How Many Hours in a Service Rig’s Day?

This was one of the first questions CAODC service rig contractors considered when CAODC committed to serving as a central resource for rig activity data.

On the drilling side, a data point that analysts and investors and oilfield service providers all pay particular attention to is utilization. CAODC reports on drilling utilization and forecasts drilling utilization, but the Association had no comparable data point for its service rig fleet.

When a drilling contractor says ‘operating day,’ the meaning is straight-forward.  A drilling rig runs 24 hours a day, 7 days a week.  Based on this uniformity, ‘full utilization’ for any given month is the equivalent of every rig in the CAODC-registered drilling fleet running every day. Drilling activity for that month would be 100%.

On the service rig side, ‘full utilization’ shifts with the times.

Back in the 1980s, service rigs ran like drilling rigs, 24-7.  But economics, competition and other factors influenced the service rig fleet to shift to ‘daylight’ schedules.  By the 90s, 8-hour days became more common.  Around this time, the CAODC Service Rig Executive Committee formally pegged full utilization at 2,808 hours per year or 234 hours per month.

The service rig fleet then shifted again.  A lengthened workday become common. Operations began to run ten hours instead of eight.  In 2001, the CAODC Service Rig Executive Committee revisited their definition: the committee decided to base “full utilization” on 10-hour days, 365 days per year.

Or – in shorthand for faster calculation – 304 hours per month.

Why a Common Understanding of Full Utilization Matters

‘Full utilization’ is a critical concept when it comes to discussing industry activity.  Analysts and government use utilization percentages as quick measures of industry’s economic impact and labour requirements.  This is why when CAODC set about creating a data hub for service rig activity, the Service Rig Executive Committee took care to ensure the agreed-upon calculation appropriately captured fleet capacity.

In March 2013, the CAODC Service Rig Executive Committee decided that full utilization should take into account both available equipment and the current predominant operating practice.  The workday on service rigs still has some variance – a small segment of the fleet does operate on 24-hour schedules.  In light of this, the new platform for data capture will not attach a maximum value for the field that captures operating hours.

However, the committee concluded that since a significant majority of rigs continue to operate 10-hour days, the formula that represents full utilization in any given month is:

(the number of rigs in the CAODC-registered service rig fleet) x 304

CAODC applies the following formula to calculate utilization:

Reported Hours from Service Rig Members

(the number of rigs in the CAODC-registered service rig fleet) x 304

Now that CAODC has a complete year of monthly activity data from its service rig members, the data set going forward will offer year-over-year analysis and highlight activity trends.

Based on the September-to-September data set, 30% of the fleet was active at the lowest point in the year (spring break up). March was the busiest month for the fleet, at 57%. September 2014 was nominally more active (3%) than September 2013.

Why a Rig Data Project

CAODC has a successful history as a coordinating resource for the Canadian rig fleets.   For example, service rig contractors benefit from CAODC advocacy every time they move equipment, thanks to the Memorandum of Agreements that the provinces established with the CAODC Service Rig Division.

Information collected through the Rig Data Project is shared with CAODC drilling and service rig members as a membership benefit.

Even if a contractor anticipates this data won’t directly benefit their operations, the detailed database will be an indirect benefit: CAODC will be better able to highlight industry’s economic impact when advocating for its members.

Rig utilization data is available on CAODC’s website. Look for the menu item ‘Rig Counts.’