Secure the pipe using a vice or c-clamp if it is loose. Place a framing square over the pipe, with the blade resting on top and the tongue hanging over and touching the side.
Hold a 1-, 2- or 4-foot level on the top edge of the framing square's blade. Make small adjustments to the framing square while watching the level bubble. Stop making adjustments once the level bubble is inside the two lines, which indicates that the framing square is level.
Place a mark at the top center of the pipe using the markings on the framing square for exact placement. Divide the pipe width in half and use the markings on the inside edge of the blade to determine the exact reference point.
Place a center punch tool's tapered end on the mark that you made on the pipe. Hold the center punch tool at a 90-degree angle from the pipe before hitting the back end with a hammer to make a small dimple.
Rest the center drill bit's tapered tip in the dimple. Squeeze the electric drill's trigger slightly to allow the bit to dig into the pipe material before bringing the drill to full power and finishing the hole.