Water Well Journal
Issue link: http://read.dmtmag.com/i/608970
T he slowly improving but still sluggish economy coupled with lower oil prices led to a challenging year for many steel water well casing suppliers and manufacturers. Steel prices have dropped significantly since Septem- ber 2014 due to a declining demand from the energy sector and a recent surge in imports. Following a modest gain in 2014, steel prices were expected to drop 7.1% this year, according to market research firm IBISWorld. "With the energy market suffering so dramatically since late last year with drilling related to the oil country falling off, there is a lot of steel production and steel inventory people are trying to liquidate," says Jeff Stephens, president of Victory Steel Products Corp., a supplier of water well casing and pipe in St. Louis, Missouri. "That's been driving steel prices down significantly." This has led to a barrage of competitors from the energy market flooding the water well industry seeking to sell their product. It's exacerbated an already tight, competitive market- place. Some believe once the energy market returns, these competitors will return to it and leave the water well market. When that will be though is tough to predict. In the meantime, water well casing suppliers and manufac- turers continue to operate in the face of these challenges and press forward. A changing mind-set As steel prices dropped over the last eight to nine months, some water well contractors have understandably become more cautious with their purchasing decisions. Some wait longer to buy steel casing for fear the price is going to drop in a matter of weeks. Or in some cases, they purchase smaller quantities because they don't want to commit long term to the inventory for the same reason. This then changes the way suppliers respond to orders from water well contractors seeking a quick delivery. It's a balancing act for the supplier. Chad Grignon, owner of Pine State Drilling Inc. in Athens, Maine, exclusively uses steel casing, 17.5 pounds per foot. He buys from Morris Industries Inc., a supplier and fabricator of water well casing and steel pipe headquartered in Pompton Plains, New Jersey. "We purchase as we need it. It's not really any advantage for us to wait or buy more bulk," Grignon says. Likewise, Jeffrey W. Williams, MGWC/CVCLD, vice president of Spafford and Sons Water Wells in Jericho, Ver- mont, only uses steel in his region. Glacial conditions and hard rock require a robust casing. He uses 6-, 8-, and 10-inch steel casing with a ΒΌ-inch wall minimum. Williams, who serves on the National Ground Water Asso- ciation Board of Directors, also buys from Morris Industries. The presence of the geothermal market has aided water well casing suppliers and manufacturers, which has been spurred on by the residential renewable energy tax credit, set to expire on December 31, 2016. "Some of the geothermal work involves steel casing, not all of it, some of it," says Craig Laine, vice president of sales The first load of steel casing for the year for American Well & Pump Inc. in Westport, Massachusetts. The steel casing is from Victory Steel Products Corp. Photo courtesy American Well & Pump. STAYING STRONG CASING continues on page 26 WWJ December 2015 25 Twitter @WaterWellJournl Despite competition from the energy market, steel casing suppliers press on. By Mike Price