MTE Engineered Materials looks to add factory

FRANKLIN, La.—A three-year old joint venture focused on supplying complete elastomeric subsea high-temperature thermal insulation systems is planning to build a new factory to enable it to supply a major upcoming project.

MTE Engineered Materials L.L.C. is a joint venture between the owners of Franklin-based Mark Tool & Rubber Co. Inc. and Elite Elastomers Inc., located in Ripley, Miss. It was formed in 2016 to conduct research, development and end-use application for the thermal insulation systems, which can install the rubber insulation on pipes used in oil drilling operations in any of the three main methods: S-Lay (horizontal), J-Lay (vertical) and Reel-Lay, according to the company.

The name MTE represents the combined strengths of both Mark Tool and Elite Elastomers, said Jerome Hebert, who is chief operating officer of Mark Tool and managing director of the joint venture. The JV builds on Elite Elastomers' rubber material research and development innovations and Mark Tool's application and manufacturing technology.

Mark Tool and Elite had worked together for about 15 years, with Elite serving as the sole material supplier for Mark Tool's rubber compounds, Hebert said. Mark Tool is a maker of custom rubber products and extruder of elastomer materials mainly used in pipe coatings. "We just had a really good relationship with Elite," he said. "Any new products we need developed we go to them and they develop the products for us."

And that's basically how the MTE Engineered Materials joint venture began. The two firms had worked on a big project for one of the major oil companies in the Gulf of Mexico, Hebert said, declining to name the customer. That was in 2015, and out of that came another project with the same oil company, this one of bigger size and for larger volume. But the companies needed to bring down costs to compete with other products on the market.

Hebert said he and Elite Elastomers President Steve Glidewell decided to form the joint venture to combine their strengths from the material development standpoint to the application of the material onto the pipe.

Glidewell said putting the two groups together created the complete package the customer needed. "We basically worked together on the first phase of the project and it just seemed natural, and it actually helped the customer being able to work through one company that way," he said.

MTE currently operates out of the Mark Tool facility in Franklin, with only the management team listed as staff. Besides Hebert, his wife, Shree Hebert, serves as financial manager; Glidewell is technical director; his wife, Ginger Glidewell, is technical adviser; and Sarah Lehman is director of business development.

Right timing

So far the joint venture has done a few smaller projects, but has its sights set on some larger projects coming up in the next five years. Jerome Hebert said it's a long developmental process getting the products developed, tested and approved by the oil companies.

The new projects, however, won't begin oil field operations for several years, so Hebert said now is the time to put up a factory just for the MTE Engineered Materials joint venture. The parties are working on site selection, projecting it likely will end up within a 30-40 mile radius of the Mark Tool operation in Franklin.

Hebert projects the JV will have to invest between $10 million and $15 million to build and equip a plant to meet its needs. It likely will be about 35,000 square feet and house such equipment as the firm's proprietary extrusion process, pipe preparation equipment and a large autoclave, expected to be about 85 feet long and have a 9-foot diameter.

Initial employees will come from both Mark Tool and Elite Elastomers.

"The way these projects work is you maybe will do only one or two a year," Hebert said. "They're really big. The first project we're looking at is about 12 miles of pipe. It will take us three to four months to run that project. Behind that, there are four more potential projects we're looking at."

After that, MTE will go to other oil companies and hopefully grow from there, he said.

MTE designed and developed two insulation systems—ThermoTron 350 and ThermoTron XT—that it said are mechanically robust, flexible, high-temperature elastomeric compounds that are applied to pipe exterior, jumpers and other components using a proprietary extrusion process. The insulation systems consist of three layers, a corrosion resistant layer, a bonding agent one, and the high-temperature, high-density elastomeric layer.

Company officials claim ThermoTron XT is the only elastomeric insulating material on the market that can operate at continuous temperatures above 350°F and be used in all three of the main drilling operations.

All the upcoming projects involve subsea pipe insulation. Hebert said the ThermoTron materials have been approved following a rigorous testing process that simulated the conditions the elastomer materials must operate in. That included doing life expectancy tests, done by an independent consultant, that judged the components will far exceed the needed lifespan specified by the customer.

"The material itself is designed to last 30-plus years in a subsea environment at 340°F operating temperature," Hebert said. "The pipe's hot and the water's cold, and then you're in salt water. Plus you have hydrostatic pressure that is probably 4,500 pounds at 10,000 feet of water depth."

MTE plans to have the site selected by the end of this year, he said, and have it operating in the fourth quarter of 2020. The first of the expected projects are expected to start up sometime in 2021 or early in 2022. He added that the first four projects are forecast to have oil flowing sometime in the 2022-24 time frame.

Mark Tool and Elite Engineering working together on the JV really has been an excellent fit. "When the idea kind of popped up it was a no-brainer," Hebert said. "We both were thinking the same thing and we didn't have to put a whole lot of thought into it. We were always trying to figure out a way to work together in something that had a lot of potential for both parties. When this opportunity came up it was just a natural fit."

Glidewell said the combination works well, with Elite responsible for material design and development, and Mark Tool serving as the applicator and the field sales representative, with its history dating back to 1954 in the oil and gas business.

As for conditions in the oil business in general, Hebert said it's still slow in rebounding from the deep dip in the sector several years back. "A lot of things are looking up," he said. "Bids are starting to come in finally. We're starting to see a little more action but not quick enough. Everybody in the oil field business is saying it will be the end of 2020 before it really kicks off."