Rewind 18 months and the United States’ oil industry was in rude health, with the $100+ price of oil fuelling the country’s myriad of shale plays, leading to predictions that it would become the world’s leading producer of oil.
Today, the picture could scarcely be different. The number of drill rigs working off the States has halved, with thousands of workers suddenly finding themselves out of jobs – many of whom are being headhunted by firms in the GCC.
Saudi Aramco, in partly has reportedly lined up hundreds of American workers, keen to tap into the wealth of shale knowledge and experience that has been accrued in the last few years.
In addition, production levels have remained on an even keel
That face perhaps explains the thinking behind the In a landmark move in December, when the White House announced its support for a deal reached by the Congress on a package of spending and tax legislation to lift a 40 year old ban on crude oil exports.
The move indicates to the fact that despite near-daily reports of offshore rig counts going offline, the US oil producers have drilled enough to not only meet the huge demand at home, but also have enough surplus to sell to the world.
It is also indicative of the fact that American producers have resisted stiff competition from the low-cost oil producing cartel OPEC (particularly Saudi Arabia), Russia and other players, and are now ready to battle it out in the global marketplace.
American companies (whether big or small, in financial terms) have primarily been behind this achievement of sorts due to their pioneering technological innovations.
Deriding popular perception that US shale oil producers wouldn’t survive in the current hostile market conditions for long due to their high cost of production, American IT, contracting and service providing companies have helped them cut down their cost of production significantly, making their operations efficient and economical.
Moreover, American firms have also garnered significant interest for their innovative oilfield, automation and software technologies in the Middle East, as regional NOCs scramble to urgently reduce their capital expenditures.
This is evident from companies like Schlumberger expanding their presence in the GCC, and Baker Hughes continuing to showcase its products at major industry events like ADIPEC.
Schlumberger, arguably the world’s largest oilfield services company (also ranked 1st in an Oil & Gas Middle East listing of global services companies) recently announced the launch of a major office in Dubai, to cater to the rising demand for its products and services.
Recently, it also became the first freezone company to be established under the Dubai World Trade Centre Authority (DWTC Authority).
Also this year, in probably its biggest corporate gain, Schlumberger acquired its American rival and another major oilfield services company Cameron, for a reported $14.8bn.
Even the US Department of Justice has cleared their proposed merger, without any conditions. ‘The transaction combines two complementary technology portfolios into a ‘pore-to-pipeline’ products and services offering to the global oil and gas industry. On a pro forma basis, the combined company had 2014 revenues of $59bn’, Schlumberger said in a statement at the time.
As an example of its commitment to press ahead with innovations that help oil producers ‘do more with less’, Schlumberger teamed up with IT giant IBM this year to provide integrated services to upstream oil and gas customers ‘that will improve the business impact of production operations’.
The offering combines Schlumberger’s production optimisation services, upstream expertise, and its flagship Avocet production operations software platform with IBM’s enterprise asset management and enterprise services to deliver an end-to-end service for optimising integrated production operations.
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American company New Tech Systems, manufacturer of electronic tubular inspection systems and related pipe service equipment, is also spreading its wings in the GCC.
Established in May 1996 in Texas, New Tech Systems’ has been operating in the Middle East and North Africa for almost two decades.
In addition to selling equipment in the GCC, the company has now upgraded itself to now offer industry certification, training, repairs, spare parts, and calibrations through MSPEC, its agent in Abu Dhabi.
“Yes, it makes sense for American companies to look outside the US for business opportunities to offset the decrease in domestic activity. As stated earlier, New Tech Systems has been firmly established in the GCC for many years. We have recently partnered with MSPEC in Abu Dhabi to be our exclusive agent on the ground, expanding our presence in the MENA and CIS regions,” Ryan E. Doyle, marketing and sales director, told Oil & Gas Middle East.
Through its equipment, New Tech Systems strives to streamline customer operations for pipe inspection with technology and industry-leading technical and product support. The company provides electromagnetic (EMI) and ultrasonic systems or inspection of casing, tubing, drill pipe, sucker rod, coiled tubing, and drill collars.
