For the past fifty years, the well servicing industry and the AESC have tried their best to estimate the number of well servicing rigs in the U.S. As the industry went through massive consolidation in the 1980s and 1990s, the task of counting well servicing rigs in the U.S. became easier, but pinpointing the exact number has always been challenging due to a number of small, independently owned well servicing contractors that may not be members of the association or do not report their rig counts publicly.
Perhaps even more challenging than estimating the number of well servicing rigs is estimating the capabilities and specifications of the roughly 4,000 well servicing rigs in the U.S. As horizontal drilling and hydraulic fracturing created the shale revolution, the industry has scrambled to build rigs to meet the new requirements of the shale industry. Well service companies in recent years have begun to market their fleets as “shale capable,” “highspec” or “high horsepower.”
As growth in shale drilling and production continues, a number of questions from producers and investors about the capabilities of the U.S. well servicing rig fleet have been asked of the AESC. Oil and gas shale producers want to know how many rigs in the U.S. can accommodate their tall BOP (blow out preventer) stacks used in complex completions. How many rigs are in the market that can technically handle the hook load to chase a lateral to 20,000 feet? Investors want to know how many shale capable rigs are in the market and whether or not the supply is adequate.
With the questions coming in to the AESC, a subcommittee of the Technical Committee was formed and tasked with creating a well service industry standard for classifying well servicing rigs. I must say, the mere thought of leading a committee comprised of four well servicing competitors along with three manufacturers who are also competitors gave me reason to question why I accepted the role of chairman of the Technical Committee. The idea that we would all agree on how to classify well servicing rigs and come to an industry standard seemed like a daunting task. Nevertheless, through several conference calls and emails, the entire committee came together to lay the framework for what is now a system for classifying well servicing rigs.
As the committee convened, we first established the two primary factors determining the capability of a well servicing rig: derrick height and static hook load (derrick capacity). Horsepower was considered, and had long been used as a measuring stick for well servicing rigs, but today’s engines are extremely versatile with the ability to be computer set from 350 horsepower all the way up to 630 horsepower, so horsepower could
not be considered.
With the two main factors being derrick height and derrick capacity, we moved forward in an attempt to divide rigs into different classes. Two of the large member companies already had internal classification systems in place, so the framework was set to see if we could agree on the minute details of each class.
We started with a separate Class I and Class II, but later determined we could combine those classes as the membership, producers and market analysts are most concerned with Class III, IV, V, and VI rigs. After some conversation about the different models of rigs and derricks built through the years, we came up with the following framework to be offered as the industry standard for classifying well service rigs. A rig must meet both the derrick height and static hook load requirements to be in a class.
To properly classify a rig, start with derrick height to see what class it fits in and then move to static hook load. Going forward, the association may reach out and ask member companies to report the number of rigs they own by each class similar to the monthly utilization rig counts that are submitted.
As with the monthly rig counts, the number of rigs in each class for each member company will be kept strictly confidential and any reporting would be for the association or industry as a whole. We appreciate all the members of the subcommittee for their work on the rig classification system.