Maxi Rig Market Update: How Are Things Going for the HDD Industry’s Largest Machines?
Maxi rigs are the big boys of the horizontal directional drilling (HDD) market. They are massive in size and the projects they work on regularly attract the headlines and industry coverage. This segment has sort of been the glamour rigs of the industry, with their ever-growing bore lengths and machine sizes.
The purchase of a new maxi size rig can easily be the single-most expensive purchase a contractor can make as the rigs reach sizes of more than 1 million lbs. Given this, how is today’s maxi market?
Over the last few years, the work for maxi rigs has been up and down, reflecting the oil and gas pipeline market. While oil and gas production is booming in the Unites States, the one area of concern has been, and continues to be, pipeline capacity and acquiring permitting for such projects. System owners are trying the best they can to gain federal approval for projects like the long-stalled U.S. portion of Keystone XL in the United States. Owners are also dealing with permitting challenges from state governments in the Northeast, preventing capacity upgrades and creating a bottleneck for energy supplies. In Canada, there is much excitement as the National Energy Board gave its approval for the much-debated Trans Mountain Project to proceed.
We checked in with a few of the maxi rig manufacturers for perspective on how the big rig market is faring. Here’s what we found out.
“The maxi HDD industry is strong and looks to remain strong in the near future as new energy sources are developed around the globe. A focus on reducing the environmental impact of new construction should continue to drive the need for HDD systems. The utilization of maxi HDD systems has been very steady through 2019 and looks to continue that pace into 2020. The oil, gas and petro chemical industries are driving the bulk of the work for these systems,” says American Augers product manager Richard Levings. American Augers offers maxi systems that range from 110,000 to 1 million lbs.
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“The market is at an interesting crossroad. You are looking at two distinct groups. Customers who have lots of work and a significant group with very little work. Government regulations continue to be a significant negative effect. For quite some time we have all heard this run will be epic. Unfortunately, we still haven’t got to the point where it has become evident,” says Prime Direct principal Bill Brennan. Prime Direct builds rigs from 180,000 lbs push and pull to 1.8 million lbs of push and pull.
“Those of us at Vermeer would describe the maxi rig market as robust. Many of the markets maxi horizontal directional drills serve are busy, including oil and gas rehabilitation, electric transmission, and water infrastructure. There is also a fair amount of gas pipelines infrastructure in development to move LNG to global market distribution points as well as replacement of coal for electric power production,” says Tod Michael, product manager-trenchless products at Vermeer Corp., which offers seven maxi rig models in its showroom.
“The maxi rig market has grown over the last three years. A lot of the growth is coming from many projects for gas and oil pipelines,” says Max Khodorkovksiy with Universal HDD, which manufactures four maxi rig models. “With relaxed regulations in the oil and gas industries, the maxi rig market will continue to grow. However, it will not see the same growth as the compact market. [This is for several reasons,]: much smaller number of companies working with maxi rigs, level of difficulty for maxi rig projects is much higher and the maxi rig market is very sensitive to government regulations.”
Khodorkovksiy estimates that the maxi rig sales have grown on average between 10 to 15 percent over the years, with the last three years being close to 15 percent. He says the breakdown between new and existing customers to be 60-40 (new to existing). Michael agrees that sales have been “robust” for most HDD suppliers. “We have a mix of small utility customers that continue to invest in larger equipment to help diversify their business and a fair amount of maxi rig customers that are replacing their equipment with new models, as well as expanding their fleet,” Michael says.
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Where is the work being done these days, especially in North America? Our panel notes large projects being done in Wyoming, Colorado, Texas, Pennsylvania, Ohio, West Virginia and Oklahoma but that the work is going on around the globe.
“While Texas, Oklahoma and Wyoming seem to be where the bulk of the projects are, it should be noted that nearly every state has work for maxi HDD systems, driven by energy markets,” Levings says. “Mexico has had steady work and Canada has major projects coming on stream.”
Michael agrees, adding that the work in South America and Latin America is also strong. “In South/Latin America, Argentina has invested $4.1 billion to support the Vaca Muerta oil and gas shale basin pipeline project, and an additional $1.6 billion is expected in 2020. Chili has a water pipeline project going on that will move ocean water to the mines in the eastern portion of the country. Additionally, there are several projects happening in Columbia, Panama, Mexico and the Dominican Republic,” he says. “In Asia, oil and gas are the primary market drivers with projects happening in Thailand, India, and China. There is also a water project in process in New Zealand.”
Today’s Maxi Rigs
The maxi rigs of 2019 are, of course, large — with some systems well beyond 1 million lbs — but have evolved with today’s technology. The biggest difference for these rigs is the incorporation of electronics. Once considered a luxury item, the digital footprint is commonplace.
“From the ability to track and diagnose problems, we also can make significant changes to the operation simply connecting to a modem,” says Brennan. “Our customers can sit in their offices and watch live activity and track every aspect of the bore.”
The transition in recent years from analogue control systems to digital control systems has been important to meeting the needs of today’s projects. “This has been necessary to meet the communication and reporting needs that plant owners are requiring,” says Levings. “It enhances the system by allowing operators to set the rig parameters to the job specifications. Additionally, it allows remote diagnostics and often correction to keep the system in operation.”
Michael adds, “We have seen reduction requirements for engine emission requirements to reduce jobsite noise, increase operator comfort and power to footprint changes. Additional changes have been made to increase torque, mud capacity and help keep the jobsite cleaner.”
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But what are today’s customers looking for in a new maxi rig? Have their needs changed along with the technology used to manufacture these systems? Bells and whistles are important, as is the latest technology but those are the first things that customers seek. Words that pepper the conversation include “reliable,” and “support” are usually at the top of customers’ lists.
“Contracting companies are looking for reliable, productive drills and support equipment that is easy to operate,” Michael says. “They also need dependable field service and parts support for the equipment they operate.”
Khodorkovksiy adds that power is also a key issue for maxi rig customers. “Power is always an important factor with maxi rigs, because project requirements can vary a lot in that category,” he says, noting that size and easy to transport are also considerations.
Levings makes this point about “customized” rigs in today’s rig market: “Historically, maxi HDD systems were custom built to each contractor’s needs. As the market has evolved over a 30-plus year time frame, system manufacturers have incorporated many elements the contractors require into their basic designs.”
Final note to potential buyers for buying the right rig. “When choosing which machine is right for their crews, contractors should consider where they are working and the expenses for transporting their equipment throughout their working territory,” Michael says. “A trailer rig can be dissembled into standard or compliant loads to avoid “super load” permits which can be expensive and potentially difficult to procure. Conversely, the configuration and/or terrain of the jobsite may require a crawler rig that can be tracked into position. However, depending on the weight and or dimensions of the rig it may be more expensive to transport the crawler rig from one site to the next.
Ultimately contractors need to consider all these factors and how they will impact their operation, before purchasing a rig, he says.
Sharon M. Bueno is managing editor of Trenchless Technology.