Water Well Drilling

SIC 1781

Industry report:

This category covers special trade contractors primarily engaged in water well drilling. Establishments primarily engaged in drilling oil or gas field water intake wells on a contract or fee basis are classified in SIC 1381: Drilling Oil and Gas Wells.

The U.S. water well drilling industry included more than 8,000 establishments operating roughly 19,000 drilling rigs in the early years of the twenty-first century?s first decade. These establishments had total employment of 25,539 in 2002, according to the U.S. Bureau of Labor Statistics. Average hourly wages for water well drillers totaled $12.77 in 2002.

Establishments engaged in water well drilling in the United States tend to be small, independent contractors. Even the industry leaders tend to be small, seldom generating more than $20 million in annual revenues. Some of the largest companies have diversified into other areas of construction or other types of drilling projects, such as oil, natural gas, and geothermal wells.

The nation's water supply comes from surface sources such as lakes, rivers, and streams, in addition to vast underground aquifers. Groundwater has often been preferred over surface water for use in homes and industry because it is relatively inexpensive to develop and treat, it contains no sediment, its chemical quality remains constant, and facilities to develop it can be situated on small plots of ground. Of the 408 trillion gallons of water consumed daily in the United States in the early years of the first decade of the 2000s, nearly 20 percent was ground water.

Contractors who drill wells to tap into underground water are largely dependent on new construction. In fact, community water mains and wells for single-family houses account for the vast majority of all business done by this industry. More than 15 million water wells provide 79.4 billion gallons of ground water daily to U.S. residents for community and single-family use, irrigation, livestock, and other agricultural, commercial, and industrial purposes. Irrigation accounted for the largest portion (60 billion gallons) of ground water usage.

Housing starts in early 2003 remained strong, despite a weakening economy. In fact, housing starts rose to more than 1.8 million in 2003, reaching their highest point since the 1970s. The water well drilling industry was mature and somewhat over-served from both a manufacturing and distribution standpoint. Manufacturers had excess capacity, and distributors were readily available to serve contractors. The environmental business had been the source of most growth for some years. Drillers who offered new and differentiated products were seeing success in their marketing efforts. Increasing emphasis on service and quick responses to customer needs was separating the firms that were growing from those that were merely retaining their market share.

The U.S. drilled roughly 800,000 water wells in the United States each year as of the early years of the first decade of the 2000s. Michigan was the leading state in terms of number of households served by private water wells, with 1.12 million. Pennsylvania followed with 987,202 households, while North Carolina had 912,113, New York had 824,342, and Florida had 794,557. California housed the largest number of irrigation wells, with 71,544. Texas followed with 57,881, then Nebraska with 57,369, Arkansas with 32,555, Kansas with 19,213, and Florida with 18,993.

Industries engaged in the supply of water are expected to be among the fastest-growing public utilities because of factors such as the nation's expanding population and the increasing number of new housing projects connected to community water sources. The construction industry was expected to grow faster than average for all the nation's industries throughout the early years of the first decade of the 2000s.

Housing starts continued upwards, fostering healthy business for water well drilling contractors in the mid-years of the first decade of the 2000s with 1.84 million in 2003 and 1.95 million in 2004, followed with 2.06 million in 2005 before plummeting to 1.80 million in 2006 and 1.35 million in 2007. Thus, it was evident that the housing market was in a downturn, which in turn would have an effect on the water well drilling industry as well.

The Northeast had a total of 3,691 irrigation wells with the majority in Pennsylvania (961) followed by new Jersey (844), as well as 17,169 community water systems led by New York (4,971) and Pennsylvania (4,446). The Midwest had a total of 121,044 irrigation wells with most located in Nebraska (69,583) and Kansas (19,124), along with 24,831 community water systems with the majority in Michigan (3,361) and Illinois (3,047). The South reported 140,926 irrigation wells with Texas at the forefront (59,995), then Arkansas (35,574); 36,473 community water systems with 11,279 in Texas and 4,270 in North Carolina. The West had 114,011 irrigation wells with California responsible for 64,423 and Colorado with 10,646; and 29,016 community water systems with 11,444 located in California followed by 4,964 in Washington.

Current Conditions

As predicted, the housing market continued to trend downward through 2009. In fact, the housing bubble burst, as new housing starts fell to just 554,000 units in 2009, down from a record high of 2.1 million in 2005. The economy as a whole sunk into a recession. As a result, the number of wells delivered during 2008 and 2009. From 2.306 million units shipped in 2006, the number of units delivered dropped every year through 2009, falling slightly to 2.284 million in 2007 before dipping to 1.827 million and 1.507 million in 2008 and 2009, respectively.

Deliveries of portable drilling machines totaled 207 in 2009, down 31 percent from 2008. In addition, the value of the units totaled $119.4, which was down 40 percent from the $199.1 million reported in 2008. shipments of domestic water systems fell by 18 percent in by quantity delivered and revenues generated in 2009, compared to 2008.

The industry's largest sector, nonsubmersibles, made up roughly two-thirds of the water well market (66.4 percent). The value of nonsubmersibles shipped during 2009 was $148.95 million, down 14 percent from 2008, and the number of nonsubmersibles was 1,000,669, down 13 percent from 2008.

Submersibles up to five horsepower (hp) totaled 442,820 (29.4 percent of the market) in 2009 (although no shipments of drills in the 3 to 5 hp range were reported). Production--as well as value of product shipment of $102.5 million--was down over 2008 by 25 percent.

Water well riggers continued to find business with the U.S. military. For example, in December 2010, Schramm, Inc., a supplier of mobile hydraulic water well rigs, won a multimillion dollar contract with the U.S. Navy's Defense Logistic Agency to design and build truck-mounted hydraulic water drilling rigs. Laibe Corp. owns the contract with the U.S. Army to supply well drilling equipment to overseas operations.

According to industry statistics, there were an estimated 7,177 establishments engaged in water well drilling with industry-wide employment at 31,022 workers who bolstered $3,248.8 million in 2007. States with the majority of water well contractors were centered in Texas, California, Florida, and Michigan. While water well drilling accounted for 6,664 firms and 92.9 percent in market share valued at 3,041.3 million of the industry total, there were an additional 405 specialized contractors who serviced water wells with revenues of $124 million and 108 geothermal drilling firms that generated $83.5 million.

Industry Leaders

Leaders in well drilling included Beylik Drilling & Pump Service, Inc., who posted $9.6 million in 2007, employing 160 workers. Barnwell Industries, Inc., whose diversified interests include Water Resources International, Inc., reported $32.2 million in 2009 whereas Charles Sergeant Irrigation, Inc. had $24.8 million in sales and 212 employees. While there were no financial data available for Caspar, Wyoming-based True Geothermal Energy Company, San Antonio Texas-based Raba-Kistner Consultants, Inc. posted revenues of $32.2 million employing 320 workers. Weeks Drilling and Pump Co. based in Sebastopol, California posted revenues of $7.5 million with 50 employees.

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