What’s Up in The World of Drill Rigs — Part 1
Drill rigs — central to any drilling operation — are essential to a contractor’s business. Knowing this, over the next couple months, National Driller is presenting a series to look at what’s hot, what’s not in the realm of drill rigs. We’re talking to suppliers all over the country to get a sense of where things stand. In Part 1, Richard Clarke of SIMCO shares his thoughts on drill rigs — on current trends, what he thinks drillers want and where he thinks the industry is going. From a manufacturer’s perspective, Clarke asserts that with the changes that are taking place in the industry, the driller will need to adjust not only his equipment, but also his mindset and business practices in order to keep up with the pace.
What Drillers Really WantIn his dealings with drillers shopping for rigs, he has had customer after customer ask for a better, more efficient drill as well as one that drills fast. Analyzing what he hears so many requesting, he interprets it to mean that what they really want is an improved way of doing things. “One of the things drillers are looking for,” Clarke states, “is efficiency in drilling, specifically increased efficiency in the drilling process.” Defining a more efficient process as less labor, reduced material handling, faster set-up and teardown, less downtime and better equipment, he suggests drillers should reconsider how they think about productivity.
“If they want to increase productivity,” explains Clarke, “they’ve got to decrease the amount of time, energy and effort they spend at the site because time’s money.”
Clarke believes that too often drillers mistake larger rig size and faster drills for increased efficiency. Instead, he recommends that they take into account the time and effort preparing to drill takes and factor it into how they evaluate their productivity. When customers ask him about drill speed, he responds, “Depending on the application, water well, geothermal, etc., I say, ‘Is that really the right question to be asking because most drills, once they start turning to the right, drill about the same general speed.’ So the question of how fast can it drill really should be supplanted with a question of how’s the productivity of the process.”
He thinks that if drillers can do things to improve their drilling process, in areas such as the set-up, the teardown and the maneuvering around on the job site, they’ll see an increase in their efficiency. He reiterates that faster drilling is not the only factor in the equation. “So the question of how fast can one rig drill over another,” he states, “we get this question with our 10-foot stroke rigs vs. our 20-foot stroke rigs. People say, ‘I don’t have to make as many connections with a 20-stroke rig.’ That’s right but the savings you have get eaten up by the maneuvering and the set up time; what have you gained?” He also warns against buying into the notion that bigger is better and finds that in terms of improving process efficiency, smaller, medium-sized rigs may be more beneficial. “That’s maybe where a smaller rig has an advantage over a behemoth,” Clarke proposes, “because I can get in with a smaller rig, be set up in five minutes and drilling.”
Clarke does not want, however, to discount the importance of drill rig function when considering efficiency. He discusses the effect of downtime on a drilling business and emphasizes that constantly having to service necessary equipment negatively impacts productivity. Speaking of the average amount of time spent waiting for a rig to be fixed, he states, “It runs the gamut but I have heard people say one out of 10 days it’s down for repairs and servicing. I’ve heard people say one out of five, and they’ve lived with this. When you translate that to numbers, that’s 10 percent to 20 percent of the time spent repairing. You can’t be making more hole and more money if you’re repairing all the time.”
Expanding the view of what constitutes the drilling process instead of focusing solely on how well the drill rig functions, according to Clarke, will enable drillers to make changes to improve efficiency and ultimately increase their productivity.
Current TrendsComparing the rig trends of today to those of a few years ago, Clarke says of the current environment, “Versatility is one of the trends that I see — translate that to I think the years of specialized drillers running a specialized rig are dwindling.”
“There are still markets where once a water well driller always a water well driller,” he acknowledges, “because they have enough business to keep them going. But I think that there’s a move to drillers, and they’re willing to take on more than just one class of drilling. One of the strong markets we see now is the vertical loop geothermal drilling market. This is a hot, long-term opportunity for someone who knows how to drill.”
