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14th Annual Horizontal Directional Drilling Survey: Telecom, Energy Drive Market, But Is It Sustainable?
Riding The Wave
World-wide HDD rig sales are anticipated to be even stronger in 2012. Much of this industry’s market strength is running counter to other segments, i.e. sewer and water. However, the actual number of rig sales per contractor is projected to drop from 2.1 in 2011 to 1.9 per company in 2012. That contrasts with production estimates of rig manufacturers who anticipate selling slightly more units in 2012 (2,397 units compared to 2,233 in 2011). When considering the continued expansion of the HDD universe, that is probably a reasonable expectation: some contractors will be buying less in 2012 but that will be offset by new companies competing in the marketplace and purchasing both new and used equipment.
In 2011, rig sales remained relatively constant. Units with less than 15,000 pounds of pullback force accounted for roughly 20 percent of sales while rigs in the 15,000 to 50,000 pullback category captured 72.4 percent of the market. The strength of telecom – and electric in some areas – has been a key market driver. Larger rig sales accounted for about 8.6 percent of the market.
Of those contractors who actively own and operate drilling rigs, 21.2 percent list HDD as their primary (more than 50 percent) business.
In the U.S., various HDD market shares didn’t change significantly compared to 2011. Telecommunications should account for about 26.4 percent of market activities followed by gas distribution at 20.8 percent, water at 15.5 percent, electric at 12.9 percent, energy transmission at 12.5 percent, sewer at 8.9 percent and “other” at 4 percent. Geothermal constitutes a very small, but actively growing portion of the HDD market.
Rig ownership in the three primary sizes has shifted significantly towards rigs in the mid-sized category (40,000 to 100,000 pounds of pullback force). While rigs less than 40,000 pounds still dominate with 62.7 percent of the market, the trend is towards larger rigs with increased diversity for a variety of market and project challenges. Mid-sized rigs have climbed to a 27.2 percent market share. Large rigs remain constant at 8.1 percent of the market. In fact, when purchasing their next rig, almost 30 percent of contractors have indicted their preference for a mid-sized unit.
Before replacing or rebuilding a drilling rig, contractors average 3,440 hours of use for small rigs, 4,545 hours for mid-sized units and 7,896 hours for big rigs.
About 56 percent of the survey respondents have purchased a used HDD rig. Roughly 47 percent will consider a used rig for their next purchase.