Being very contrary in a terrible market

By Geoff Lee

May 5, 2016 6:00 AM

Western Alliance Tubulars Ltd., majority owned by Moosomin First Nation in Cochin, Saskatchewan is taking a contrarian outlook to the market for oil and gas tubing and specialty products.
WAT has partnered with Victoria International Tubulars (VIT) and is set to open a new manufacturing plant in Edmonton in anticipation of a turnaround in the oil and gas industry next year.
“We’re either really smart or we’re really dumb,” said Larry Kryska, president and CEO of WAT, who calls the existing market for oil country tubular goods (OCTG) as terrible.
“We’re contrarians to the market—you always buy low and sell high.”
Kryska hopes WAT can mimic the success of Husky Energy in the 70s after it was bought by Chinese interests and saw rapid growth by drilling during the downturn of the 80s when others didn’t.
“We’re not expecting to get rich in our first year,” said Kryska who believe things will turn around.
“Even now we have a little of business because our product offering is quite unique to Canada.”
WAT’s partner VIT is a wholly-owned subsidiary of Darun Jiangsu Shined Petroleum Equipment Manufacturing Co. Ltd. that owns seamless pipe manufacturing in China, Vietnam and Indonesia.
WAT will kickstart the manufacture of OTCG and specialized products in the coming weeks.
“We are three to four weeks away from vacuum insulated tubing manufacturing which is a specialized product not manufactured in Canada,” said Kryska.
“It’s used in steam injection lines in steam assisted gravity drainage or SAGD.”
Vacuum Insulated tubing reduces heat loss in SAGD operations, reducing steam consumption; therefore making wells more energy, time and cost efficient.
WAT will target the North American market with its products and services.
The first stage of the project is the manufacture of about 20,000 metric tonnes a year of up to seven-in outer diameter downhole and casing tubulars and line pipe for process pipe used in refineries.
The facility will also include production lines of heat treatment, upsetting, threading, vacuum insulated tubing when API certification is achieved by the summer.
“People are going to Houston Texas and paying exchange rates to have their pipe altered and we can do it here now,” said Kryska. “When things turn around we are going to be in a very good position.”
The plant will also provide used tubing cleaning and repair services.
The plant currently employs five Moosomin First Nations trainees with a staff of about 17 and plans to eventually include a consortium of other First Nations in the business.
“In the future we could be working with other First Nations and looking at something on reserve,” said Kryska.
“But with the rates and lease rates and logistics, it just made sense to do it in Edmonton which is a bit of hub for manufacturing in Western Canada.
Kryska said for Moosomin, WAT is an investment in their community located north of North Battleford.
“We’re hoping this proposal is going to see community development in the form of schools, not to mention the training that will be offered at the facility for community members,” he said.
Kryska said he’s been working with importing products and steel from Asia dating back before 2,000. “It’s not easy to keep the employment pool going and keeping good employees, but there is a lot of opportunity for First Nations communities,” said Kryska.

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