WEST CHESTER, Pa. – For much of its 114-year existence, Schramm has built machines designed for mining and drilling water wells.
But seizing on the boom in domestic energy development — and the demand for more efficiencies in the oil field — Schramm is designing sophisticated new rigs that take fewer truckloads to transport and then can move on their own power among tightly spaced well sites.
Although Schramm Vice President Fred Slack insists the company will stick by its water well customers and continue to produce equipment for that market, he’s clear about the opportunities on the horizon.
“That is part of our history,” Slack said during a recent walk through the company’s final assembly building.
“But this,” Slack said, gesturing to an oil drilling rig on the shop floor, “is our future.”
Schramm is just one of many businesses capitalizing on the surge in oil and gas activity across North America and aiming to forge a link in the long oil industry supply chain stretching from boot manufacturers in Minnesota and pipe makers in Ohio to wells in Texas and North Dakota.
At Schramm’s 27-acre manufacturing facility, nestled on rolling hills next to a high school football field not far from Philadelphia, 170 workers are designing equipment, cutting metal and assembling it into new truck, trailer and track-mounted rigs.
They are designing the equipment for a rapidly evolving market, driven by advances in horizontal drilling and hydraulic fracturing that are pulling once-unyielding oil and gas out of dense underground rock formations.
As the industry gains greater confidence about where to find those fossil fuels, energy companies are shifting to rapid-fire drilling, with wells clustered together on a single platform called a pad. The approach is more like an assembly line than the wildcat well crap shoots of yesteryear.
“There’s a productivity boom taking place, as there’s far more certainty about where the resource is and how to get to it,” Schramm President Ed Breiner said.
For oil and gas companies eager to pare costs, the emphasis now is on optimizing operations and boosting efficiency.
“Manufacturing is about process; it’s about moving things from in the door to out the door in as efficient a manner as you can,” Breiner said. “That’s what’s occurring in the oil field.”
The result is that fewer rigs are drilling more wells. There were 1,791 rigs working onshore in the United States during the week ending May 16, according to Baker Hughes. Although there has been a recent uptick, that is down from 1939 just two years ago.
Upside and downside
For rig manufacturers such as Schramm, the general downward trend of the past few years presents a challenge and an opportunity.
Expanding the business means convincing companies to replace aging rigs and to pay top dollar for sophisticated new versions.
Schramm thinks it has the answer with its newest design, the T500XD Telemast trailer-mounted drill rig that takes just 10 truckloads to transport, instead of the 30 to 40 required for other rigs.
Once at a drill site, it can stand itself up — self-erecting like a Transformer without the need for a separate crane — and then maneuver among well sites, walking on hydraulic feet that carry its 300-ton mass 30 feet per hour in any direction.
Video: New rigs march past the old
Its remote communication capabilities mean a driller can adjust the machine from a living room or an office around the globe.
“It gets to the site very quickly and easily, and it sets up more efficiently than anything else that’s out there,” boasted David Hartzell, Schramm’s vice president of engineering. “As the oil field industry is changing and going to well pad drilling, the T500 is the rig to directly answer that product need because it can walk hole to hole.”
The rig also requires fewer people to operate and puts them in less precarious positions. For instance, where legacy rigs generally require a derrick hand to perch 70 feet above the ground and guide drill pipe into a well, Schramm’s latest designs use an automated pipe handling system, manipulated with joysticks and touch screens in a control room steps away from the action.
A hydraulic “iron roughneck” screws pipe together — traditionally a job for workers who use tongs to manipulate the pieces into drill pipe spinners on the deck floor.
“There’s no man in the derrick, there are no guys on the deck,” Breiner said. “Fewer people are required to be at that site, and, more importantly, the ones there are out of harm’s way.”
Such automation, which improves speed and safety, has been common in deep-water drilling, but it’s only recently come onto onshore fields, where rig turnover is slow.
And the technology comes at a cost. The two T500XD rigs Schramm has sold so far went for about $8 million apiece.
“We believe it’s a value proposition to the market, despite the fact that it’s considerably higher priced than anything else we’ve ever sold,” Breiner said. “If you start on Jan. 1 and end on Dec. 31, you’re going to drill more wells.”
Schramm recently hired a sales representative in Houston, giving it better access to many energy company executives as well as drillers active in Texas’ Permian Basin and Eagle Ford Shale.
Some of the company’s competitors include Dragon Drilling Co., Stewart & Stevenson and Atlas Copco.
Competitive offerings have similar features, including the ability to walk among wells that may be spaced 15 feet apart, but also can be larger, able to accommodate three linked pieces of drill pipe at a time.
Cabot Oil & Gas has turned over its entire rig fleet in the past three years, partly to take advantage of the technological advances, said drilling manager Steve Novakowski.
First one is on the job
Alpha Hunter Drilling, a subsidiary of Houston-based Magnum Hunter Resources, claimed the first T500XD last year and put it to work tapping the Marcellus and Utica shale formations in the Northeast.
The second is on a cargo ship, just days into a four-week journey to Australia, where Energy Drilling Australia will use it to bore wells in the Cooper Basin for Senex Energy Ltd.
Weeks before the rig began its trek around the world, Energy Drilling Australia workers were on the site of Schramm’s manufacturing facility, learning to work the machine and observing its final battery of tests.
Joseph Brown, operations manager for Energy Drilling Australia, said he is eager to get the rig out in the field, where he expects it will save time and cut costs.
Slow and steady
As the Australian team looked on one day in early April, Schramm employee Charles Young used a remote control to make the rig walk on a hilltop test pad at the company’s Pennsylvania campus. Red pads at the corners of the unit moved steadily and slowly in response to Young’s triggers, lifting the rig — along with its attached cabin and stairwells — five inches at a time.
Inside a control room on the T500XD, test technician Ethan Eckard swiped his fingers across a touch screen and clamped his hands around two joysticks, directing equipment that picked up 14½-inch drill pipe and swung it slowly into place over the well hole.
Two years ago, that kind of simulation would be impossible. When Schramm started dreaming up new designs, the company built the test pad — complete with a real well and lifting devices – to verify the equipment.
“This is a new technology for us, so we spent a lot of money in creating a test fixture here and validating that,” said Hartzell, the engineering executive. “You can’t do everything in a lab.”
Also on FuelFix: