This installment reports an increase in activity for all drilling markets.

After going through a couple of leaner years in 2002 and 2003, things definitely are on the upswing - all over the place. “The contractors are buying everything - from 2-inch to 48-inch,” says Todd Taylor, vice president of Halco America Inc. “Our sales are up by 30 percent. The 2-inch hammers are doing a lot of post holes, small utilities and things of that nature. The 48-inchers are being used on municipal holes - elevator shafts, large utilities and the like.”

Asked about which markets are driving sales, Taylor replies, “Quarrying is going up; oil and gas is still busting out. And it seems like this is going to be a good year for water wells - they're finally coming on line when they normally are supposed to. The good weather has helped that. Construction is up. Geothermal is strong.” Asked if he sees any markets that are off at all, Taylor is quick with a blunt “No,” adding, “Even the directional drilling is coming back.”

Tom Purcell, president of U.S. operations for Mincon Inc. is equally optimistic. “Our sales have continually increased over the last number of years,” he explains. “That's primarily due to the fact that for about the past six years, since we brought out a new product line, we've been pretty aggressively pursuing markets in which we already had a share and also a lot of new markets and new territories where we didn't have representation. 2003 was the one year that pretty much hit everyone, but we weathered the storm. We're in a growth phase so even with the slow economy, we were happy with the results of last year.

“One area that has really picked up after being down for a bit is the mining market out west,” says Purcell. “Gold prices have held above $400 for quite a while now so that's good for those people. Another thing that has really taken off is exploration drilling. Because of the low prices, a lot of the mines weren't putting the money into exploration that they normally would. When the prices went back up, it became more important to them to know which way their production is going to have to go, so the first thing to really pick up is the exploration. And now the production is starting, so that industry has seen a significant increase.”

Hammer Sizes

Some markets are seeing a decrease in hammer size and others are doing just the opposite. Notes Purcell: “On the east coast - and to a certain degree, the west coast - there's a trend to go to 53⁄4-inch- and 51⁄2-inch diameter holes for blasthole patterns, where traditionally, people drilled a 61⁄2- or 63⁄4-inch hole. The main reason for that is that you get a lot more ground vibration and a lot more air blast out of a pattern that has the wider holes. In the more condensed areas, with people closer to the quarries because of a lack of places to build, there are liability concerns. You want to keep the racket down and keep your exposure to lawsuits down. So more and more there's gravitation toward 5-inch hammers for blasthole drilling as opposed to the traditional 6-inch hammers.

“For shallow oil and gas, it's mostly 6-inch and 8-inch hammers. That's a growth industry for us, and we've invested a lot of time, effort and resources into it. Then on your deeper stuff, you get into 12-inch hammers. The exploration market uses 4-inch and 5-inch hammers. In underground mining, what you're seeing for long-hole drilling is 31⁄2-inch hammers, and then for surface blast holes, it's 8-inch and 6-inch hammers.

“Water wells in the U.S. traditionally has meant 6-inch hammers - 61⁄8-, 61⁄4-inch diameter. You're seeing, in a lot of municipalities, minimum grouting requirements. In many cases, this forces the drilling contractors to drill a 12-inch hole down to a depth of 40-, 50-, 60-feet. And if you're hitting hard rock pretty early in the well, there's good opportunity for the development of 8-inch hammer business - rather than the sort of traditional means that might have been to run a roller cone and a stabilizer behind it until you got down to hard rock and then just case to the hard rock and drill from there.”

The Steel Factor

"Hammer prices will be going up,” Taylor acknowledges. “Steel prices continue to climb. The steel shortage has left some manufacturers in a bind. We do single-source buying and that allows our allocations to be much larger than most. We're being promised price increases for July 1 - somewhere around 5 percent to 10 percent. Most of the people we deal with have to buy other steel items. For instance, casing has more than tripled. It used to cost $3.60 a foot; now it's $12 a foot.” Taylor doesn't even want to think about the reaction that he'd get if the price of hammers tripled.

But the hammers are dependent on that expensive steel - now and for the future. Purcell tells us, “Advances in metallurgy - metal treatment, metal processes, development of new steels - has improved the quality of the raw materials that go into the hammers. Another thing is to look at the processes by which we treat the steel that makes up our hammers and making sure we're using the best systems available. And we're taking a new way of looking at how we make a hammer. Traditionally, the 6-inch hammers have had cycle speeds of 1,700 to 1,900 blows a minute. We've taken a concept that you have with a hydraulic hammer - a higher frequency on the piston and a shorter stroke length. The trend with rig manufacturers has been to increase air - four or five years ago, 900/350 probably was the standard on water wells. Now 1070/350 and packages like that are what they're selling now. The shallow oil and gas contractors are running 1,600-plus cfm. So there's plenty of energy behind the hammer, whereas 20 years back, people were running 250 psi with top-end 750-cfm compressors. Once the piston hits the bit, you have to overcome the compressive strength; if you're doing that and you want to drill faster, hit more often. You've got a much faster cycle speed - in excess of 2,000 blows a minute - which makes it a much smoother operation. As long as you're getting the blow energy behind it, you're able to break the rock and get the cuttings away so you have an increase in penetration.”

