• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Less Drilling rigs- more wells being drilled

A

Anonymous

Guest
Rigs ‘walking’ in oil patch

Posted by: Lydia Gilbertson in Bakken News, Energy, Oil, Top Stories February 3, 2014 0 76 Views



By COLLIN EATON New York Times Service




Highly specialized mobile rigs are literally walking over the oil patch’s collection of aging equipment — tamping down sales and profits in a burst of efficiency that’s making some drillers victims of their own success.

Large oil field services companies deploy the pricey machines called walking rigs to grab customers from midsize drillers that have to stretch to afford replacing their drilling armadas with the new-generation gear.

But the market is getting tighter for drillers large and small, as producers embrace walking rigs — so-called for the massive mechanical feet that let them move among well sites — and other technologies that let them drill more wells and harvest more oil while spending less on oil field services.

Baker Hughes recently reported a 9 percent rise in the number of wells the average U.S. land drilling rig produced in the fourth quarter, compared with the same period a year ago.

“They’re drilling themselves out of the job,” said Tanjila Shafi, an analyst with S&P Capital.

The new rig efficiencies are among the technological advances that have revolutionized the U.S. energy scene by boosting production in once-inaccessible shale and tight rock formations.

Land drillers like Houston-based Nabors Industries and Tulsa-based Helmerich & Payne have had to replace rigs to keep up with larger rivals that are supported by high global profits and multibillion-dollar research and development budgets, said Jim Rollyson, a Raymond James analyst.

Rollyson said some new rigs can cost about $20 million — up to 20 times the rig price a decade ago.

The new mobile rigs have surpassed the older units among active U.S. land rigs, now numbering more than 650 against 500 conventional rigs, according to Helmerich & Payne. Several advances, including automation that reduces the need for rig workers and drill bits built for specific shale plays, have persuaded oil companies to discard the older models.

It’s paying off: Shale oil producers have been able to boost their output on average 600 percent for every rig they use, according to the Energy Information Administration.

That lets them cut down on oil field spending even as they collect more crude — which isn’t good news for drilling contractors.

Combined year-over-year revenue for eight major North American land drillers was flat at $4.8 billion in the third quarter of 2013 compared with the same year-ago period, and their North American sales mostly declined, Bloomberg data show.

As the industry shifts to more complex, more expensive horizontal drilling, major oil and gas producers are willing to pay more for the most efficient drilling rigs and technology available, because they save in the long run by cultivating a cost-effective process, said Ahmed Mousbah, director of marketing and business development at Baker Hughes.

That efficiency also is heating up competition among Baker Hughes and the other three largest services companies, and pushing them to reach for market share from among smaller rivals, especially in North America.

The top four in order of sales — Schlumberger, Halliburton, Baker Hughes and Weatherford International — collected an average 2 percent increase in North American revenue in the third quarter of 2013, while their international sales climbed 12 percent. Those companies also made 44 percent more revenue on international rigs than North American rigs, according to data compiled by Bloomberg.

The trickle-down from that tough environment affects fortunes of services companies’ suppliers like Tolteq, a downhole equipment maker based in the Austin, Texas suburb of Cedar Creek. Demand for what those companies make rests on the number of rigs producers use.

Tolteq, which builds technology that guides drill bits and captures geological data in oil wells, saw growth when companies began drilling horizontally in shale.

But that didn’t prevent the slowdown Tolteq saw as rig counts flattened last year, said Paul Deere, who started his business a decade ago.

Denny Smith, director of corporate development for Nabors, said the oil field services market has softened because supply has outweighed demand for more than a year, and Wall Street analysts have missed the mark several times in predicting a rebounding rig count.

Walking rigs were born of an even more prominent driver of modern drilling efficiencies — temporary rig foundations called pads that allow operators to drill multiple wells using one rig.

Pad drilling, adopted by operators in rough environments like the Rocky Mountains, spread to the Barnett shale and other plays as natural gas prices fell and cost-cutting became paramount.

It allows companies to skip the laborious steps of setting up a rig over a well site and then hoisting it off, said Patrick Hladky, president of Colorado-based rig contractor Cyclone Drilling.

Oklahoma City-based Continental Resources, the largest operator in North Dakota’s Bakken shale, said it has increased the number of wells it could drill per pad site from four to 14.

Today, more than 70 percent of shale play rigs use pads, a sign that producers know they should cut costs. Oil companies will likely end up drilling hundreds of thousands of wells over the life of a shale play, said Phani Gadde, an analyst with Houston-based Wood Mackenzie.

“In the past, you would talk about how many days it would take to move a rig,” he said. “Now they talk about how many hours it takes.”

Ultimately, oil companies hire the companies they trust, Hladky of Cyclone Drilling said. “It comes down to people and planning,” he said. “A rig is just a tool.”

“There seemed to be a significant ramp-up in spending coming, but now we have a more tempered view,” he said. Nabors’ U.S. drilling and rig services revenue dropped to $492 million in the third quarter, down 12 percent from the same period a year ago.

“You have to know which direction you’re going,” said Paul Deere, who in 2003 decided to start building and selling tools that can sketch out various measurements in an oil well.

