included complete facilities for pipe finishing including facing, threading, coupling, hydrostatic testing, galvanizing, coating, stenciling, and bundling Pipe mill was closed in 1991
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USS Tubular Products 2007: Lone Star Acquisition
Committed to grow energy business LSS Acquisition finalized June 2007 Leader in the OCTG Market Leader in the Line Pipe Market Growing the International Market 2007: Lone Star Acquisition After 25 years in a difficult energy and steel business... U. S. Steel reaffirmed its commitment to being the leading producer of Tubular Products in North America The combined entities are currently North America’s largest manufacturer of Tubular OCTG and Standard & Line Pipe products Over 2 Million Tons of Seamless and ERW production capabilities
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USS Tubular Products Evolution 1981 – June 2007 - Present June 2007
Lorain Fairfield Camp Hill Lorain Texas Operations (Lone Star) Fairfield Bellville Camp Hill Tubular Processing Services Tubular Threading & Inspection Serv. Wheeling Machine Products Apolo Tubulares (Brazil) Fintube Texas Tubular Products Seamless Electric Resistance Weld Mechanical Tubing Boiler Tubing Pressure Vessels Slitting Capabilities Inspection Units Coupling Shops Tubing Upsetters Threading Units Heat Treat Facilities Expanded Products and Operations
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USS Tubular Products United Spiral Pipe Lorain Tubular CampHill
Minnesota Ore Operations Hamilton Works United Spiral Pipe Lake Erie Works Great Lakes Works Lorain Tubular Gary Works CampHill Mon Valley Works Granite City Works Fintube Technologies, Inc. Wheeling Machine Products This is a detailed view of U. S. Steel Tubular Products – Facilities shown here in white text. The blue dots indicate pipe producing facilities and the red dots are for sales offices and finishing operations. In gray are our flat roll facilities. With headquarters located in Dallas, we have sales offices in Houston, Pittsburgh, Bakersfield and Calgary. In addition, various JV’s and alliances provide our Tubular group with a presence in the global market. We produce the full range of API and ASTM products at all our facilities, including a number of specialty tubing products such as hydraulic cylinders, trailer axles, high pressure cylinder stock and other mechanical applications. Immediately following the acquisition, one of our top priorities was to realign relationships with selected distributors. As a result of this realignment, we have established an efficient supply chain network committed to maintaining short lead times with consistent reliable deliveries. We also quickly migrated best production practices across all of our tubular operations, with a common focus on being leaders in safety, housekeeping, environmental performance, quality, efficiency, and customer service. U. S. Steel Tubular Products, Inc. Fairfield Tubular Texas Operations Wheeling Machine Products Bellville Operations Tubular Processing Services Division Tubular Threading and Inspection Services Division Wheeling Machine Products 11
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USS Tubular Products Current capabilities- OVER 2 Million Tons
Seamless Size Processing Lorain #3 10”-26” Rotary Roll, Direct Roll, Q&T, Straighten, Bevel, HydroTest, WMS, UT Insp. Lorian #4 1.9”-4.5” Mandrel, SRM, Straighten, Bevel, HydroTest, WMS Fairfield 4.5”-97/8” Rotary Roll, Mandrell, SRM, Straighten, Normalize, Q&T, WMS, UT Insp., Thread & Cpl. ERW Size Processing Texas Ops # ”-16” FBN, Q&T, Straighten, Bevel, HydroTest, UT Insp, Thread & Cpl. Texas Ops # ”-7” FBN, Q&T, Straighten, Bevel, HydroTest, UT Insp,. Thread & Cpl. Texas Ops Bellville ”-4.5” FBN, Straighten, Bevel, HydroTest Camp Hill /8”-20” Seam Anneal, Straighten, Bevel, HydroTest, WMS Texas Tubular Products 23/8”-41/2” Seam Anneal, Straighten, Bevel,
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U. S. Steel Tubular Products Product Size Offerings
Inches 1 5 10 15 20 25 30 50 60 Texas Operations ERW Seamless Spiral Welded * Identifies alliances Camp Hill Bellville Texas Tubular * Apolo Lorain #4 Lorain #3 Fairfield United Spiral Pipe USSK 13
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U. S. Steel Tubular Products Product Mix Profile
S&L 33% OCTG 62% Based on 2007 shipments. Pro-forma texas operations. Excludes flat roll. Specialty 5%
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USS Tubular Products Market Share 2003: 26% 2004: 30% 2005: 38%
2006: 42% 2007: 42% 2008 through September 52% OCTG Imports Source: Preston Pipe & Tube, US Census
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USS Tubular Products Market Share 2003: 41% 2004: 50% 2005: 56%
2006: 56% 2007: 61% 2008 through September 61% Line Pipe Imports Source: Preston Pipe & Tube, US Census
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USS Tubular Products Increased Capability in 2008 Fairfield - Hot Mill
Manpower Increased Capability in 2008 Fairfield - Hot Mill - Finishing Lorain - #3 Mill - #4 Mill Camp Hill
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Continued commitment to distributors Distributors’ quarterly forecasts
USS Tubular Products Sales Channels USS Tubular Products Continued commitment to distributors Maintains a ‘No Inventory’ policy Work closely with Distributors’ quarterly forecasts US and Canada through distribution USS committed to Stocking Distributors Management of inventory, stocking locations, repairs and returns Efficient solicitation of smaller customers Internationally through distribution Support major oil & gas company requirements for both domestic and international activity Internationally through USS International Sales Group Solicits trading companies, and countries with State owned Oil companies and /or requirements of local agent representation
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United States Steel Corporation Tubular Products
Competitive Advantages: Premium Welded & Seamless Tubular Value-Added Supplier Major Player in Strategic Market Segments Full Complement of Product Sizes 1.9 inches to 26 inches diameter Seamless .140 inches to inches wall 1 inch to 20 inches diameter Welded .125 inches to .670 inches wall Premium Threads – Star Seal Significant Asset Base Fairfield Seamless Mill – World Class Manufacturing Facility Texas Operations – New #5 Heat Treat Line Lorain #3 Seamless – Large Diameter Heat Treat Line Raw Materials Base Research and Development
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COMMITMENT USS Tubular Products
TUBULAR PIONEERS COMMITMENT U.S. Steel has long been associated with the “Tubular Products business” . . .
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Joe Alvarado Vice President-Tubular Operations
USS Tubular Products United States Steel Corp. Tubular Products NASPD Convention Boston, MA October 10, 2008 Joe Alvarado Vice President-Tubular Operations
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