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2018-01-12 / News

The Original Supplier, Plus Affordable Compliance

What Current Trends Mean for Marcellus Equipment and Supplies Companies
BY R. BROCK PRONKO
Regional Business Analyst

In 1959, more than 40 years before Range Resources kicked off the shale gas boom by successfully drilling the first horizontal well in the Marcellus in Washington County, Pa., Ken Miller Supply in Wooster, Ohio, was the original oil and gas well casing supply company in the Appalachian Basin, providing oil and gas operators with steel pipe casings for drilling vertical wells. Today, with 120 employees at distribution centers in five states, Ken Miller supplies a “very nice percentage” of the gas operators drilling horizontal wells in Ohio, Pennsylvania, West Virginia, Virginia and Kentucky, according to Doug Duie, the company’s sales manager.

“The core of our business is downhole tubulars, casing and tubing used to start oil and gas wells and smaller casings for drilling deeper and for turning into horizontal wells to whatever length the gas operator needs,” said Duie.

“If a gas operator drilled a 7,500-foot vertical, the lateral could be anywhere from 7,000 to 20,000 feet.”

Each casing is designed with the proper diameter and pressure tolerance for the segment where it will be placed inside the well. The specifications are also subject to each state’s drilling permit requirements. The steel casings are manufactured in the United States.

“Even before the president encouraged the oil and gas industry to use U.S.-made steel, there was a ‘use- domestic-first’ attitude in the industry,” said Duie.

“That’s partly due to patriotism, but also because U.S.-made steel casings are of better quality than Chinese-made.”

The demand for drill casings has fallen off since the Oil Bust of 2014, but the outlook is improving. According to Baker Hughes, as of Dec. 29, 2017, 929 drill rigs were operating in the United States – 271 more than December 2016.

“2016 was a really, really tough year, 2017 was somewhat better, and with more major gas pipelines being completed in 2018 and a seemingly positive attitude toward drilling, we’re looking for this year to be even better,” said Duie.

DMS Safety Services in Curwensville, Pa., Clearfield County, provides safety services to the oil and gas industry, including tank installation and permitting services, and geologic and hydrogeologic services. It also provides safety supplies including flame- resistant clothing, high-visibility shirts and vests, first aid kits, safety glasses, hard hats and hearing protection items.

Despite the uptick in drilling rigs, Andy Swales, the president and principle geologist of DMS, is not optimistic about his company’s prospects of gaining new business from the anticipated uptick in drilling this year. One reason is that Marcellus gas operators have changed the way they drill wells.

“OSHA requires safety training for working in confined spaces deeper than four feet, however, Marcellus gas operators are eliminating their confined spaces by doing their surface drilling work at less than four feet below ground, which eliminates the need for our safety training and personnel,” said Swales.

“We also did some permitting associated with pad work and pipeline road crossings, but that dried up, too.”

Even during the shale boom, as a small, Pennsylvania-based company, DMS found it hard to compete against larger environmental engineering and geological firms coming into the state from out West.

“Most of gas operators in the Marcellus are headquartered in the Midwest and Southwest, and they preferred to deal with the larger service and supply firms from that region of the country rather than local companies,” said Swales.

DMS hopes to make up the difference due to the Trump administration’s deregulations.

“A lot of regulations have been duplicative and onerous on a number of industries, so companies spent more time trying to find ways of skirting the issues than addressing them head-on, because of the high cost of compliance,” said Swales.

“I’m hoping with the lifting of some of the regulations, companies will focus more on necessary compliance issues and be willing to put money into them, because now they’re affordable.” .

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