There is likely to be a drill pipe shortage in the next 1824 months.
And the drill pipe situation is just an example of what is likely to happen to other equipment items if industry activity continues to show growth.
That's the view of Gary D. Nicholson, president of LTV Energy Products Co., Garland, Tex.
Oil field equipment manufacturers have "decapitalized" by 75-80% since the early 1980's, leaving capacity at only about one fourth of the peak at that time.
"There will be tremendous pent up demand for drill pipe in the next 24 months," says Nicholson.
Although there is sufficient manufacturing capacity around the world, it will take time to man these facilities and increase production.
As used drill pipe is consumed, demand will jump sharply and prices will increase, Nicholson says. Substantial demand for new drilling rigs would mean long lead times for other rig equipment.
There already have been reports of a wait of several months for blowout preventer equipment.
James C. Day, president of Noble Drilling Corp., Houston says that U.S. land drilling contractors' rates have not been high enough in recent years to replace drill pipe strings.
Day, chairman of the International Association of Drilling Contractors, and Nicholson, president of the Petroleum Equipment Suppliers Association, late last month announced a joint IADC/PESA forum on European Community market issues to be held in Brussels in October.
It's part of continuing efforts to mitigate EC rules that might hurt U.S. manufacturers and service companies.
"We're concerned that EC officials have an agenda that will hinder access to markets by U.S. firms and put them at a competitive disadvantage," Nicholson said.
Local content requirements and price preference for EC based firms are two of the group's key concerns.
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