2009 A Bumpy Road But Bright Future Awaits HDD

11th Annual HDD Survey
By Robert Carpenter, Editor | June 2009 Vol. 64 No. 6

Inevitably, for the energy industry in particular, what goes up must come down and by the end of last summer, oil and gas commodities were in a downward price spiral. Oil fell to as low as $33 per barrel by December and gas dipped below $3.50. But this energy market scenario is more complex with many different factors coming into play. Most experts expect that energy prices will rebound to a higher level and that is already beginning to happen. At press time, oil prices were hovering around $60 per barrel and natural gas had cleared $4 per Btu. A benchmark oil price of at least $70 - $80 per barrel and the corresponding gas price is considered realistic and sustainable by the world’s economy – and inevitable. At those prices, pipeline projects will go forward at an aggressive pace for several years and large directional drilling projects will reap the benefits of a healthy market.

Other market impacts

Water woes continue to plague the country and HDD has the potential to play a significant role as the water infrastructure is replaced and expanded. Notably, many small to medium rig operators have adapted effectively to public works operations and frequently either contract or subcontract installation of water lines. With most water mains pressurized, line and grade tolerances are more flexible.

But small drill side still dominates the HDD contractor – and rig – population. Telecom, electric and gas distribution remain a great match with HDD technology. The under 40,000 pounds of pullback rigs constitute 66.8 percent of the overall market followed by mid-sized rigs (40,000 to 100,000 pounds/pullback) at 24.3, and large rigs (over 100,000 pounds/pullback) make up 8.9 percent.

Contractors predict they will be able to utilize HDD on about 45.1 percent of their overall construction operations in 2009 and by 2014 will climb to over 50 percent.

Age of Fleet

As the small rig market started slowing in late 2007 and continued to contract through 2008 and into 2009 due to the recession, contractors are obviously hanging on to their rigs longer. Subsequently, the age of the overall HDD fleet is increasing. About 9.8 percent of active rigs are now more than 10-years-old; 36.4 percent are five to 10-years-old; 35.2 percent are two to 5 years of age; and 18.6 percent are less than two-years-old.