At ADIPEC 2015, the company launched its WellTech 4X EMI Rig Floor Tubing Inspection System. This technology, which inspects oilfield tubing on the well servicing rig, is a standard method of inspecting production tubing throughout North America.
“We think there is great potential for this technology in the GCC to help oil and service companies save time and money, compared to conventional inspection methods,” Doyle said.
Baker Hughes, also among the top ten global oilfield service providers, announced a range of products this year, and was seen promoting their portfolio at regional exhibitions, only to receive satisfactory responses.
Baker Hughes announced the commercial release of its DeclineShift mature asset solution, which helps operators maximise capital efficiency and extend profitable production from their older oil and gas investments.
The DeclineShift solution boosts recovery and lowers operating costs rapidly and efficiently through a combination of detailed analysis of the asset and fit-for-purpose technology applications.
The foundation of the DeclineShift solution includes a close examination of the areas that can have the greatest positive impact on the asset’s overall economics, whether individually or collectively.
The process focuses on three primary areas to increase the value of an asset: optimising hydrocarbon flow from existing wells, maximising production revenues and increasing economically recoverable resources.
Talking about practical implementation of the product, Baker Hughes designed and implemented a DeclineShift solution for an 80 year old field in which production was declining 6% monthly, new wells were costly, and previous revitalisation attempts had not yielded significant improvements.
Baker Hughes developed and prioritised an assortment of production enhancement opportunities, including rejuvenating existing wells and accessing bypassed oil.
At the operator’s request, Baker Hughes assumed management of the field. The full solution included the drilling and completion of 30 new wells, 36 recompletions and 86 workovers of existing wells, and 77 new fracturing treatments.
As a result of these efforts, the DeclineShift solution increased the operator’s field production 300% while reducing monthly decline rates 43%.
Additionally, the efficient execution of the solution reduced costs related to ongoing production and field operation 57%.
Baker Hughes also released its SPECTRE frac plug, the first in the industry to completely disintegrate downhole after fracturing.
The plug eliminates coiled tubing (CT) interventions, accelerates completion times and leaves behind an unobstructed production inside diameter (ID) for maximum flow area and easy future access.
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As with a traditional frac plug, the SPECTRE plug enables flexible stage placement.
But unlike traditional plugs and even other disappearing downhole plugs, however, the entire SPECTRE plug — including the plug body, anchoring grip and packing element — disintegrates fully at predictable rates when exposed to wellbore fluids.
Complete disintegration ensures that no plug debris are left downhole, thereby protecting the well infrastructure from undissolved components, which can compromise wellbore integrity, restrict access and complicate operations such as future well rejuvenations.
Industry media and the local consensus in the Middle East would suggest that investment in R&D by the major NOCs is growing despite the downturn.
In such a scenario where not just awareness, but investments into operational excellence is growing manifold, Texas-based global drilling services provider National Oilwell Varco (NOV) sees relevance for its products increase in the region.
NOV uses a number of proprietary software platforms, including VibraScope and DynaScope platforms.
The VibraScope software uses a proprietary finite element analysis method to model the dynamic behaviour of both the drillstring and the bottom hole assembly (BHA) and has been validated through downhole measurements using the high-resolution BlackBox dynamics recorder.
The DynaScope software enables the detailed analysis by expert staff of downhole dynamics based on data acquired from multiple tools within the BlackBox product line, resulting in the delivery of a solid optimization strategy to the client and the strategy’s associated performance benefits, NOV claims.
“It is my sound opinion that investment in technology and in particular automation will not decline in the current market and will in fact continue to grow. Multiple SPE events in the Gulf region have recently focused on technological innovation to solve complex operational problems, reinforcing that the need for technical breakthroughs is still strong,” Stephen Pink, director – dynamic drilling solutions services Eastern, NOV Wellbore Technologies, told this magazine in an earlier interview.
“As margins are eroded due to the low oil price the industry’s focus has to be on how to be more efficient and cost-effective, and automation is a key enabling technology for achieving this. The technology enables operators to be more informed, efficient, and consistent whilst at the same time bridging the growing competency gap as we move towards the “Big Crew Change’,” Pink said.
