Walking Oil Rigs Spur Cheaper, Quicker Drilling in Supply Glut

Cannibalizing Demand

While newer technologies will cannibalize some rig demand, there will still be a need for a wide variety of rigs, said Sean Roach, vice president of drilling systems and services at Schramm Inc., a West Chester, Pennsylvania-based maker of walking rigs. Shale producers are taking the toolbox approach to drilling, with a variety of rigs for different types of wells, he said.

Nonetheless, Desai of Edward Jones said he doesn’t see how drilling contractors will be able to keep expanding their rig fleets after the rollout of new, more sophisticated rigs over the past few years.

“We need fewer rigs than we did a while ago for the same amount of production,” he said. “That is kind of a long-term fear we have for the onshore drilling market.”

--With assistance from Dan Murtaugh in Houston.

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net. To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Reg Gale, Dan Stets

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