“Quite often the drilling company will branch out,” Clarke explains, “but whether they’ll use one rig for everything is questionable. What we’re finding is these drillers, if they want to get into a different chunk of the drilling business, they have to look at approaching it from a different business stand point, and that may require another piece of equipment.”
Clarke notes that many businesses are not set up to do more than one type of drilling. He gives an example of the water well driller who broadens out to do environmental/geotechnical work. While the result of the work is the same — putting a hole in the ground — the purpose and the parameters are not. Similarly, while the same equipment used to drill a water well could be used to drill a geothermal system, managing the projects is very different. “Because you get on a geothermal drilling job,” Clarke clarifies why the two types of work require different business approaches, “it might be a school, an office or a house. It might be four holes, 20 holes or 40 holes per site. You get on there and you start drilling your 200-foot holes, you don’t break off to go do a water well.” The solution: “They’ve got to go for a maybe second rig that is geared toward that market, that could be used if they had an overlap — in other words, two rigs, two crews.”
Structuring a business this way, according to Clarke, will allow for more flexibility for the contractor: “He can bring his big rig in if he needs it, or he can take the little rig and do his water well. But you have the versatility I was talking about.”
Going Forward“I think what’s falling out of favor is mechanical, hard-to-muscle equipment,” claims Clarke, speaking of the types of rigs that appear to have gained and lost popularity. “There are sections of the drilling market that get into auger drilling, soil sampling, geotechnical drilling; in that part of the market, mechanical rigs have a wonderful place,” he concedes. “In the water well business, the long-stroke, top-head rotary rigs are the way it’s going and what’s falling out of favor is the large, mechanically operated, table-drive rigs. They’re just not as versatile. I think they’re more prone to increased mechanical repairs and they’re harder to operate for the new generation.”
In addition to specific rig types, Clarke offers his perspectives on manufacturing drill rigs and where he sees the industry heading in general.
Clarke sees the trend toward versatility in drill rigs continuing. He discusses the decreased number of suppliers and equipment to the marketplace and how it has affected manufacturing: “Where 10 years ago there might have been six different suppliers, now there may be two, maybe three. Those that are remaining have had to do a better job of providing a little more versatility.”
Likewise, he finds drillers are combining versatility with consolidation when approaching new rigs: “Where they used to have five different rigs for basically five different types of drilling environments,” he describes, “they’re getting rid of a bunch and maybe they’re going down to three rigs, where several of those rigs are more versatile, more multi-purpose. So there is some consolidation in equipment; having the specialized rig for the one shot deal, people can’t afford that.”
Clarke continues, anticipating that the trend will be toward consolidated rigs that are versatile, able to efficiently perform different applications but less customized. While he has stressed the importance of versatility, he also emphasizes that the trend of customizing rigs will not continue.
“We cannot build rigs the way we used to build them when the guy bought the rig the last time,” he elaborates. “You can’t put this option on, you can’t put this feature on, you can’t make this guy’s rig so customized you can’t afford it — we can’t afford the manufacturing. So we’re having to look at more standardization of the options.”
“If anything, these drillers, when they come back to the marketplace if they have not entered it in a long time, will find they cannot do things the way they used to do because as manufacturers we can’t do it economically and stay in business. They still can get some of the options but [building a rig exactly to the customer’s specifications] is going by the wayside.”
“What I’m seeing is a lot of similarities to the automotive industry.” Clarke likens rig manufacturing to the automotive industry, where new cars come with option packages. He suggests that offering option packages for rigs is the direction the industry is taking. “That’s what I see from a manufacturing point-of-view. One of the ways that the drill rig business is going to have to gravitate: You just can’t have things the way they used to be because it’s not affordable. Rigs are still built for the most part to the application, but the choices are becoming less.”
SIMCO Drilling Equipment Inc. is headquartered in Osceola, Iowa. SIMCO manufactures rigs for water well, geotechnical and environmental drilling as well as a wide range of other applications. Eighteen years with the company, Richard Clarke is director of sales and marketing for SIMCO.