Flush from the recent boom, operators and service companies alike have been buying back stock and reinvesting in infrastructure. Some say that US operators face reduced prospects of investing internationally as national oil companies take on more upstream work and countries scale back lease offerings. This is probably one of the factors behind the big push to develop shale gas and unconventional plays in North America, in and of itself an intriguing phenomenon to follow.

For drilling contractors, reinvesting means upgrading the rig fleets.

Much has been written about the record-breaking numbers of construction of deepwater rigs under construction.

The available US land rig fleet includes about 2,500 rigs (600-hp or greater), and various sources estimate that 75% of the fleet is refurbished rigs initially built from the 1940s to 1982. Despite building programs that introduced efficient AC-powered rigs in the last few years, only 14% of the US fleet is AC-driven newbuilds.

Building land rigs

US land daywork margins dropped steeply from fall 2008 through most of 2009, although rig activity picked up in the middle of the year.

Three of the big five land drilling contractors — Nabors Drilling, Helmerich & Payne Inc., Patterson-UTI Energy Inc., Precision Drilling Services (Grey Wolf), and Unit Drilling Co. —continue to build drilling rigs.

Houston-based Nabors Industries is building new rigs and refurbishing older rigs at its yards in Crosby, Texas; Oklahoma City, Okla.; New Iberia and Harvey, La.; Calgary and Edmonton, Alta.; Dubai and Sharjah, UAE; and Guanghan, China (cover photo).

Tulsa-based Helmerich & Payne Inc. has built hundreds of FlexRigs in the last decade and is now on a fourth generation version that targets a shallower well depth market. At the recent Goldman Sachs Energy Conference (mid-January), H&P said it has more than 100 rigs working under term contracts, with the remainder in the spot market, and incremental activity is mostly geared toward unconventional plays.

H&P will finish building three new rigs (with contracts) for its US land fleet by this April. The company expects its total fleet to grow to 261 rigs in 2010, up from 77 rigs in 1997. Nearly all of the expansion has been in the US land fleet.

Houston-based Patterson-UTI has been building new advanced-technology APEX rigs, adding at least 16 in 2009. The new rigs are working under term contracts and are being deployed to shale and unconventional resource plays.

In December, Calgary-based Precision Drilling announced 2010 capex improvements of US $71.4 million to include upgrades to some of its Super Series rigs. The company does not plan to build any new rigs in 2010 but will decommission 38 of its least-efficient drilling rigs (26 in Canada, 12 in US). After decommissioning, Precision’s rig fleet will number 352.

Tulsa-based Unit Corp. announced $49 million capex allocation for contract drilling in 2010. The company will focus on refurbishing and upgrading drilling rigs, converting mechanical to electrical and adding top drives and larger mud pumps. About 75 rigs in Unit’s fleet of 130 rigs are still mechanical, and no newbuild AC rigs have been added in the last several years.

IADC/SPE conference

The International Association of Drilling Contractors annual conference takes place in New Orleans early this month, covering most aspects of well construction. Speakers from around the world will discuss integrating new technology and new materials, using tools and techniques that add value and reduce non-productive time, innovating to improve drilling performance, working in deep water, and drilling deep wells, sometimes through a lot of salt.

And that’s all in the first day.

Automation

From dedicated sessions to individual papers and posters, automation is a recurrent theme at the conference.

SPE’s Drilling Systems Automation Technical Section, chaired by John Thorogood, is sponsoring a half-day meeting on Feb. 1 preceding the conference. It will include a panel session on the business value of automation followed by an open-floor discussion on barriers to and drivers toward automation.

Drilling Automation is the subject of a full technical session on the second day of the conference Feb. 3. The topics include closed-loop control of remote operations, an automated drilling pilot program, “fully” automatic pipehandling systems offshore, and automation of drawworks and top drives.

The final session of the three plenary sessions is devoted to “Automation: From pipe dream to practicality.” Why is drilling automation still seen as “futuristic” when so many other industries were mechanized long ago?

See you in N’awlins.