OREM — An increase in the sale of synthetic diamond teeth for drill bits used to explore oil and natural gas reserves is good news for the economy, according to Rob Galloway, chief executive of US Synthetic.
Officials at the company, the world's leading manufacturer of the long-lasting diamond inserts, say the industry has turned a corner, re-establishing a growth trend that was steadily increasing before the economy faltered in 2008.
"The global recession just put a little delay to that curve, but we are returning to 2008 levels," Galloway said. "We seem to lead the downturn and the upturn in the economy."
Galloway said the company has added new employees at its manufacturing plant in Orem and is making plans to add 20,000 square feet to the existing 125,000-square-foot building later this year. The planned expansion will increase the company's capacity by 10 percent, Galloway said.
"We've added over 100 people in the last three months, and our backlog for products is growing," Galloway said. "The demand is there. We are a little cautious that there could be some overbuilding, but we think the growth is sustainable."
US Synthetic, part of the Energy Products Group of Dover Resources, currently employs about 500 and is operating on a 24-hours-a-day, six-days-a-week schedule, producing polycrystalline diamond cutters for oil and gas exploration. It's labor-intensive work.
The Orem plant has 50 huge cubic presses to supply several thousand tons of force that, combined with high temperatures, fuse together dust-sized crystals of synthetic diamonds — called "diamond grit" — into a drill bit insert about the size of a fingertip. The inserts are pressed one or two at a time and then are shaped and polished for a specific use.
Galloway said several factors are responsible for the renewed interest in oil and gas exploration thatis driving the company's resurgence in business.
"All these drilling companies realize that the global trend is on a steep upward curve for the demand for the energy," he said.
For one thing, exploration has increased, in part through the recovery of the off-shore oil rigs that were taken off-line because of hurricane damage.
An Associated Press story said the number of rigs actively exploring for oil and natural gas in the U.S. increased by 21 this week to 1,465. Houston-based Baker Hughes Inc. said that 949 rigs were exploring for natural gas and 502 for oil. Fourteen were listed as miscellaneous. A year ago this week, the rig count stood at 1,043.
And President Barak Obama's announcement that he wants to permit oil and natural-gas drillling in parts of the Gulf of Mexico and the Atlantic Ocean won't hurt, although Galloway said the market for his product is worldwide and doesn't depend so much on U.S. exploration efforts.
Galloway said another factor is improvements in technology that allow drill operators to explore in multiple directions from a single drilling platform. Current technology even allows drilling horizontally once a hole is sunk, meaning a smaller footprint on the surface.
"We have a hard time seeing beyond about a quarter," Galloway said, "but all the forecasts look good into 2011 and 2012, and there will still be growth in the industry."