It’s no secret that the oil and natural gas industries have suffered with the decline in prices the past couple of years. That in turn has influenced the horizontal directional drilling (HDD) market for pipeline installations.
But according to contractors and project owners, pipeline construction projects are still occurring. In fact, here are some of the biggest trends within the industry:
• Larger-diameter pipes are being installed, which require larger rigs.
• Government regulations, especially those related to drilling fluid disposal, are growing, putting stress on directional boring companies.
• Finding quality crew members is an ongoing struggle.
• Technology use is growing.
Larger Pipelines and Rigs
The midstream business drove the North American pipeline construction market for many years, but it’s slowing down. Transmission line installations are on the rise, however.
This is creating change for pipeline construction companies because the new transmission pipelines are larger in diameter at 36, 42 and even 48 inches (91.4, 106.7 and 121.9 cm), compared with the 20- and 24-inch (50.8 and 61 cm) pipelines of the past. This is happening not just in the U.S., Canada and Mexico, but also Europe.
Larger pipelines generally require larger equipment, including drilling rigs that feature pullback forces of 500,000 lb (2224.1 kN) and greater, trenchers, reclaimers and tooling. This could lead to more specialization among contractors because of the size of equipment needed to do the work—although some will purchase machines that let them get into the emerging transmission line market.
There will likely still be plenty of work for smaller rigs, such as directional boring machines with pullback forces of 220,000 lb (978.6 kN) and 330,000 lb (1467.9 kN). This size of drill is perfect when a contractor needs mobility and faster setup and teardown times for large-diameter bores over short distances, such as road crossings.
Another market for these drills, and one we might deem as the bright spot for the industry, is replacing aging infrastructure. Much of this is in developed areas where machines with smaller footprints and more mobility will be valued. These pipelines often range from 16 to 24 inches (40.6 to 61 cm) in diameter, and sometimes go up to 30 inches (76.2 cm).
If we could ask the contractors reading this to raise their hands if they thought government regulations were a burden — there’s no question, there would be a lot of hands in the air.
Regulations are a big risk to the North American pipeline market. We have the people, we have the equipment, we have the technology, we have the know-how, but regulations are such a moving target that it’s hard to plan a business around them.
It’s not just that regulations vary region to region or even city to city — it’s that they can change job to job. There’s also the permitting process, which can take years and get caught up in politics, as happened with the Keystone XL pipeline project.
Falling under the regulations umbrella is drilling fluid, a huge issue in the horizontal directional drilling market. Although drilling fluid is basically just water and a special clay, it’s treated as a hazardous material. This hits contractors hard when it comes to disposal.
In many HDD projects, drilling fluid management can account for half a contractor’s total expenses. In fact, we’ve heard stories of contractors who have walked away mid-project because the disposal process was too unwieldly and the cost too high.
Pipeline contractors are turning to reclaimers and large vacuum excavators to meet their fluid management needs. Industry associations, equipment manufacturers and colleges are studying the issue to bring more science to what sometimes can seem more like a matter of public relations. “Beneficial reuse” is an emerging phrase in the HDD world. Might drilling fluid be reused in some sort of valuable way, rather than sending it to a landfill or a water treatment plant? Possibilities include drying it on-site, using it in a farming application or incorporating it with compost.
Finding a New Workforce
Just like regulations, we don’t need to ask to know that labor is one of the biggest challenges for directional boring companies. There are a couple of things at play. One is that, like many other industries, the workforce is aging. But more pressing is the lack of skilled laborers, especially equipment operators.
However, we see this as more of an opportunity than a hardship. Now we have a chance to bring in the next generation of operators. To do this, those of us in the industry, from manufacturers to contractors to associations, need to share with high school and technical school students the message that a career working on a pipeline installation crew is a great job. It’s becoming a profession that increasingly uses technology, there are opportunities to travel, and a drill operator’s pay is probably much better than many would expect. These are all selling points that would appeal to many people starting their careers.
The Demand for Technology and Data
Speaking of technology that should soon permeate the pipeline market just like the rest of our lives. The oil and gas companies are ahead of pipeline contractors on this front, and they are starting to expect the people they work with to embrace technology.
Telematics for equipment, project planning and jobsite tools and digital reporting are examples of the type of technology some in the industry are already using and that will become more common in the coming years.
There is going to be a huge demand for data. That includes data on job performance, operation of machinery, ground conditions, tooling, the mud pump — everything you can imagine.
We also hope others will begin to adopt leaner practices to eliminate waste. This is often associated with manufacturing — think of the factory setup to minimize wasteful movements — but as pipeline project deadlines and margins get tighter, construction contractors would benefit from a lean philosophy. They can try to be more efficient in their operations, in the layout of their shops, in jobsite setup and teardown and in fleet management.
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