How to Start an Oil Well Drilling Contractor Business in 2026
- Nate Jones, CPCU, ARM, CLCS, AU
- 6 days ago
- 2 min read
Starting an oil well drilling contractor business in 2026 can be a strong opportunity as drilling demand grows in several U.S. basins. But drilling is one of the most highly regulated and highest‑risk industries, which means new business owners must understand licensing, equipment, safety, and insurance requirements before beginning operations.
Here’s a clear, beginner‑friendly guide to get you started.
1. Understand the Market and Choose Your Service Type
Before launching your business, analyse the demand for drilling services in your target region. Look at:
Active wells and new drilling permits
Whether operators need shallow, intermediate, or deep drilling
Competitor pricing and capacity
The U.S. Energy Information Administration (EIA) offers production and activity trends useful for forecasting demand.
2. Form Your Business and Secure Required Permits
Register your company as an LLC or corporation, then secure all required state and federal permits.
Drilling contractors working offshore must apply through 30 CFR Part 250 Subpart D, which requires BSEE approval, detailed well design criteria, and safety documentation.
Onshore contractors must follow state‑level rules for drilling, land use, and environmental compliance.
3. Follow OSHA & API Safety Standards
Oil well drilling is regulated by strict safety frameworks:
OSHA 29 CFR 1910 governs oil & gas extraction safety programs.
API RP 54 outlines safety practices for drilling and servicing operations.
Your business must implement:
Daily safety meetings
Rig‑up/rig‑down safety procedures
Emergency response planning
These standards are also required by major operators like Chevron, Shell, and Exxon before awarding contracts.
4. Acquire Drilling Rigs, Equipment & Skilled Staff
Drilling requires significant investment in:
Drilling rigs (mechanical, electric, or hydraulic)
Pumps, motors, BOP systems, and derricks
Crew trucks and support equipment
Hiring experienced drillers, derrick hands, and floor hands is critical. OSHA reports that drilling contractors experience a disproportionately high number of severe injuries, highlighting the need for skilled and safety‑focused crews.
5. Obtain the Required Business Insurance
Drilling contractors must carry specialised insurance to meet operator requirements and protect their business:
Your insurance program must meet operator contract requirements to secure work with Chevron, Exxon, Shell, BP, and others.
6. Build Operator Relationships & Bid for Work
To begin generating revenue:
Register as a contractor with major operators
Meet their safety, insurance, and compliance requirements
Maintain accurate safety records and proof of training
Provide COIs (Certificates of Insurance) matching contract limits
Strong compliance increases your chances of winning drilling work.
Start Your Drilling Contractor Business With Wexford Insurance
Launching a drilling contractor business is complex, but your insurance program doesn’t have to be. Wexford Insurance works with drilling contractors nationwide to secure affordable, operator‑approved insurance coverage.
👉 Request an oil & gas insurance quote from Wexford Insurance today and get expert guidance for your 2026 startup.
