2020 was the year of COVID-19 and worldwide pandemic lockdowns. Being an essential service, work in the horizontal directional drilling (HDD) market continued.
We’re more than halfway through 2021 and as North America and the world continue to emerge from a COVID-19 haze, the work of the horizontal directional drilling market played through it all. For the maxi rig segment of HDD, it’s been an interesting 18 months as the big rigs are trying to withstand the downturn of the oil and gas pipeline market — a downturn that won’t see a quick recovery.
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. Owners are also dealing with permitting challenges from state governments in the Northeast, preventing capacity upgrades and creating a bottleneck for energy supplies. The widely-publicized Keystone XL pipeline project made headlines in January when on his first day on the job, President Joe Biden revoked the project’s permit. On June 9, TC Energy, the project’s owner, announced that it terminated the project.
The loss of this market segment definitely hurts the maxi rig sector but it’s not a knockout punch. But where does the maxi rig market go from here?
We asked a few maxi rig manufacturers for some perspective and insight into what the big rig sector of the trenchless industry is experiencing and will continue to experience for the foreseeable future.
“From our vantage point, it appears that the maxi rig market has dropped off a bit in 2021 in comparison to 2020. The Keystone XL pipeline project cancellation has sent shock waves through the energy construction market,” says Thomas Schmidt, vice president of business development at Barbco. “A properly focused Infrastructure bill that truly looks at America’s tangible infrastructure needs such as roads, railways, sewers, pipelines and energy would be a huge boon to our industry. Moreover, the growing green hydrogen market will necessitate a boon in new pipeline construction.”
With the oil and gas pipeline market struggling, this has opened the door for maxi rig contractors to pursue other utility work, such as underground water and electrical projects. “In 2020, the maxi rig market was able to continue working [during the pandemic] on a few essential electrical and water installation projects. Today, maxi size level projects are on the rise and the demand for energy, electric and renewable resources continues to drive the market. “This is true in more urban areas where maxi rigs are utilized as the key piece of equipment for water installation,” says American Augers product manager Richard Levings.
Vermeer pipeline sales manager Andy Bremner shares this perspective: “The movement toward renewable energy and the cancellation of some major projects like ACP, Keystone XL and the Jordan Connector have significantly impacted the industry,” he says. “These factors have had an impact on the number of larger drills being active in the market. However, the most recent EIA forecast projects fossil fuels to remain a critical portion of the energy matrix out to 2050.”
With the oil and gas downturn impacting the maxi rig work, new opportunities for big rig contractors and manufacturers have risen up. Contractors are diversifying the types of work they are bidding on, turning their attention to a plethora of large diameter projects.
“The petrochemical sector, water and municipal and overhead transmission lines going underground will help support the maxi rig market,” Bremner says. “In addition, there is growing optimism for the maxi rig market in developing sectors, like offshore wind, carbon capture and sequester, as well as hydrogen from a long-term perspective.”
Levings concurs, noting the market is seeing more and more big rig projects move into urban areas, bringing more challenges and congested jobsites. These challenges include equipment size and weight restrictions. But the compact project sites just don’t have the space for the extra water, tools, pipe, excavators and other construction equipment. Levings says advancements in maxi HDD techniques continue to evolve to meet these challenges.
“Today’s projects are usually broken into smaller installation lengths so operators can use a more compact system,” he says. “And with advancements in HDD technology and next generation stat systems, operators can gather and use real-time data to manage their equipment and optimize their jobsite. These systems help users manage space and equipment, diagnose remotely, schedule maintenance and repairs and improve overall productivity.”
2021 is a Utility Expo (formerly ICUEE) year, which means new equipment for the construction market will be unveiled. What are some of the trends we might be seeing? We’re hearing there will be a focus on telematics and data collection to guide more precise, data-based decisions.
“[There is] a continuing desire for improved equipment efficiency and utilization [that] is driving a greater focus on data and fleet management,” Bremner says. “This includes machine health metrics to help contractors be more proactive with maintenance.”
He adds that contractors are re-evaluating their maxi rig fleet needs so they are ready to go for the work they do have. Are they adding to those fleets, and if so, what do contractors and fleet owners need to consider when eying new equipment?
Schmidt recommends looking for flexibility in the machine. Bremner reminds us that having quality personnel in place is an important part of the equipment equation, along with a proactive maintenance schedule to support and service your new equipment for consistent productivity. Levings suggests developing a business plan and hiring an experienced superintendent to lead that side of the business.
“There are a lot of moving parts to a maxi HDD drilling system, both in equipment and personnel requirements,” Levings says. “Your maxi rig manufacturer and local dealer representatives can assist in understanding those differences. Adding capacity to your business successfully will allow your portfolio to grow by diversifying your customer base or meeting your existing customers’ growing needs.”
As Schmidt notes above, all eyes are on infrastructure and the bill being negotiated in Congress, as we go to print. The short- and long-term outlook both point to a diversified maxi rig market and a smaller carbon footprint to get the work done. HDD is perfect for this work, our experts say.
“As the industry continues to focus on reducing the environmental impact of new construction installation, the need for less invasive solutions like HDD continue to increase,” Levings says. “The utilization of maxi HDD systems has been very steady through recent years and looks to continue that pace into the future.”
For Bremner the word is diversify. “Contractors also need to have a solid strategy for acquiring contracts beyond their current opportunity/project,” he advises. “It is increasingly important to diversify across markets, including liquified natural gas (LNG), power transmission, municipal/water and renewables, to provide additional opportunities once that immediate project is completed. They should also factor in ancillary equipment costs, including drill pipe, pumps, cleaners (possibly multiple), tooling, excavator/rod handling equipment and steering resources when investing in new equipment.”