On-going Efforts

"The main thing that we've seen out of most of the manufacturers from the technological standpoint is trying to push the edge on penetration,” says Purcell. “Then other things become important to people when you do that, for instance, the ability to maintain the hole - to keep it clean, get the cuttings away from the drill face and exhaust the hole. And in a lot of cases, if you're doing deep-hole drilling, an ability to deal with back pressures from whatever you're running into - be it muddy drilling conditions where you've got to soap a lot or if you hit a lot of water - and still keep your tool cycling and operating is important.”

Halco's Taylor says, “We invested in new machinery last fall and we've got it up and running so we can add to the line of bits we make on the 12-inch shank range. Now we're able to make 10-inch all the way through 24-inch, and we plan on stocking several of those common sizes. Those bits are expensive pieces of equipment and contractors normally just don't have those lying around. We conducted an 18-month market survey to determine what's being used. We already had the 12-inch hammer line to go with it so now we're going to offer a fairly large line - up to 24 inches - of the different 10- and 12-inch shanks.

“We're looking at some new technology relating to how our hammer works to increase the service life,” he says. “We have a new 6-inch hammer, the NT6, coming out soon. It incorporates a new methodology designed to lessen wear and tear on the internal parts.”

New vs. Rebuilt

“We do rebuilds here every day but it's probably less than 10 percent of our business,” Taylor explains. “Water well customers will rebuild, a lot of the quarry guys don't. Our product lends itself to in-the-field rebuilding; you don't need a lot of tools - just a screwdriver. But it's not very cost-effective to rebuild compared to the performance you'd get from a new tool. By the time you buy all the parts that make it perform like new, you've already spent 60 percent of what a new hammer would cost; and oftentimes, you don't even get what you pay for with a rebuilt hammer. You might as well buy a new hammer. People look at hammers and bits as commodities anyway. That's why the pricing is so beat down. Normally, you see a lot of rebuilds when times are tough. When money's tight and no one is doing a lot, contractors are more willing to rebuild and get another couple months out of it, hoping that they'll get busy again soon. They're just trying to get by for the time being until they can justify buying a new hammer.”

Mincon's Purcell has similar thoughts: “When you look at your hammer and bit costs as part of your overall drilling costs, it's rather minimal. Let's look at it from two different perspectives. If you're a driller who's out there deep-hole drilling and want to get 40,000 feet out of a hammer, and you've gotten there and the hammer is worn out on the outside. In a best-case scenario, that hammer is down about 10 percent from where it was originally. If you look at the costs of that hammer and the bits that went into it over the course of its life and the costs of fuel, labor and depreciation on your rig, the hammer is a very small part of the equation. However, all of those things in and of themselves are quite expensive, so I believe it behooves the contractor to have the fastest and best possible tool on the end of that rig. It's such a small cost in the overall scheme of things. If you rebuild a hammer with 40,000 feet on the internal parts prior to rebuild, it's still going to be about 10 percent slower than a new hammer. If you're drilling 10 percent slower, in reality, it's costing you 10 percent more on everything else - fuel, rig depreciation, labor, etc. To rebuild the hammer, you'd have to put in about half the cost of a new hammer. So really, you're better off buying a new tool and throwing the old one in the scrap pile.

“Another take on that could involve a blast hole contractor drilling in abrasive granite,” says Purcell. “The ground conditions by their very nature tend to have a strong wear effect on a hammer. In such a case, a hammer could be worn out externally before it has 20,000 feet of drilling on it. In that case, everything internally could be fine and it would make sense to rebuild that hammer and get the rest of the life out of the internal parts. It just depends on the types of drilling conditions you find yourself in; some places you can go 100,000 feet on a hammer and it still will be in good shape on the outside but worn out on the inside. And on the flip-side, you can get just 18,000 feet from the outside but the inside is in perfect condition.”

International Scene

“The overseas business is strong because the dollar is so weak against foreign currencies,” Taylor explains, noting that Australia, with all of its gold mines, and South America are very strong markets. Somewhat surprisingly, he reports that Eastern Europe is flat, at best.

As for overseas hammer and bit competition, Taylor tells us, “The Asian manufacturers don't have the drill bit technology down yet. The quality is so bad that an American-made, English-made or Swedish-made bit still is competitive. As for hammers, they've been playing with the hammers enough and there is such a price difference that people will run three or four Asian hammers to one American-made hammer. If they happen to get one that runs a little extra, then they're happy. So we don't move a lot of hammers over there but we've moving loads of drill bits in the Far East.”