13th Annual Directional Drilling Survey: Mixed Market Recovery For HDD

By Robert Carpenter, Editor | June 2011 Vol. 66 No. 6

As the various market dynamics come into play for 2011, there was some shifting in the market shares by discipline. With the increased emphasis on telecommunications construction, it should account for 22.6 percent market share, up from 18.5 percent in 2010. Gas distribution should also see an increase in HDD applications from 16.1 percent in 2010 to 17.3 percent in 2011. Not surprisingly, the utilization of HDD for water and sewer markets declined since the recession is still negatively impacting the cash flow of most cities. In many areas, new municipal construction has largely ground to a halt. HDD water construction fell from 16.6 percent in 2010 to a projected 13.7 percent market share in 2011, with sewer dropping less dramatically from 11.9 percent to 10.9 percent.

As for current distribution of rig size, the small rig category is at its highest level in five years with 68.3 percent of contractors owning small rigs (under 40,000 pounds of pullback). More than 23 percent own mid-sized rigs (40,000 – 100,000 pounds of pullback) while 8.4 percent own large rigs (greater than 100,000 pounds).

The “other” category of HDD markets continues to include many diverse and innovative applications. But in this year’s survey, geothermal showed up more strongly than in the past. Manufacturers have been predicting (and hoping) that the use of HDD in that market would be increasing substantially. For the first time, geothermal began to show some definitive signs of impacting the market.

Purchasing plans
For the past few years, the trend has been to buy mid-sized and even large rigs for expansion into new markets while replacing small rigs as necessary. But another by-product of the renewed strength of telecom was reflected in the purchasing plans of contractors for 2011 as 67.1 percent plan to invest in small rigs for their next rig purchase, 23.6 percent plan to buy a mid-sized rig and 9.2 percent hope to afford a large rig. In 2010, a contractor averaged purchasing 1.4 rigs while in 2011, contractors plan on purchasing an average of 1.6 rigs.

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