It is a different landscape than it was a year ago.
Since the global financial collapse in the fourth quarter last year, commodities have remained volatile, mine operations have been shuttered, suspended, or sold, and industry investment slowed to a trickle, producing a predictable strain on drilling contractors.
Remaining mineral exploration projects have shifted to only the highest potential targets, leading some contractors away from low-demand minerals like nickel, while others have turned to adjacent markets, like coal bed methane and water well drilling projects.
Markets that utilise compatible drilling methods and do not require massive rig conversions have become attractive alternatives for those unable to keep rigs turning during the global recession.
The severe economic conditions have also generated a significant increase in competition.
With far fewer projects undertaken, those that are awarded contracts have often been forced to bid at rock bottom prices.
With rates hovering around levels not seen since 2000, some contractors are even taking jobs at cost, just to keep cash flowing through their business.
With a smaller margin on contracts, productivity is at a premium.
While avoiding downtime on projects has always been a critical issue, today’s environment has heated this simmering issue to a boil.
Contractors feeling the pressure to produce know that clients have many other options if safety is compromised or machine operation goes awry.
Indeed, even before the mining industry was hit with economic difficulties, mine operations had begun paying much closer attention to contractors’ safety records.
Today, this is one of the most critical components to winning new business and carrying each contract through to its successful completion.
Parts and safety
While many have recently trimmed inventory and downsized to essential services only, some contractors have kept non-productive rigs, opting to use them for spare parts on the rigs they still have in the field.
Rig cannibalisation allows contractors to ‘float’ the cost of aftermarket parts and service by stripping rigs not employed on an active contract.
Still others continue to refurbish old machines or make repairs to active rigs with non-genuine parts that often can be obtained at a much lower cost to the contractor.
While these may seem like viable alternatives for cash-strapped contractors, they can create major problems.
True, rig cannibalisation fills an immediate need, but in the long run, it can handicap a drilling contractor, leaving them unable to support an increase in business.
When the pace of business does quicken, the drilling contractor may be stuck with a major repair bill, and be forced to swallow the cumulative cost of parts incrementally removed from the cannibalised rig.
In addition, non-genuine parts, while more affordable upfront, are often costly in the medium to long term.
Created by ‘reverse engineering’ genuine parts, these components are the product of copying the design of leading technology, often using cheaper materials and inferior manufacturing processes.
These parts leave a drilling contractor exposed to critical failures on the jobsite, increasing downtime and safety risks to drillers and putting the contract in jeopardy.
Even in a down economy, smart rig maintenance and strategic parts support play critical roles in creating a safer working environment and maximising uptime on the jobsite.
Given the remote operation of many exploration projects, parts availability has long been one of the most critical issues facing the drilling contractor.
To date, manufacturers have addressed this issue through the utilisation of industry standard components, vast dealer/distributor networks and strategically placed parts warehouses — all in an effort to keep the parts close to the end user.
In addition, industry leaders are also now making better aftermarket kits available that encompass common repairs.
Local technical support and increasingly robust product training have also become standard practices.
For their part, drilling contractors have responded by implementing more advanced operator training and maintenance procedures of their own.
While some smaller operations continue to practice ‘ad hoc’ maintenance, larger drilling services organisations have begun implementing more sophisticated maintenance planning, including machine history files and better records of service.
While these measures continue to streamline machine maintenance and reliability, the integration of electronics into drilling rigs and systems holds perhaps the most promise for the future of rig maintenance and aftermarket services.
Perhaps the biggest change in both rig technology and maintenance has been experienced in the introduction of PC-based systems to control many of the increasingly automated aspects of rig operation.
Together with CANBUS electronics, these digital interfaces are beginning to replace the standard gauge and lever setup, more accurately monitoring rig and component performance.
Rigs equipped with the most advanced electronics available can provide real-time data acquisition, transmitting performance statistics to engineers and field supervisors via satellite anywhere on the planet.
In addition to providing more efficient and accurate drilling, this technology also helps operators more quickly identify and resolve issues with performance.
Rigs equipped with this smart technology provide self-diagnostic capability, quickly recommending repairs and necessary parts.
Onboard electronics can walk the operator through a troubleshooting procedure step-by-step, and guide them to the correct part number needed, minimising downtime.
These systems can also keep track of scheduled maintenance, alerting operators when it is time to make routine changes to oil filters and fluids or larger maintenance events involving engine or hydraulic servicing.
By continuously monitoring critical parameters on the jobsite, these control systems can even prevent common mistakes that cause damage to machine components, rods and other consumables.
As electronics continue to develop, they will stimulate greater efficiency and a higher degree of safety by requiring fewer and fewer operators to directly interface with the rig for normal operations or common maintenance procedures.
By automating many routine activities, drilling contractors will have more accurate and reliable performance with less downtime; and that is important in all economic cycles.
*Brian Patience is Boart Longyear’s Asia Pacific Service Manager, and Ron Hankins is the company’s Capital Spares Global Product Manager.