When Deere started his business a decade ago, only a few rigs used such equipment; now, nearly every U.S. rig does. The company made Inc. Magazine’s list of the 500 fastest-growing U.S. private companies two years in a row.

Schlumberger — the first of the four to report fourth-quarter and full-year earnings — said its overall revenue grew 7.5 percent last year, more than twice the growth rate in North America.

The government has recognized the change in its number-crunching: In October, the U.S. Energy Department began releasing a report that combines the traditional rig count with the number of wells each rig drills.

Earlier this month, analysts with Cowen and Co. wrote that, based on its annual survey of oil and gas producers, spending on North American exploration and production would grow by just 4 percent in 2014. It was a disheartening sign for oil field service companies, months after Cowen’s initial projection of 8 percent growth.

And Houston-based market intelligence firm PacWest Consulting Partners last month predicted that this year’s fleet of active drilling rigs will sink 15 percent below the level in 2013, even while they bore more than 15,800 horizontal wells, the highest number ever.

Every business goes through cycles, but the constraints that new drilling efficiencies have put on smaller oil field service companies are more challenging than past problems because it’s not clear when the pace of change will slow.
http://bakken.com/news/id/75020/rigs-walking-oil-patch/
 

hypocritexposer

Well-known member
If this is news to you, or you think this is American ingenuity, you should check out a Canadian company, in Calgary, called Precision. :lol:


Calgary-based Precision Drilling delivered 18 new rigs in 2011 and has contracts on 33 more to be delivered by the end of 2012 in North America.

“These are state-of-the-art, tier one rigs that are equipped with pipe-handling systems and integrated top drives, and all run range three (45-ft) tubulars. They are designed with a small footprint in mind,” said Doug Evasiuk, senior vice president of sales and marketing, North America for Precision.



A Precision Drilling Super-Triple (ST) 1200 rig moves to the next well on a pad in the Marcellus play. The self-moving rig can move with a full setback of tubulars.
 

hypocritexposer

Well-known member
Big Muddy rancher said:
They are better for the environment as they can drill more wells on a pad and not heed to disturb as much native prairie.

I see it is old news to you too eh? :lol:

OT must have been checking out those chicks on that dating site, the year this news broke?
 

hypocritexposer

Well-known member
This new technology was probably discussed in those closed door meetings Bush had with the big oil corporations. :lol:

At that time, big oil profits were bad, but now that obama is President...
 

Big Muddy rancher

Well-known member
hypocritexposer said:
Big Muddy rancher said:
They are better for the environment as they can drill more wells on a pad and not heed to disturb as much native prairie.

I see it is old news to you too eh? :lol:

OT must have been checking out those chicks on that dating site, the year this news broke?

Not really. My nephew has been with Schlumberger for 15 years in the Directional drilling field and my son has been in the oil patch service business for a while so i hear bits and pieces. Had a SIL working on a walking rig in the Dakotas. :?
 

hypocritexposer

Well-known member
Big Muddy rancher said:
hypocritexposer said:
Big Muddy rancher said:
They are better for the environment as they can drill more wells on a pad and not heed to disturb as much native prairie.

I see it is old news to you too eh? :lol:

OT must have been checking out those chicks on that dating site, the year this news broke?

Not really. My nephew has been with Schlumberger for 15 years in the Directional drilling field and my son has been in the oil patch service business for a while so i hear bits and pieces. Had a SIL working on a walking rig in the Dakotas. :?

OT should spend less time on the dating sites, spinning tales and more time reading current news.

He sounds like the guy on another forum a couple of weeks ago that argued for hours that Enbridge Energy Partners was an American owned/controlled company. He too was pretty proud of the "American owned infrastructure" that was being built by Enbridge versus that "foreign owned TransCanada crap pipeline" :lol:

I let him know that the next time he attended a shareholders meeting, I could put him up for a night or 2. :lol2:
 

Big Muddy rancher

Well-known member
hypocritexposer said:
Big Muddy rancher said:
hypocritexposer said:
I see it is old news to you too eh? :lol:

OT must have been checking out those chicks on that dating site, the year this news broke?

Not really. My nephew has been with Schlumberger for 15 years in the Directional drilling field and my son has been in the oil patch service business for a while so i hear bits and pieces. Had a SIL working on a walking rig in the Dakotas. :?

OT should spend less time on the dating sites, spinning tales and more time reading current news.

He sounds like the guy on another forum a couple of weeks ago that argued for hours that Enbridge Energy Partners was an American owned/controlled company. He too was pretty proud of the "American owned infrastructure" that was being built by Enbridge versus that "foreign owned TransCanada crap pipeline" :lol:

I let him know that the next time he attended a shareholders meeting, I could put him up for a night or 2. :lol2:

I wonder how many realize the Vantage pipeline in running north carrying ethane to Canada from North Dakota. Helping the USA balance of trade. :)
 

hypocritexposer

Well-known member
Big Muddy rancher said:
I wonder how many realize the Vantage pipeline in running north carrying ethane to Canada from North Dakota. Helping the USA balance of trade. :)

I'm not sure those that voted for obama, like OT, realize anything. They seem to be in La La Land, not reality.
 
Top