When you have fewer rigs, you have fewer rig moves

The reduction of the drilling rig fleet has spinoff impacts

Carnduff – With the drilling rig fleet in Canada having contracted by 300 rigs, and likely more in the coming years, that can be a real problem if your business is built around moving rigs, like Fast Trucking Service of Carnduff.

Dennis Day, president, said they recognized the contraction early, and moved quickly to address it. More recently, they’ve diversified both geographically and in service lines as additional measures.

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In the last year, two operations were bought into the Fast Trucking Service group of companies, each in their own way, which allowed the core company to keep more of its people and equipment working.

“Since ‘05 we bought eight companies out, and they’ve all expanded,” Day said on Jan. 17.

They didn’t buy Swift Current’s Dynamic Heavy Haul, per se, but rather hired all their staff, bought a good chunk of their equipment, and took over the rent on the shop.

“We really didn’t take the company over, but I hired all their men. When they sold their stuff at the auction, I bought a bunch of it back,” he said.

That meant hiring 35 people and bringing them under Fast Trucking. Basically everyone except the previous ownership came over to Fast. Some iron from Carnduff was sent to Swift Current to work.

“They do quite a bit of service work, moving frac tanks, hauling tubing, stuff like that,” he said.

This took place just before the 2019 Saskatchewan Oil and Gas Show in June.

The Swift Current operation is primarily rig moving and service work. There are usually around five to six rigs working in the Shaunavon area. That many not seem like a lot, but those rigs are usually some of the most consistent working rigs in the Saskatchewan fleet. While it was a bit sluggish for September and October, it’s since picked back up. “It’s busy out there now,” Day said.

“We’ve got two rigs moving here, today, but three rigs moving up there (in Swift Current) today. So we’ve got some Fast guys from here (working there). So it helps the guys and helps the customers, too.”

The operating area is south of the South Saskatchewan River, from Regina to the Alberta border.

Cara Dawn

The second operation picked up in the last year was Cara Dawn Transport Ltd. out of Regina. Dave Wellings was the owner.

“He’s been a buddy of mine for years. He phoned me and said you should take this company over,” Day said.

“There was 40 people there, too,” he said.

He had to move quickly in July, because other companies were trying to hire those men away. “I told these guys in July I would be taking over and buying some of the equipment back.”

All the staff stayed.

He went over to his friend Lenny Janz, who was working with a truck dealer in Regina, to talk to him about it. Janz asked who was going to run it, and Day said, “You.”

Cara Dawn specializes in long distance heavy haul, with oversized loads being their specialty.  

“The reason we bought it was he has all his permits in place, and whatever you need to cross the border for hauling heavy equipment. That was something Fast didn’t have. So whenever we have a big job, we can lease our trucks (to Cara Dawn).

Cara Dawn had an auction in its yard in October. “I just bought what I thought we needed,” Day said.

This meant retaining about 70 per cent of the trucks and about 40 per cent of the trailers. But now some Fast, Sam’s, and Competition Trucks are working with Cara Dawn, leased on as needed. This was a way to put men and equipment to work that otherwise may have been idle. It works the other way, too.

“Today, for instance, there’s five Cara Dawn trucks in Swift Current helping the Swift Current guys move rigs today.”

It was essentially a diversification out of the oilpatch. “Big time,” Day said.

“I’m not operating against people doing flat decks, working for nothing. This is all specialty stuff. They haul D10s. We just hauled a Cat 24 grader that weighs 240,000 pounds. We’ve got 60-wheel trailer combination.”

Another reason Fast took them over Cara Dawn is the fact it does a lot of work associated with Ritchie Bros. auctions. That’s a natural fit. “We are huge supporter of Ritchie Bros. sales,” he said.

There’s a lot of work hauling items to sales and away from them.

Contraction of rig fleet

Dennis saw the writing on the wall with the oil price collapse at the end of 2014, and he talked to his father, the late Tony Day, about it. “I saw it right away. I went and talked to Tony about it in January of 2015 and said oil is going to US$40 a barrel, and we might as well sell at least a third of our older fleet, when the prices are still reasonable at the auctions, and the next four or five years, we’ll be buying new stuff at half price.

“That’s exactly what happened,” he said.

He said in early December 2014, he warned their staff, “Oil is US$68 a barrel, and it’s going down to the low 40s.”

He saw a contraction of the fleet in the 1980s, and again in 1998. “You’ve got to look at ’85, ’86, there were 40 rigs working here. That was a pretty big boom. And then it went down to 20, and then it went up with the Bakken play.”

He showed a sheet from 2008, with 73 rigs working in southeast Saskatchewan and southwest Manitoba, combined. And many of the companies on that list no longer exist. “Lakota’s no longer around. There’s no Totem, no Eagle, no Red Dog. There’s no Trinidad anymore, because Ensign took them out.”

“Out of 16 companies in 2008, eight of them, half of them, are non-existent,” he said. 

Many rigs have been sitting since the downturn hit. “The sad thing is, those engines are worth a lot of money. But you keep thinking, in a month it’ll go to work. Next year, it’ll go to work. After road ban, it’ll go. And it just kept going.”

A fleet that’s shrunken by half only needs half as many rig movers. “Or less,” Day said.

There’s 30+ rigs working in southeast Saskatchewan and southwest Manitoba. “If we can stay like this, it won’t be too bad,” he said.

“We’re about the right size, because 15 of the trucks that were parked out back went to Swift Current. Another six are working out of Regina.”

The first quarter looks good for Fast, and Day has been encouraging oil companies to do more work in the second quarter. It hasn’t been wet in the region in the second quarter for six years, he noted.

There’s quite a bit more pad work, he said, but pad drilling means much less in the way of rig moving. “There’s lot of multiple pads now. We’ve really seen that since the downturn, more pad work, from here to Alberta. There’s a lot of pad work in Swift Current. We have two moves tomorrow, and they are skids.

“None of the rigs here walk. They just skid them. But it only takes a truck push, one bed and a tractor to usually move it. So instead of sending eight trucks to move a rig five miles, you’re sending three, and instead of getting eight hours, they’re getting four-and-a-half hours.

Rigs for sale but not moving

Tony Day had started buying rigs in the 1980s, and they wheeled and dealed in that market for many years, through ups and downs. “We could buy cheaper than anybody else because we had the trucks to haul it,” he said.

There’s about a dozen rigs in the yard for sale. The most recent acquisitions, made in Houston, didn’t work out as planned. “I thought we could flip it, but we didn’t,” he said.

Some were bought back in 1997-1998 for scrap iron price, and then sold as a premium. But others were purchased, and haven’t sold. Some might end up as scrap.

“In the last few years, everything’s changed. People want top drive rigs,” Day said.

“It’s all saleable, but there has to be demand.”

“Most of the rigs are super singles or tele-doubles around here,” he said.

“It seems like the ADR (advanced drilling rigs) and tele-doubles have more of the market, because that’s what was being built.

“I’ve already got a surplus of equipment. I don’t need to buy anymore,” he said.

There’s not much of an overseas market for older rigs, either, he noted as they are often looking for bigger rigs. “I’ve had guys come from Dubai, Russia, come look at rigs here. I’ve sold some trucks to Russia, but not any rigs,” he said.

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