Hello to readers of GeoDrilling International from a cold Southern Australia now smack bang in the middle of our winter. We are also seeing plenty of rainfall, which is great for the farmers here, however, Eastern Australia remains in a prolonged drought period, which is causing a lot of hardship for many people on the land there. Waterwell drillers around the country report that work is spasmodic and piecemeal at best, so the drought is not doing a real lot to help them either.
Those with exposure to the mining industry are seeing better prospects. However, the business and equipment compliance levels can be much higher for anyone wanting to work in that sector.
Working for one of the major miners is therefore realistic for the larger drilling contractors but is out of reach for many smaller drilling contractors. While some others just don't want to go into that space because they can't be bothered with the amount of time and cost it takes to work through the compliance, to begin with. Just responding to a tender can consume the time of a contract specialist for several weeks and that person will likely need to call on other departments to assist. If the tender is not won, this is time and money largely wasted.
Over the last decade or so, the mining majors have mostly been responsible for driving the changes that we have seen implemented on drilling rigs, best represented by automated rod handling and remote operated controls. These are major operational and safety developments that have improved the welfare of the drill crew for the better. Other types of mandatory requirements include things such as sheave wheel counters, winch cameras, fire suppression systems, guarded and coded hydraulic hosing, certified hand railings and ladders, engine guards and cowlings and maintenance inspection points.
One thing that is often lacking though is consistency between different mine-sites, whereby a contractor could be working for the same parent company but two of their mines have differing equipment requirements.
This can be a bewildering situation and also cause delays to equipment mobilisation resulting in higher costs for the contractor. Contractors who plan things the right way will ensure that they get a rig and equipment audit completed by a client representative prior to arriving at the site, thus allowing any last-minute work to be completed at their own shop. Also, it prevents the drill crew from arriving on-site and not being able to go to work.
Another area of frustration is the inconsistency in crew inductions. Stories abound of drilling contractors working for a customer on one lease and then crossing the road to go and work for the same customer on a different lease and then having to have the drill crew sit through days of more inductions. This is not so bad if the client is paying for it, but it will still not likely return the same to the business compared with if the rig was operating.
Professional procurement teams usually know nothing about drilling...
By far the biggest bugbear, currently, is payment days, with procurement departments wanting to push this out to 60 and even 90 days. In recent years we have seen a switch whereby there used to be relationships in place between the geology and exploration teams and the drilling contractors, to where now there is often no relationship. Professional procurement teams usually know nothing about drilling and are there simply to achieve the best result for the company, which not surprisingly is the lowest price.
The expectations are that any contractor who has prequalified to tender already satisfies the compliance requirements. The origins of this practice came into effect at the end of the last boom when mining companies needed to slash their costs and drilling contractors were expected to accept some hefty rate cuts over consecutive years.
Combining the various factors of having to invest resources to make equipment compliant, the work needed to put extensive documentation in place to cover off on audit needs and then wait for extended periods to get paid at the end of it all, it is not surprising that it is only the larger companies with deeper pockets that can conduct this work.
Once set up, this does have its positives, as many of our larger contractor members who work for the majors are now reporting high utilisation of their rig fleets. This is good news and in cases where better payment terms can be negotiated, it is even better.
On the flip side, many of our smaller sized members are doing it harder with lower rig utilisation due to the lack of funding going into the junior and greenfield exploration sectors. This is resulting in fewer holes being drilled and more competition for what work is available, which is also keeping contract rates low with no increase seen for several years.
There is no sign yet that this is changing and, therefore, we expect to see this "two speeds of industry" carry on through to the remainder of 2019 at a minimum.
On a different note, I would like to make mention that the Australian Drilling Industry Association (ADIA) is now distributing the Drilling Manual 5th edition globally, as the relationship that was in place with an external publishing company in the US has now ended. This comprehensive 750-page technical manual is often referenced as the "one to go to" for the drilling industry for techniques and procedures covering off on all types of drilling operations. It was produced by the ADITC and has been regularly updated as drilling technology has advanced. For more details please visit ADIA's website at www.adia.com.au
Lastly, I am pleased to advise that the DRILL 2019 conference being held in Darwin in September, is shaping up to be both informative and enjoyable for those who attend. ADIA holds a major conference only every two years and it is therefore always a great opportunity to reacquaint with colleagues who share the same interests.
The conference theme is "Drilling down on skills", which we considered apt because of the skills challenges the industry is experiencing. We have an excellent array of speakers lined up, as well as a sold-out exhibition, all to be held in a warm, tropical location. What's not to like about that?
