Rig Movers Consolidate, Diversify To Survive Oil Slowdown

Source: Grand Forks Hearld

 With drilling activity in the Bakken at an 11-year low, workers who specialize in moving drilling rigs to new locations are often finding themselves parked.

“It’s definitely been difficult,” said Tony Lamping, general manager for Cruz Energy Services. “There’s just not as much work to do.”

Moving each rig to a new location can take two to four days of work, involving a lot of coordination and heavy equipment to disassemble the rig and transport it to drill the next well.

Cruz has been among the busiest companies in the Bakken that specialize in rig moves. But demand is a lot different with fewer than 30 rigs operating in the state, down from the 2012 high of 218.

Now the company is looking for efficiencies and diversification to survive the slowdown and keep a core of workers to be ready when oil prices recover, Lamping said.

Cruz Energy Services has locations in both Ray and Dickinson, but starting in June the company will consolidate and only operate from its shop in Dickinson. The move means about 50 workers will relocate to Dickinson, Lamping said.

With more operators focused on drilling the core area of the Bakken in McKenzie and Dunn counties, a Dickinson location will be closer to the bulk of activity.

In addition, Cruz moved two cranes that were in North Dakota to the West Coast for construction jobs and other work. The company is also pursuing other subcontracting work and doing more marketing than it had to do when times were booming.

About 20 workers were laid off and another 30 have left since prices declined, Lamping estimates.

The rig count was 29 on Friday, the lowest since 2005. Lynn Helms, director of the Department of Mineral Resources, has said he expects it to remain in the 25 to 30 range until oil prices improve. Companies have indicated they’ll start putting more rigs to work again when the price of West Texas Intermediate oil is $60 and stays that high for three consecutive months, Helms said. That price was $46 on Friday.

Lamping said the company is hopeful that the rig count will begin climbing again at the start of 2017.

“We’re one of the companies that will be here to take care of our customers when things get busy,” he said.

Lamping, who relocated to North Dakota from Alaska in 2011, said while the slowdown is challenging, he thinks the long-term potential for the Bakken is “fantastic.”

“I think it’s a great place to be. The play itself and the infrastructure that’s starting to show up,” Lamping said. “I don’t think it’s a flash in the pan where people can walk away from it.”