SAN ANTONIO, TEX.�The contract drilling industry could put more idle rigs back to work in the lower 48 US states than many imagine, the head of the US' biggest land drilling contractor said Saturday at the close of the annual meeting of the Independent Petroleum Association of America.
That increase could come "pretty dramatically, without getting into new builds and the burdensome economics of paying for them," said Gene Isenberg, chairman and CEO of Nabors Industries Inc. "There are a lot more (idle) rigs available than most people think."
The six biggest land drilling contractors have more than 300 rigs stacked that can be brought back into the US market at much less cost than building new rigs, said Isenberg. "Even a major capital cost program (for activating a stacked rig) is maybe 40% of what it would cost to bring out a new rig," he said.
"We hope we can forestall the building of new rigs that would drive up day rates. Not that day rates won't go up, but not as rapidly as they would otherwise," Isenberg said.
The combined fleets of those top six contractors represent 60% of all the land rigs working in the lower 48 states, including "all of the deeper rigs and certainly all of the stacked rigs," he said.
As the largest land drilling contractor, Nabors has the most stacked rigs�193, compared to the 190 it now has working.
While Nabors commands about 20% of the current land rig market in the lower 48 states, Isenberg said, "We have 60-65% of the incremental rigs. I can't say we planned this, but we did anticipate that there would be an increase in the demand for rigs."
He said, "We have multiple rigs available and we're going to bring those out. We're going to upgrade them with the most modern rigs possible and we're going to package complementary services with rigs. With our acquisition of Pool Well Servicing and some of our other acquisitions, we can put together a one-stop shop that will cover operation and drilling requirements in multiple locations in the lower US, Alaska and internationally."
The contract drilling industry marked "a recent high in land rigs" on Oct. 20 with 889 land rigs among the 1,054 total rigs working in the United States, Isenberg said.
That compares to the previous high in December 1997 when 864 land rigs were included in a total count of "a little over 1,000 rigs." The bottom came in April 1999, with 388 land rigs among the 488 total working in the US.
"I wouldn't be at all surprised to see our aggregate rig count go to 1,300 in the next 2-3 years. And I don't think that's going to be the end of the world," he said.