Visions - Spring/Summer 2013 - (Page 8)

TUBULAR – OCTG Our Subsidiary OCTG Distribution Companies Earn Biggest Market Share W hen Ron Dewan and Mark Kays formed Premier Pipe in 1987, it was a truly trying time for the oil and gas business in the United States. Dewan had worked for a SCOA pipe customer. In the early to mid 1980’s, many of SCOA’s customers were abandoning inventory positions as well as declaring bankruptcy, saddling SCOA with debt and inventory write-downs. The Company realized that in order to be successful with oil and gas companies going forward, we would need to have more control over the supply chain. SCOA enjoyed a close relationship with their manufacturer Sumitomo Metals (now Nippon Steel & Sumitomo Metal Corporation) and wanted to duplicate that relationship on the distribution side. SCOA approached Dewan in late 1986 to form a company that would take SC and SCOA into a viable distribution role in the U.S., and in September 1987, Premier Pipe was founded by Dewan and Kays in conjunction with SCOA. Premier Pipe became the platform company for SC and SCOA’s upstream OCTG distribution business both domestically and later internationally. Because of the success of this new business model, SCOA later invested in Pipeco and others to broaden its energy distribution portfolio. The primary product is OCTG, with a minor emphasis on line pipe and drill pipe. Currently, Premier Pipe, Pipeco and others have developed the largest market share of OCTG supply to the oil and gas companies in the U.S. With the largest customer base, these companies have the broadest mill access as well. The companies’ combined size cements SCOA as the dominant force in OCTG supply in the U.S., helping create international opportunities. In the beginning, most transactions were spot business versus program business. Premier recognized the opportunity to change the culture of the OCTG business from individual quotations on each well to a longer term strategic alliance supply. Premier implemented its first strategic alliance with Arco Oil and Gas (now part of BP) in 1992, and that started the transition of the OCTG business from spot to program. The supply chain operates today in a much more integrated fashion than back in the late 1980’s and 1990’s. Approximately 80% of the rigs drilled for natural gas back then, whereas today, that has flipped; now, 80% of the rigs are drilling for oil. Also at that time, virtually all wells were drilled vertically versus today, where 63% are drilled horizontally. Relationships at both the OCTG customer level and steel supplier level are the key to success for an OCTG distributor. In order for the supply chain to operate effectively, all three companies work to create a very transparent relationship between the mill, the end user and ourselves. By attending drilling meetings, and thinking out of the box to find new ideas and operational ways to increase efficiency and benchmark results, SCOA can become part of the process at the customer level. We look to cultivate the relationship so both the mill and customer depend on us to assist their operational efficiency. 8 v i s i o n s S p r i n g | S u m m e r 2 0 1 3 SCOA provides the strong financial and administrative capabilities that support these companies’ industry growth. Our distribution companies have also developed into large strategic customers for SCOA’s manufacturing investments that have increased their value to the oil and gas companies, providing growth in both revenue and profitability. Also, SCOA’s global contracts with certain key oil companies have provided opportunities for our distribution companies as these oil companies have made additional investments in drilling projects in the U.S.

Table of Contents for the Digital Edition of Visions - Spring/Summer 2013

Visions - Spring/Summer 2013
Contents
Meet our New President and CEO Kazuhiro Takeuchi
Bringing Global Expertise and Foresight to Tubular Market
Our Subsidiary OCTG Distribution Companies Earn Biggest Market Share
SCOA Teams Up with HOWCO for Oil Field Materials and More
SCGTS Creates Value Through Service Integration
Midstream and Downstream Services Business Serve Line Pipe & Specialty Tube Demands
Management Synergy & Coordination Helps Our New Oil & Gas Working Group Put All The Pieces Together
Shale Gas and Tight Oil Projects Look to the Future
NSI Crankshaft Finds New Business In Oil and Gas Exploration
Steel and Non-Ferrous Metal Group Supplies Offshore Drilling Operations
Unique Machine Prospers in Alaska
Construction Equipment Business Serves Oil Sand Project Needs
Pacific Summit Energy Experiences Energy Trading and Marketing Success
Analysis and Prevention are the Keys to Success for Tubular HSE

Visions - Spring/Summer 2013