July 1, 2008As 2008 continues to quickly roll by, the horizontal directional drilling (HDD) market is keeping pace with projects across North America — demanding its technologies, techniques and equipment to complete installation projects for a variety of clients in a spectrum of industries. With professionals describing the market as “strong,” “vibrant” and “growing,” the first half of 2008 has been busy for HDD, and there’s a great expectation that the HDD industry will continue to flourish into the latter half of the year.
“One of the things creating the strengths for the industry is the worldwide acceptance of HDD as the method for installing underground utilities,” explains Richard Levings, senior product manager for trenchless products for Ditch Witch. “Utilities of all sorts — gas, electric, telephone, cable television and water — are all using HDD technologies.”
Similar to 2007, the use of HDD technologies in the telecom market is remaining steady. With cities and individuals itching to increase their Internet capabilities, HDD is being used to install these fiber networks and satisfy the growing demand for Web services.
“The telecom work seems to be stable when compared to last year. There are several fiber projects in progress,” says Ed Savage, trenchless segment manager for Vermeer. “This work should continue as consumers want faster and better Internet access.”
Competition in the telecom market has also helped HDD flourish. With different companies vying to offer the best Internet, telephone and cable television packages, the need to expand their services using HDD methods is growing.
“There is a strong fiber-optic push and the communication companies are fighting with each other — whether it’s a telephone company fighting for cable TV and Internet service or a cable television company hoping to offer telephone or Internet service, there’s this race to expand services that’s driving the installations. We’re in a fairly good economy for upgrading services because there’s a strong competition between these companies,” adds Levings.
As for the water and electrical utilities, Levings agrees that the work has remained stable for 2008. With the need to replace and update aging sewer and water infrastructure, the water sector of the HDD industry is commanding attention and work from contractors.
Electrical work has been steady so far this year, with more cities wanting to put their infrastructure underground, says Savage. In recent years, cities have pushed to put more and more of their electric utilities underground rather than overhead.
The need for HDD work in the energy industry is increasing as the need to transport gas and oil are rising. For example, natural gas pipeline extensions, replacements and installations are being constructed all over North America, every day. New methods of drilling techniques are also opening more doors for HDD to be used.
“The energy work has increased compared to last year,” says Savage. “New vertical drilling techniques have enabled companies to access gas and oil reserves that were not feasible to extract several years ago. As new vertical wells are drilled, it drives the need for more horizontal transport lines, which helps drive the HDD work.”
Tracking the Trends
Perhaps the biggest trend the HDD industry is seeing is the need and desire for longer bores and larger diameter product. According to Grady Bell, Laney Directional Drilling Co. in Humble, Texas, and chairman of the Distribution Contractors Association’s HDD Committee, the amount of large HDD work, 36 and 42 in., is tenfold from what it was more than five years ago.
Trends in the equipment being used on HDD projects are also emerging. For example, Savage points out that upgrading to newer machine models is currently in strong demand. Contractors also fancy the latest creature comforts equipment manufacturers have to offer including climate controlled cabs and Auto Drill functions.
A push in demand for geothermal work is also becoming more present in HDD work. As a means of dealing with high-priced, petroleum-based energy, geothermal systems are appearing more often and HDD is used to install these systems.
“As the cost of gas, propane, etc., increases, it forces us to find better ways to preserve energy and geothermal is one way to do that,” says Levings. “HDD is a very acceptable practice of installing geothermal systems. The higher the price of diesel fuel gets, the less likely we’ll see the transportation of liquid in tanker trucks and pipelines will become more efficient. Installing these pipelines would be done with HDD.”
As in previous years, finding experienced and willing workers in the HDD industry has been difficult and 2008 is facing the same challenge. With HDD work increasing in the United States and projects spanning across the country, companies are finding it increasingly complicated to fill their crews with qualified workers.
“There’s a shortage of experienced workers and people willing to travel in the construction industry,” says Bob Johnston, vice president and division manager of Henkels & McCoy Inc. and president of the Pipe Line Contractors Association (PLCA). “Everyone needs more people with experience.”
Levings adds that companies looking to expand in size or broaden the scope of services they provide may also face difficulty when looking to add employees capable of doing specific work.
In order to draw in and encourage workers to enter the field, HDD companies are adding incentives and proper training to attract employees. For example, Johnston notes that companies are paying more for an experienced crew. HDD equipment manufacturers such as Vermeer and Ditch Witch even provide training courses for contractors and crews to become accustomed to the machinery a project demands.
“We continue to provide several training events yearly for both end-user customers and our worldwide dealer network, so that they can train the end-user customers,” says Savage.
Levings adds: “Our dealers have a very good training program. Most of them have training seminars multiple times a year. If a new crew comes on a new unit, our dealers will go out and spend time training the new crew. We rely heavily on our dealers and that’s why they’re there — to have point-to-point contact and expertise out in the field.”
Evaluating the Economy
As talks of a weakened economy make daily headlines across the United States, HDD professionals must look to how the economy may affect business for 2008 and beyond. With the rising prices on equipment, fuel and other project necessities, the total cost of a project can be expected to increase to accommodate to the shift in the funds needed for completion.
“The economy is driving the cost of HDD,” says Johnston. “There are rigs available, but you have to plan your work in advance to get the size of rig you want, and the cost of fuel is driving the price of HDD up because it just costs more to operate.”
One of the biggest economical factors affecting the HDD market is the rising cost of fuel — both for getting to and from a jobsite, as well as operating the necessary equipment.
“Increased fuel costs impact almost every aspect of an HDD project, from the additional cost to operate the equipment, to the increased shipping costs, etc.,” explains Bell.
Aside from the ever-changing fuel prices, the way HDD clients spend money may change due to the struggling economical situation the United States faces. With budgets and incomes shrinking, the funds necessary to install utilities using HDD may become depleted.
“The price of oil is going to potentially affect the worldwide economy, not just in the United States, but all over,” says Levings. “There are still spots that are doing well and will continue to do well. However, there are some questions we ask about the market. For example, will people have disposable incomes for installing fiber-to-the-home networks? Or will the utilities continue to have the revenue to update and revamp their existing networks and structures? Those are all factors that will affect the market and the amount of HDD work.”
With 2008 shaping up to be a promising year for the HDD market, the future of the industry looks promising. Professionals in the HDD market agree that the industry can expect to experience more growth and development as it continues to become an accepted practice over open-cut methods.
“The future looks bright for the HDD market,” says Johnston. “With all of us trying to protect the environment, it’s a good time to be in the HDD business. We can drill under sensitive areas, buildings, parks, freeways and wetlands that we couldn’t do before. It has helped push through some projects that probably wouldn’t have gone except for the ability to use HDD.”
Pam Stask is an assistant editor of Trenchless Technology.