A recent trend sees contractors looking for compact and customized rigs.



When asked where they think the drill rig market is headed, many manufacturers will reply with a variation on “If I knew that, I'd be a millionaire!” Based on the purchasing trends they observe, however, these manufacturers do have a fair idea as to the current state of things. We recently spoke to a couple of rig manufacturers who shared with us their perspectives on the current rig market.

Whether you consider them compact or whether you call them lighter-weight rigs, regardless, drill rigs that are smaller and more versatile are being sought by contractors, we found.

Describing what contractors want in their rigs, Dan Wright of Deep Rock Manufacturing says, “They're going toward smaller, more compact rigs.” He explains that in the past, contractors would buy a rig for one specific purpose, whether it was to drill residential or larger-diameter commercial wells, to drill in unconsolidated dirt or hard rock, or to install heat pumps and so on. Instead, he's found that today's contractors are purchasing rigs that as Wright says, will do everything.

Mark Laibe, Laibe Corp., concurs. “We build lighter-weight drills,” he reveals, “and it seems to me that the trend has been for lighter-weight drills because we have had a strong demand.”

One factor contributing to the movement toward lighter-weight equipment is that stringent DOT laws governing weight on drills impact contractors' abilities to get from job to job. Lighter rigs don't have the same restrictions on the roads the larger, heavier versions do.

Another is simply that the technology has improved: The smaller, more compact rigs now have the power that before only the larger rigs could provide. Technology has advanced to such an extent that a smaller rig now not only offers maneuverability but also power.

Because the technology is “so far superior today than in the past, you're able to design lighter-weight equipment that has the power and even more power than the heavy drills that you're seeing going by the wayside,” Laibe explains. “It's just all-around a better product today, with the lighter-weight drills having the power the heavy iron used to. It's just getting hard to sell the heavier rigs.”

Powerful rigs that actually can be used on roads certainly contribute to the draw of smaller, lighter-weight rigs. Customization also helps create their appeal and remains an important aspect for rig sales.

Contractors still request rigs with customized features. Options like custom paint jobs and rigs outfitted with accessories in convenient locations are important considerations for the contractor who's in the market to buy. Many rig manufacturers will offer a certain amount of customization with their rigs, and from a contractor's perspective, it seems, the more, the better.

Typically, rigs will come standard with certain features and have custom options available. Manufacturers that do customize in this way often will work with contractors to fabricate what they would like to see special on their rigs, such as adding stabilizers or creating different ways of carrying down-hole hammers or mud applications.

“We'll always customize a rig to the extent that it's possible, engineering-wise, for all customers. Almost all of our rigs are customized rigs,” Wright reveals. “My engineer and my accountants say we have no standard rigs. I keep telling them that we have 18 different models, and they say, 'No, we don't.' They say, 'How ever many customers we have, that's how many models we have.' And to a great extent, that's true.”

Importantly, even the manufacturers that do customize cannot reinvent the wheel, or the rig in this case, every time they make a sale. Careful to distinguish what his company can and can't do in terms of customization, Laibe explains: “We have to be careful when we talk about modifications. When it comes to standardizing, for instance, the wheelbase on the drill - the truck it's mounted on - we can't modify wheelbases any.

“We have a certain amount of customizing that we do for customers in the case of each particular model,” he adds. “Each one has standard features and then we offer several custom items that individuals want on their rigs. I don't want to say we do anything that anyone wants, naturally we can't do that, but we do do a lot of customizing for individuals.”

The willingness to work with contractors to provide what's needed seems to be the key for rig manufacturers. Also having the ability to foresee what contractors will need is another. Laibe attributes his company's success to recognizing what customers want in their rigs and responding accordingly. “We know we're headed in the right direction with these lightweight drills because that's what people are asking for and that's why we've been successful.”

Ten to 12 years ago, when the DOT laws were changing, Laibe anticipated the weight of rigs were going to be a problem and designed a new, lighter drill rig to address that issue. And it's worked: According to Laibe, the company's sales were up more than 50 percent this year.

Given those numbers despite the economy, it would appear that lighter-weight rigs truly are in high demand.

Looking Back, Going Forward

A wet busy season limits the amount of work a contractor can accomplish. For 2003, the weather has been an issue. Add a temperamental U.S. economy to the mix, and for one reason or another, projects have been delayed.

Dan Wright recounts conversations with contractors that touch on both issues: “This year, and I'm talking this year only, it seems like it's been wet almost every place, with very few exceptions. I talked to a driller I respect very much, and I was kind of bellyaching about nobody buying rigs. He says, 'Well, right now I've got 35 wells backlogged; this time of year, I should have 135. We contractors buy our equipment based on the size of our backlogs because we know we're going to have money coming in to pay for them.'

“On the other hand,” he adds, “I've talked to contractors who have a pretty good backlog but because of the weather, they are only drilling one day a week because they can't get in to do it.”

The weather aside, the economy remains a subject of concern for manufacturers and contractors alike, and the fortunate few who haven't felt the bite of recession still recognize the situation for others. Yet, with job creation on the rise and unemployment dropping - albeit slowly - manufacturers acknowledge the economic uncertainty but are optimistic.

Looking ahead, the manufacturers we talked to anticipate general growth as well as an increase in residential projects and work in the heat loop industry. Wright comments that projects involving heat loop installation are increasing, based on the sales he's had.

Laibe predicts: “I think we're going to see more projects that have been put off because of the economic times and maybe larger projects will come back into play. But again residential work, I think, is going to stay really strong as long as the interest rates are there. More people are going back to work; I think residential is going to be very strong for the next couple years or better.”

Whatever the project-type, if the industry can expect to see more drilling work in 2004, it's good news to us. ND