Switzerland-based automation services provider ABB, which has a major operation in Silicon Valley, considers the Middle East as an important market for its offerings, and boasts of a major office in Dubai.
“Here, in the Middle East, there is more of a conventional oil production, and not to say that there is no investment there, it just hasn’t put such big demand for it and there hasn’t been a lot of new technology and innovation from my perspective,” Chris Rittler, head of wireless, ABB, said in an interview.
“My opinion of this region is that it is following the United States and I would say more of the North Sea. If you look at those regions, there has been a lot of new infrastructure deployments. In the US, that is because there has been an increased fracking activity by the producers there that has led to new requirements in the production and therefore you have had new technology put in which is driving the demand for wireless,” Rittler said.
“Now that the price of oil is changing drastically, we are seeing customer enquiries from this region, very similarly to the other regions that are looking for more modern technology to drive more automation, efficiency, safety and reliability,” he commented.
He stressed on the fact that wireless technology holds key for the oil and gas industry, and said ABB’s clients have increasingly been deploying wireless technology for machine-to-machine data communications.
Within its portfolio, ABB claims it endeavours to provide any wireless technology that its customers would need as part of their automation systems, along with other components, be that measurement products or process automation and control systems in an oilfield, pipeline or in a refinery.
“If you look at any one of these environments — upstream, midstream or downstream – it is difficult to pull wires. To have communications you need either wireless, fibre or copper. In these challenging environments, due to temperature, vibrations, etc. having wires or fibre in place usually is not a viable option so wireless has a pretty wide use right now in the industry,” Rittler explained during the interview.
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“I think we are seeing this in a number of industries already. I think what we’ve seen in process automation in oil and gas — casting kind of a white net over it, is already happening. If you look at the process automation that’s happening in unconventional production in the US, it’s impressive and ABB is a part of it,” Rittler added.
Health, Safety and Environment (HSE) is also of paramount importance when it comes to the oil and gas industry. US companies see themselves well-positioned to address the needs of improving the regional industry’s safety standards, and say they have found out that companies here are more than willing to implement American HSE solutions.
US industrial services provider Ingersoll Rand has recently tied-up with Famco, part of Dubai-based conglomerate Al-Futtaim Group, to sell its pioneering personnel lifting product – the MR150 Man Rider – in the local market. The two companies were out in full display at ADIPEC this year and spoke highly of one another.
The MR150 Man Rider winch integrates all the best safety and durability features of Ingersoll Rand’s lifting technology as standard features in a single compact package.
The MR150 has built-in safety mechanisms, including a slack line prevention system and an emergency lowering system, as well as a number of intuitive design elements that help rig workers protect themselves and co-workers during operation.
The MR150 is fitted with stainless steel components and marine-grade paint to reduce corrosion and withstand harsh environments.
About 7% of US oil worker fatalities in recent years were caused by falls from higher to lower levels, and keeping that in mind Ingersoll has laid special emphasis on the safety features of the product.
“It is unfortunate that a lot of the fatalities in the oil and gas that have happened in the past have been due to fall from heights. In many cases, they could have been averted with the use of proper lifting techniques. So we think the MR150 Man Rider is the great product as it has the safest lifting capabilities and has been packaged better than other products,” James Green, marketing leader, Ingersoll Rand, said during ADIPEC.
What the future holds
Saudi Aramco’s chairman Amin Nasser, at a conference in Norway this year, alluded to the fact that Aramco intended to triple its R&D manpower and to increase its R&D expenditure fivefold over the coming years, whilst ADNOC stated it has seen a year-on-year increase in R&D for the last five years.
The need for R&D is further reinforced by a recent survey performed by Lloyds Register Energy, which showed that the five major NOCs of the GCC have increased their research budgets to $5.3bn.
“Based on our findings at ADIPEC in November, the GCC has a higher level of activity than most of the world. Most notable are Saudi Arabia, Kuwait, and the UAE. If the Iran sanctions are lifted, then they may become a big player for American companies as well,” Doyle said.
“With the decreased level of activity in the US, it seems logical that Americans would relocate to where the industry activity levels are higher. Due to the decreased activity in North America there should be a large pool of talented people that the GCC companies can access for their expertise and knowledge.”
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