Alcoa to Supply Marcellus Shale Development

Brian Hicks

Written By Brian Hicks

Posted August 6, 2012

Alcoa Inc. (NYSE: AA) will be able to supply aluminum alloy drill pipes to Pennsylvania General Energy for use in the Marcellus Shale, the company stated Thursday.

This is just the latest in several recent announcements that focus on aluminum or alloys rather than steel, likely due to its lighter weight. According to Alcoa, its aluminum pipes will allow PGE to drill deeper while using less energy.

Although no financial specifics were revealed, Alcoa did state that they will be producing 3,500 feet of 4.5-inch drill pipes.

For PGE, this means that they could drill to around 7,500 feet, or at least 1,000 feet deeper than possible with more conventional steel pipes.

Alcoa stock ended on Thursday at $8.18, down nearly 3 percent on the New York Stock Exchange after the announcement.

Reuters reports:

“The high strength-to-weight ratio of Alcoa pipe will allow PGE to drill deeper with less energy-intensive rigs and to maintain a smaller drilling footprint, which is a win for PGE, our land owners, and the environment,” said Justin Hansen, PGE’s drilling engineer.

Alcoa claims that its pipe design allows the aluminum pipes to be at least half the weight of comparable steel pipes without losing durability.

The actual pipe is tapered in shape and is a high-strength aluminum alloy tube that incorporates proprietary thermal connection technology, Reuters reports. This means conventional steel joints and pipes can work with the aluminum pipes.

Although aluminum pipes aren’t a new development, they are coming under increasing focus as the shale boom continues, Alcoa told Reuters. Such pipes are suited to the needs of shale operations, as they function well in the horizontal drilling common to gas operations.

Alcoa was back up 2.03% on Monday to $8.54.

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