WorldWide Drilling Resource

WorldWide Drilling Resource ® is a proud member of this association. National Drilling Association Tel: 877-632-4748 Fax: 216-803-9900 www.nda4u.com 11 WorldWide Drilling Resource ® MARCH 2015 Final Tier 4 Implementation and Your Finances Adapted from an Article by Steve Michaels of Neff Rental, Appearing in Construction Executive The past few years have seen vast improvements in the way diesel-powered equipment engines are built to meet the Environmental ProtectionAgency’s (EPA) final Tier 4 emissions reduction standards. Tier 4 engines were introduced in 2012, starting with the addition of a variety of products adhering to emissions require- ments using the lat- est technology from major manufacturers. Contractors will see an increase in the cost of Tier 4 equipment, which has been the case over the last few years as these products have evolved. The 10-25% increase comes from the engine design, build, and installation, as well as govern- ment requirements. Keep in mind, the cost of an engine in a small air compressor may be 50% of the total unit cost compared to an engine for a wheel loader, which may account for less than 20% of the over- all cost. Companies should also expect higher maintenance costs as special fluids, filters, and servicing are required for proper maintenance. Be sure to familiarize staff with how to operate Tier 4 units correctly so proj- ects stay on schedule. Training packages are available to ensure every mechan- ic and operator is educated on main- taining this technology. If equipment costs are on the rise, where do contractors see a break? Many Tier 4 engines on units with at least 75 horsepower use 1-4% less fuel com- pared to Tier 4i engines in certain applications. With the addition of selec- tive catalytic reduction technology, Tier 4 engines use Diesel Exhaust Fluid, which costs less than fuel, and decreases the overall costs related to consumed fluids. Renting equipment is one option for contractors to minimize their cash out- lay and capital requirement since they would only be paying for the time need- ed to complete a project. Many contractors may take into consideration the resale value of pre- Tier 4 equipment. This has been a com- mon question and challenge due to the fact that resale equipment frequently is shipped outside the United States, where EPA regulations are not required. What happens to the equipment with Tier 4i engines? Major manufacturers are work- ing on kits to restore these engines back to Tier 3 so they can be shipped overseas without dramatically affecting resale value and cost. All newly-produced units inside the United States are required by the EPA to be Tier 4, which adds greater cost to engines having to be reprogrammed back to Tier 4i and below. Implementing final Tier 4 engines comes at a cost. However, meeting the new EPA regulations allows contractors to better compete for sustainable proj- ects. As rental and purchasing decisions arise during the course of the year, closely consider the project’s guidelines and budget, as Tier 4 engines cost more but may also improve production and efficiency.