Horizontal directional drilling (HDD) is a technique that allows the installation of underground pipes, cables, and conduits with minimal surface disruption and environmental impact. HDD is widely used for various applications, such as oil and gas pipelines, water and sewer lines, power and telecommunication cables, and fiber optic networks. HDD offers many advantages over traditional trenching methods, such as faster installation, lower cost, greater accuracy, and less damage to the surrounding area.
However, HDD also faces many challenges and opportunities in the current market scenario. The COVID-19 pandemic, the energy transition, the digital transformation, and the environmental regulations are some of the factors that are affecting the demand and supply of HDD services and equipment. In this article, we will explore some of the new developments in the HDD industry that are shaping its future.
COVID-19 Impact The COVID-19 pandemic has caused a significant slowdown in the HDD activity across various sectors due to the lockdown measures and travel restrictions imposed by governments to contain the virus spread. The oil and gas industry, which is one of the major end-users of HDD, has been severely affected by the reduced demand and low prices of oil and gas products. According to a report by ResearchAndMarkets.com1, the global HDD market size is expected to reach $11.6 billion by 2027, growing at a CAGR of 5.8% from 2021 to 2027. However, this growth rate is lower than the pre-pandemic estimate of 6.7% CAGR1.
The pandemic has also disrupted the supply chain of HDD equipment and materials, such as rigs, drill bits, pipes, and mud. Many manufacturers and suppliers have faced delays in production and delivery due to labor shortages, transportation issues, and health and safety protocols. Some contractors have reported difficulties in obtaining new rigs or spare parts for their existing rigs2. Moreover, the pandemic has also affected the availability and cost of skilled labor for HDD projects. Many workers have been laid off or furloughed due to the reduced workload or health concerns2.
However, the pandemic has also created some opportunities for the HDD industry. For instance, some sectors, such as telecommunication and fiber optic networks, have witnessed an increased demand for HDD services due to the surge in online activities and remote work during the lockdowns. According to a report by Grand View Research3, the global fiber optic cable market size is expected to reach $14.86 billion by 2028, expanding at a CAGR of 6.7% from 2021 to 20283. HDD is one of the preferred methods for installing fiber optic cables underground, especially in urban areas where trenching is not feasible or desirable.
Another opportunity for the HDD industry is the stimulus packages and infrastructure spending plans announced by various governments to revive their economies after the pandemic. For example, in May 2021, the Biden administration released $55 billion from the Infrastructure Investment bill dedicated for rural or underserved markets2. These funds can be used for improving broadband access, water supply, sewer systems, and electric grids, which can create more demand for HDD services.
Energy Transition Another major factor that is influencing the HDD industry is the energy transition from fossil fuels to renewable sources. The global efforts to combat climate change and reduce greenhouse gas emissions have led to a shift in energy consumption patterns and policies. Many countries have set targets and plans to increase their share of renewable energy in their energy mix and phase out coal-fired power plants. For example, according to a report by International Energy Agency (IEA), renewable sources accounted for almost 90% of new electricity capacity added globally in 2020. The IEA also expects renewable sources to provide almost 60% of total electricity generation by 2030.
The energy transition has both positive and negative implications for the HDD industry. On one hand, it reduces the demand for oil and gas pipelines, which are traditionally one of the main applications of HDD. On the other hand, it creates new opportunities for HDD in other sectors, such as power transmission and distribution (T&D), geothermal energy, hydrogen production and storage, carbon capture and storage (CCS), and biogas networks.
For instance, HDD can be used for installing underground power cables that connect renewable energy sources (such as wind farms or solar parks) to the grid or end-users. HDD can also be used for drilling geothermal wells that tap into the earth’s heat for generating electricity or heating buildings. Moreover, HDD can be used for laying pipelines that transport hydrogen or carbon dioxide (CO2) for various purposes. Hydrogen is considered as a clean fuel that can be used for power generation or transportation. CO2 can be captured from industrial sources or power plants and stored underground or used for enhanced oil recovery (EOR).
Digital Transformation Another important trend that is affecting the HDD industry is the digital transformation. The rapid advancement and adoption of digital technologies, such as artificial intelligence (AI), machine learning (ML), big data, cloud computing, internet of things (IoT), and blockchain, have enabled the HDD industry to improve its efficiency, productivity, quality, safety, and sustainability. These technologies can be applied to various aspects of HDD operations, such as planning, design, drilling, monitoring, inspection, maintenance, and reporting.
For example, AI and ML can be used for optimizing the drilling parameters, such as speed, torque, pressure, and mud flow, based on the real-time data collected from sensors and cameras installed on the rigs and drill bits. This can help to reduce the drilling time, cost, and risks of failures or accidents. Big data and cloud computing can be used for storing and analyzing large amounts of data generated from HDD projects, such as geological information, drilling logs, borehole profiles, and environmental impacts. This can help to enhance the decision-making process and provide insights for future projects. IoT and blockchain can be used for creating a smart and secure network of connected devices and stakeholders involved in HDD projects, such as contractors, clients, regulators, suppliers, and operators. This can help to improve the communication, coordination, transparency, and traceability of HDD activities.
Environmental Regulations Another key factor that is influencing the HDD industry is the environmental regulations. The HDD industry is subject to various environmental laws and standards that aim to protect the natural resources and ecosystems from the potential impacts of HDD activities. These regulations cover aspects such as water quality, soil contamination, air pollution, noise pollution, wildlife protection, waste management, and greenhouse gas emissions. The HDD industry has to comply with these regulations by obtaining permits, conducting environmental assessments, implementing mitigation measures, monitoring performance, and reporting results.
The environmental regulations can pose challenges and opportunities for the HDD industry. On one hand, they can increase the cost and complexity of HDD projects by requiring more documentation, analysis, consultation, and monitoring. On the other hand, they can also create a competitive advantage for the HDD industry by highlighting its environmental benefits over other methods of underground construction. For example, HDD can reduce the surface disturbance and restoration costs by avoiding trenching or open-cutting. HDD can also minimize the risk of spills or leaks by using closed-loop systems or double-walled pipes.
Conclusion The HDD industry is undergoing significant changes due to various factors that are affecting its demand and supply. The COVID-19 pandemic has caused a slowdown in some sectors but also created opportunities in others. The energy transition has reduced the need for oil and gas pipelines but also opened new markets for power T&D and other applications. The digital transformation has enabled the HDD industry to improve its performance and competitiveness by using advanced technologies. The environmental regulations have increased the compliance requirements but also highlighted the advantages of HDD over other methods.
The HDD industry has to adapt to these changes by adopting new strategies and innovations that can help it to overcome the challenges and seize the opportunities. The HDD industry has to diversify its portfolio of services and markets by expanding into new sectors and regions that have high demand for HDD. The HDD industry has to invest in research and development (R&D) and collaboration with other stakeholders to develop new solutions and standards that can enhance the quality and safety of HDD. The HDD industry has to leverage its experience and expertise in HDD to demonstrate its value proposition and differentiation from other methods of underground construction.
The HDD industry has a bright future ahead as it continues to provide reliable and efficient solutions for installing underground infrastructure with minimal environmental impact. The HDD industry has proven its resilience and adaptability in facing various challenges and opportunities in the past. The HDD industry will continue to do so in the future as it strives to meet the evolving needs and expectations of its customers and society at large.