Drilling and Energy Services
A compressed but highly resilient backbone
Operators in Nevada can rely on a wide array of service providers that act as the industry’s backbone in overcoming infrastructure, drilling, and access to equipment challenges. Still surfing the exploration wave seen in Nevada in 2020-2021, Nevada-based drillers had their hands full in 2022, with no signs of decreasing tempo as drilling campaigns start in Q1 2023. Globally, drilling activity was near a 10-year high in 2022, a trend that does not seem to have decreased despite inflationary pressures and fear of a recession. This is particularly the case for gold projects, highlighting Nevada as a hub for growing activity throughout the industry's value chain.
Copper, gold and silver majors’ intent on capitalizing on booming prices in 2020-2021 led to a sharp rebound in demand for drillers in Nevada. However, supply chain disruptions, a scarcity of both available and trained labor, and new methods related to lithium drilling continue to present a challenge.
The robust outlook for metal demand will force firms to mine deeper underground. Operators will need increasing services and supplies, including mining fluids – such as water-based mud, oil-based mud, and air – to assist with the drilling of boreholes underground. Based in Spanish Springs, Jentech Drilling Supply proposes high-quality drill rods to mining firms, and besides acknowledging a heightened demand for these rods, general manager Steve Antonini noticed the demand for drilling fluids: “This space has evolved over the years and today, we have various kinds of fluids and mud engineers who assist drillers to mix the right fluid for the specific ground conditions at the site. As mining continues to go deeper underground, drilling fluids will evolve as they become more and more needed every day.
Boart Longyear, the world’s leading provider of drilling services, saw a staggering 18% increase in revenue in H1 2022. The firm saw increasing demand for its surface core and RC drilling services in the southwest, with, for instance, an updated drilling program at South32’s Eastside project’s East Pediment in Nevada, consisting of approximately 20 holes for a total of 5,000 additional meters. Asked about his outlook regarding future demand as prices remain high and companies need to drill to meet mineral demand, CEO Jeff Olsen answered: “I believe this increased drilling activity will continue into 2023, and we are anticipating strong business for the foreseeable future.”
Drillers have found in technological advancements answers to both inflationary pressures and a scarce labor pool. Used along the Carlin trend, Boart Longyear’s TruScan field drill sample system uses unique XRF technology and helps mining firms to adapt their exploration stance and improve cost-effective decision-making. Technology is also a way to achieve workforce diversity which is much needed in the industry. As put by Olsen: “Technology gives women access to do jobs previously seen as inaccessible. Today, we have women in all parts of our operations - some drill crews are led by women, and they do heavy equipment maintenance.”
"Commodity prices are currently strong, particularly copper and gold, and companies are again out drilling. I believe this increased drilling activity will continue into 2023."
Jeff Olsen, CEO, Boart Longyear
Servicing the infrastructure for the energy transition
Nevada is renowned for its quality infrastructure that provides easy access to its remote mine sites, such as paved roads and electricity. The state, however, faces broadband and connectivity challenges, the scale of which could threaten the good development of mining operations should sporadic outages occur. Indeed, the Elko area is the third worst-served area in the US. Serving mines takes long lines that need to run along a vast territory, exposing them to outside risks like weather or wildlife, further highlighting the necessity to modernize the power grid.
NV Energy, which serves about 90% of Nevada’s electricity needs, is up to the challenge. In 2022, the firm launched the largest infrastructure investment it has ever made; the Greenlink Nevada transmission project. It should run from southern Nevada, up the west side to the Fort Churchill area (where Nevada Copper is located), and from there it will run across the northern part of the state to Ely, near Robinson. The firm works with mines to increase use of renewable energy and is actively looking at providing solar panels at mine sites and combining them with battery storage to advance customers’ ESG initiatives.
NV Energy president and CEO Doug Cannon stated: “People have been talking about electrification for a while, but not many states have taken the lead on it. Here, we have the Nevada Electric Highway that allows someone to drive from Reno to Las Vegas and that person will see there is access to electric charging infrastructure along the entire route. We have EV chargers that run from our border with Utah to the one with California. This defeats the concept of range anxiety.”
Down the line, service providers are essential in making sure mines can access key parts needed for their operations to function. This is particularly relevant as the whole industry faces supply chain issues and disruptions due to geopolitical and environmental events. Based out of Denver, but with an extensive presence in Nevada, particularly at the Robinson Mine, CAP Logistics built a name for itself by transporting mining supplies and equipment to the most remote locations. Speaking of the importance of delivering raw parts to mines, founder and CEO Gayle Dendinger explained: “As Nevada mines are remote, we have years of experience shipping heavy equipment to and from uncharted and unpaved locations. Downtime for a mine can be hundreds of thousands of dollars per day, if not per hour.”
Image courtesy of Newrange Gold Corp