Starting a Geothermal Drilling Company: part 2
The growth of the geothermal heat pump market is catching the attention of HVAC, pluming, excavating and landscaping professionals nationwide. Many are expanding operations into geothermal systems and see the advantages of bringing the drilling of geothermal bore holes in-house.
In a previous chapter of The Geothermal Journal we discussed startup and day-to-day costs of operating a geothermal drilling company and costs such as equipment, tooling, transportation and materials. Not unlike various trades that estimate projects based upon cost per square foot, the drilling industry uses cost per foot drilled calculations. In this issue we will get more detailed and show you how to determine your costs per foot of drilling so you can estimate what to charge to make your business profitable. This information is for reference only, to describe the ìcost per footî calculations, and not designed to be used as an all-inclusive business model.
For example purposes, we make the following assumptions: A geothermal drilling company will be completing 20 residential geothermal bore holes per month, including drilling 4-in. diameter bores to a depth of 300 ft, installing HDPE pipe (1 º-in. HDPE U-Bend diameter) and grouting with TG Lite GeoPro grout (target thermal conductivity 1.0 Btu/ft degrees Fahrenheit). A compact track mounted drill rig (perfect for limited access residential sites) will drill with augers though the overburden and a DTH hammer through the bedrock below.
With these assumptions, we can begin to estimate the monthly cost of equipment, necessary tooling, fuel, equipment maintenance, labor and materials. To calculate the required amounts of grout and silica sand, we used the free online Grout Volume and Cost Calculator from GeoPro Inc. (www.geoproinc.com). It is an extremely useful tool that allows you to input all of your project variables. A similar tool is Cetco’s newly released free mobile app that includes a convenient grout calculator. Cost per bag of grout, sand and HDPE pipe is based on estimated contractor pricing.
With these projected monthly costs divided by the total depth drilled each month, the cost per foot of drilling is $6.96. Depending on where you operate in the country, drilling contractors can charge anywhere from $15 to $20 per ft and above for hard rock drilling with DTH hammers. A moderate price of $10 per ft will net $18,254 per month profit ó from the very first month in operation. It should be noted that the K40 drill rig, used in the example, is capable of drilling 600 ft per day in difficult conditions.
Therefore, as the number of monthly projects increases and once equipment is owned, the profit margins will continue to increase. However, as previously stated this information is for example purposes and reference only to describe the cost per foot calculations and not designed to be used as an all-inclusive business model.
Training and Permits
Another important step is training. A great place to start is the industry’s standard International Ground Source Heat Pump Association (IGSHPA). As stated on its website (www.igshpa.okstate.edu): ìTraining is vital in any industry, especially in the ground source heat pump industry. IGSHPA training is the best way to learn accepted ground source heat pump standards and procedures and the best way to get ahead in the industry.
The courses offered include Accredited Installer Workshop (system layout, pipe joining techniques and thermal conductivity), accredited drillers training (drilling processes, grouting concepts and system materials) and a Certified GeoExchange Designer Workshop (ground source heat pump design and ground loop heat exchanger software). Courses are available both at their facilities on the campus of Oklahoma State University and in other states through an IGSHPA certified trainer.
Another great training opportunity is through your drilling rig manufacturer. Some offer drill training at their facilities, running through general operation of the equipment. Other manufacturers offer onsite training with a drilling specialist at your location, actually drilling holes in your local ground conditions with your rig. This type of hands-on training is invaluable to get your business off the ground and moving in the right direction.
Drilling licenses and permit requirements vary from state to state. The National Ground Water Association (www.ngwa.org) provides access to a very helpful state-by-state roster of useful information resources including licensing, regulatory agencies and more (located on the State Information page under the Professional Resources tab). Similar state specific licensing requirement information is also available on the National Drilling Association website under Licensing (). For a more extensive understanding of the permitting process in your state, contact your state agencies.
With good planning you can create a very profitable business model. The resources that provide training, permits and licensing are at your fingertips. With the right equipment the pieces can fall into place. All that remains is to tap into the abundant potential of the ever-growing geothermal market.
Brandon Wronski is an equipment specialist with RigKits LLC, based in Charlotte, N.C.
Click here to review part 1 of this article.
