May 2012, Vol. 67 No. 5
Features
Shale Plays Boost Track Trencher Market
Oil and gas shale production plays in several regions of the United States are having significant economic impact on the areas of activity and organizations that provide the equipment and services involved in tapping these rich sources of natural gas and oil.
Major energy shale fields include Eagle Ford in south Texas, Bakken in North Dakota, Montana and Southern Canada, and perhaps best-known, the Marcellus, reported to be the largest energy shale play in the eastern United States.
While most everyone agrees the U.S. needs to achieve energy independence, activities to help achieve that goal often create issues for residents with areas affected by drilling and related activities, along with national and even international environmental concerns. That has been true of techniques used for extracting oil and gas from shale, especially the controversial technique of hydraulic fracturing (fracking).
Multiple types of equipment and the personnel to transport and operate it is required not only for energy production, but to build and expand roads, install water lines, provide a myriad of services and to construct pipeline infrastructure to gather and transport gas and oil.
Earlier this year, the Associated Equipment Distributors (AED) surveyed equipment distributors serving the Marcellus play and as-yet largely undeveloped Utica shale area. Fourteen of 15 dealers participating in the survey reported revenues they could attribute directly or indirectly to energy activity producing $356 million, an average of $25.4 million per company. From information gathered in the survey, it was estimated energy shale supports more than 570 jobs among the dealerships. Eighty-seven percent of respondents said continued growth in energy shale production would permit expansion of their businesses and hiring of construction workers.
AED represents dealerships providing a wide variety of types of equipment. For the underground construction industry, Tesmec and Vermeer, two leading manufacturers of large track trenchers, say energy shale production is significantly impacting their companies and dealers.
Bryan Blankenship, Tesmec USA national sales manager, says shale plays in North America have had significant impact on Tesmec’s business both in terms of new machine sales and monthly rentals.
Chris Lynch, Vermeer strategic business manager, specialty excavation group, said contractors doing energy shale work are purchasing, leasing and taking out short term rentals of large trenchers and horizontal directional drills they usually wind up buying.
Equipment, support growth
Blankenship explained that “we have seen a multiple of units being utilized in the shale plays throughout North America. Throughout the last year we have experienced a high level of short term and long term rental contracts from our factory-owned and supported rental fleet consisting of chain machines, saws, bucket wheels and rock machines. However, as the level of need for trenchers has increased and the market has continued to grow, we have begun to see significantly increased levels of sales throughout the last three quarters.”
Blankenship said for Marcellus shale, Tesmec is selling and renting machines equipped to dig eight-feet deep at widths ranging from 42 to 46 inches.
In the Bakken area, sales and rentals are for Model 1075 bucket wheel machines which cut depths six to 8 feet and widths of 28 to 36 inches. At Eagle Ford, trench depths are from six to 8 feet with widths 18 to 36 inches.
“In the Bakken shale,” he continued, “Tesmec has had tremendous success with bucket wheel machines, particularly the Model 1075. In the Marcellus shale we have M3 and M5 high-chain pull mechanical machines. Then in the Eagle Ford shale, we have seen a mixture of Tesmec 1075 and 1175 bucket wheel machines, and high-speed hydrostatic 1100 and 1150 chain trenchers and M3 and M5 chain pull mechanical machines.”
With increased utilization of trencher fleets and competitive machines, Blankenship said Tesmec has experienced increased demand for parts and service.
Tesmec opened a new facility in Troy, PA, to satisfy increased demand for service calls.
“We also have successfully utilized factory service capabilities and increased activity in the shale plays,” Blankenship said. “Tesmec provides service for all regions of North America through our factory service department dispatched out of corporate headquarters in Alvarado, TX. We have added to our overall head count to support our business in Marcellus shale and as the Utica area begins to develop, we plan to add more employees to service both shale plays.”
Blankenship said Tesmec perceives shale play activity in North America to be in its infant stage and expects a trend for increased activity in the coming years.
“With discoveries in Wyoming, Colorado and South Texas, the overall shale play possibilities in North America may very well be greater than previously imagined, and we are manufacturing bucket wheel and mechanical trenchers to meet the ever growing demand for both the sales and short- and long-term rental needs of our industry. We have developed alternative such as rent-to-purchase options, short- and long-term rentals, fair-market-value leases and programs with skip-payment options.”
Lifetime work
Vermeer’s Chris Lynch said many contractors view the energy shale areas as being “generational” plays — the work is expected to continue for generations.
“Work in the shale gas plays absolutely is generating business for Vermeer,” said Lynch. “There was about four years of exploratory activity, but the past two years have been intense.
“The Marcellus gas play is a very large area covering parts of Ohio, Western Pennsylvania and New York. It has varying soil conditions, some of it really hard. Trenching for gas lines started out with a lot of six-inch pipe about 6-feet deep. Today pipe diameters of 12 to 24 inches are being put in the ground at depths from six to 8-feet.
“Most trenching is being done by chain-type equipment. For Vermeer, it has been the 350-horsepower T855 and 415-horsepower T955 models weighing 80,000 and 110,000 pounds respectively. These machines are about as big as can be transported on highways east of the Mississippi River where restrictions on loads are stricter than in western states.”
Lynch said in the past two to three years, Vermeer has moved about 150 pieces of equipment for energy shale work.
“In addition to open-cut construction,” he said, “there is a lot of directional drilling, because much of the construction is in developed areas and there also are environmental considerations and restrictions affecting excavation.
Most Vermeer customers working in energy shale now operate multiple machines. It seems most will get a job or two, then quickly have two years of work, said Lynch.
“Shale plays in the northeast have created jobs,” Lynch said. “At the dealership level, people have been added to accommodate parts and service demands. Our dealer in Lumberton, NY, is putting in a new service facility nearer to the play area to better serve customers. At Vermeer in Pella, growth in the energy shale business also has required new hires to fill demand.
“We should add that the same thing is happening in South Texas with the Eagle Ford gas shale formations where there is a rapidly-growing demand for equipment. Development is moving faster here than in the northeast, because spaces are wide open and there are fewer restrictions.
“As a company, we see steady, long-term growth in these sectors and plan to do everything necessary to serve these markets.”
FOR MORE INFO:
Tesmec USA, (800) 851-5102, www.tesmec.com
Vermeer Corp., (888) 837-6337, www.vermeer.com
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