Gas Industry Fuels Growth

Washington PA  Observer Reporter
10 March 2011

Chapman Corp. said Wednesday that it will build a $6.6 million, 54,000- square-foot pipe fabrication plant on land at its Washington headquarters.

John McCarthy, Chapman's vice president of finance, said the new facility, one of the largest industrial expansions to occur in the city in the past 25 years, is being constructed to allow the company to pursue additional opportunities in Marcellus Shale natural gas projects.

The announcement was made during a meeting with the Washington County Industrial Development Authority, which is providing Chapman with the ability to borrow $6 million from Washington Financial at a tax-exempt interest rate.

Jeff Kotula, executive director of WCIDA, said the authority will not lend the money itself, but will issue a bond note which will allow Chapman Corp. to obtain funding from the bank at a lower interest rate. He said no taxpayer money will be used in the financing arrangement.

McCarthy said Chapman, which is headquartered at 331 S. Main St., expects to begin construction by August, with a completion date about six months later. He said the project will enable Chapman to hire up to 40 additional employees from the local workforce.

"What's driving this project is the Marcellus Shale," McCarthy said, noting that Chapman is already working on several piping projects for natural gas processing in the area.

McCarthy showed engineering drawings for an 80-by-600-foot structure that will be 30 feet high to be constructed on Chapman's property, which extends from South Main Street along Catfish Creek to West Maiden Street. He said the new building, which will require the demolition of a portion of Chapman's existing plant, won't be visible from the street.

According to McCarthy, one of the key components of the project was negotiations with Steamfitters Local 449, which will permit the company to hire nonunion members from the area and train them on-site. He said when the new workers complete the training in the pipe area, they will have the option of joining the union.

"We have an agreement with (the union) to allow us to become more competitive in the fabrication field," McCarthy said, adding that the new hires will be classified as "metal trade workers." He described the level of training as below that of the union's apprenticeship training, which is a five-year program.

"It opens opportunities for local people to be employed," McCarthy said, adding that the company plans on hiring workers from Washington and Greene counties.

He said Chapman's current pipe fabrication area, which provides welding, sandblasting, painting and pre-fabricated piping assemblies, has an average of 10 people working in it, depending on the company's project demands.

The expansion plan comes at a time when Chapman finds itself getting more work in the Marcellus Shale extraction field. According to the company's literature, it has performed more than 100 different projects over the past three years, successfully completing more than $90 million in construction services related to the industry associated with the Marcellus Shale. The corporation's total sales volume has averaged $130 million over the past three years.

McCarthy said the company is already doing work for MarkWest at its compression stations and its Chartiers Township processing plant. He said Chapman focuses on pipes used in the processing and gathering areas and upgrades at transmission sites for natural gas. Other customers in the natural gas industry include EQT and Columbia Gas of Pennsylvania. In addition to pipe fabrication, the company also provides site work and mechanical and electrical work in the power, glass, chemical and steel industries.