VIEWPOINT
News from Down-under
Peter Hall of the ADIA provides an insight into the state of the drilling industry in Australia
The development of safety features on drill rigs in Australia has largely been driven by the major mining companies
Hello to readers of GeoDrilling International from a cold Southern Australia now smack bang in the middle of our winter. We are also seeing plenty of rainfall, which is great for the farmers here, however, Eastern Australia remains in a prolonged drought period, which is causing a lot of hardship for many people on the land there. Waterwell drillers around the country report that work is spasmodic and piecemeal at best, so the drought is not doing a real lot to help them either.
Those with exposure to the mining industry are seeing better prospects. However, the business and equipment compliance levels can be much higher for anyone wanting to work in that sector.
Working for one of the major miners is therefore realistic for the larger drilling contractors but is out of reach for many smaller drilling contractors. While some others just don't want to go into that space because they can't be bothered with the amount of time and cost it takes to work through the compliance, to begin with. Just responding to a tender can consume the time of a contract specialist for several weeks and that person will likely need to call on other departments to assist. If the tender is not won, this is time and money largely wasted.
Over the last decade or so, the mining majors have mostly been responsible for driving the changes that we have seen implemented on drilling rigs, best represented by automated rod handling and remote operated controls. These are major operational and safety developments that have improved the welfare of the drill crew for the better. Other types of mandatory requirements include things such as sheave wheel counters, winch cameras, fire suppression systems, guarded and coded hydraulic hosing, certified hand railings and ladders, engine guards and cowlings and maintenance inspection points.
One thing that is often lacking though is consistency between different mine-sites, whereby a contractor could be working for the same parent company but two of their mines have differing equipment requirements.
This can be a bewildering situation and also cause delays to equipment mobilisation resulting in higher costs for the contractor. Contractors who plan things the right way will ensure that they get a rig and equipment audit completed by a client representative prior to arriving at the site, thus allowing any last-minute work to be completed at their own shop. Also, it prevents the drill crew from arriving on-site and not being able to go to work.
Another area of frustration is the inconsistency in crew inductions. Stories abound of drilling contractors working for a customer on one lease and then crossing the road to go and work for the same customer on a different lease and then having to have the drill crew sit through days of more inductions. This is not so bad if the client is paying for it, but it will still not likely return the same to the business compared with if the rig was operating.
By far the biggest bugbear, currently, is payment days, with procurement departments wanting to push this out to 60 and even 90 days. In recent years we have seen a switch whereby there used to be relationships in place between the geology and exploration teams and the drilling contractors, to where now there is often no relationship. Professional procurement teams usually know nothing about drilling and are there simply to achieve the best result for the company, which not surprisingly is the lowest price.
The expectations are that any contractor who has prequalified to tender already satisfies the compliance requirements. The origins of this practice came into effect at the end of the last boom when mining companies needed to slash their costs and drilling contractors were expected to accept some hefty rate cuts over consecutive years.
Combining the various factors of having to invest resources to make equipment compliant, the work needed to put extensive documentation in place to cover off on audit needs and then wait for extended periods to get paid at the end of it all, it is not surprising that it is only the larger companies with deeper pockets that can conduct this work.
Once set up, this does have its positives, as many of our larger contractor members who work for the majors are now reporting high utilisation of their rig fleets. This is good news and in cases where better payment terms can be negotiated, it is even better.
On the flip side, many of our smaller sized members are doing it harder with lower rig utilisation due to the lack of funding going into the junior and greenfield exploration sectors. This is resulting in fewer holes being drilled and more competition for what work is available, which is also keeping contract rates low with no increase seen for several years.
There is no sign yet that this is changing and, therefore, we expect to see this "two speeds of industry" carry on through to the remainder of 2019 at a minimum.
On a different note, I would like to make mention that the Australian Drilling Industry Association (ADIA) is now distributing the Drilling Manual 5th edition globally, as the relationship that was in place with an external publishing company in the US has now ended. This comprehensive 750-page technical manual is often referenced as the "one to go to" for the drilling industry for techniques and procedures covering off on all types of drilling operations. It was produced by the ADITC and has been regularly updated as drilling technology has advanced. For more details please visit ADIA's website at www.adia.com.au
Lastly, I am pleased to advise that the DRILL 2019 conference being held in Darwin in September, is shaping up to be both informative and enjoyable for those who attend. ADIA holds a major conference only every two years and it is therefore always a great opportunity to reacquaint with colleagues who share the same interests.
The conference theme is "Drilling down on skills", which we considered apt because of the skills challenges the industry is experiencing. We have an excellent array of speakers lined up, as well as a sold-out exhibition, all to be held in a warm, tropical location. What's not to like about that?
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