Keith Leggett, VP of operations MENA, at global titan National Oilwell Varco says Saudi Arabia is busier than ever
Drilling and production activity, always a bellwether for wider industry trends in Saudi Arabia, is on the increase. New work on the Kingdom’s new and existing fields is driving investment in upstream support operations, according to Keith Leggett, VP Operations MENA at National Oilwell Varco.
Following the completion of its $100 billion capital expenditure programme in 2010, many observers may have been pessimistic about forthcoming business opportunities in the Kingdom.
Leggett says, demand for rig services and equipment has not only maintained a healthy level, but NOV in fact saw demand grow throughout 2011.
“At the beginning of 2011 we moved into a brand new 8,000 square metre facility in the second industrial area of Dammam, just on the outskirts of the city. This represented a major investment but means we have the capability to represent just about the entire NOV group from a hub site,” explains Leggett.
The new facility is a combination of six NOV divisions, and aside from business units which have longstanding or legacy agreements elsewhere, such as the Tuboscope division, it brings a centralized approach to business in the Kingdom.
“For downhole tools, rig solutions, all of the related equipment and distribution, which dominate what the rig solutions business provides, we can stock everything here which delivers obvious benefits to our customers,” Leggett says.
At year-end 2011 NOV had around 60 employees at its Dammam site.
“Business is going well. We have been looking forward to adding greater support in Saudi Arabia and we are achieving that now. Given the extent of installed equipment belonging to NOV, we felt it prudent to upgrade our support structure in the Kingdom.
There is an ongoing expansion in drilling activity. That is continuing into 2012 and beyond. For that reason we needed to make sure that we had sufficient support, personnel, spare parts and equipment available in the Kingdom to manage that.”
Leggett says that in 2011 customers will have noticed more availability in stock, thanks to a substantial upgrade of inventories and additions to support staff in the Saudi Arabian hub.
“In terms of field service and well based services we have a great deal more capability now, and we have been building our capacity for overhauls on key equipment such as top drives and mud pumps, as well as being able to service and recertify BOPs in country – it’s a big improvement,” he adds.
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Trends
Leggett says business in KSA is exceeding expectations and that key trends of tougher, deeper and longer wells being drilled have emerged and helped encourage the investment decision.
“In the region generally there is a feeling of upturn, of progress and growth in several areas of the MENA region, but certainly in Saudi Arabia there has been considerable growth this year, and that looks to be continuing in 2012.”
He adds that new projects, which require more drilling equipment both onshore and offshore, are being green-lit and that the rig business is poised for further growth.
“There is strong demand for more rigs to develop new fields in Saudi Arabia, in addition to in-field expansion and maintenance. On top of these key areas the divisions we deal with are showing increased demand for enhanced oil recovery solutions, which translates to drilling with newer, more powerful equipment so that they can drill deeper and longer.”
The drive for new technology, and new development techniques means top-end equipment producers and service centres are being kept busy.
“In the rig solutions division of the company there is a definite requirement to drill deeper, longer and lateral wells which require more powerful top drives. The industry is of course influenced by what is happening in the rest of the world, and nobody can be 100% certain of the way things are going to pan out on a global level, but we feel confident that there are good opportunities for growth over the next two to five years.”
Regional
performance
Leggett says the uptick in Saudi demand has translated into a concentrated effort on NOV’s part to meet and extend its service capabilities in the Kingdom – a trend likely to continue.
“I would say that the coming two to three years we will be focusing a lot more on Saudi Arabia than we have in recent times. This is led by demand and put simply they are looking for more sophisticated rigs and more powerful equipment, and we need to be around to support that necessity. Of course, we focus on all the countries in the Gulf, but Saudi Arabia is getting more attention right now.”
On top of the facility expansion, which was largely complete last year, 2012 holds an exciting development for the companies KSA capabilities.
“In our budget for the coming year we have decided to install a top drive test stand. Essentially this means when a top drive drilling unit has been stripped down and serviced, after reassembly it is placed into this custom-built stand and thoroughly tested. Currently we only have two other top drive test stands in the MENA region, one in Dubai and our North African one is in Cairo, so this effectively closes the triangle for us.”
Leggett adds that the pressure testing facilities are also scheduled to be expanded in 2012, which will enable greater onsite testing and recertification of blow-out preventers in Saudi Arabia.
With 2011 drawing to a close, Leggett was upbeat about the regional, and particularly Saudi Arabian achievements and momentum which has been built throughout the year. “As a region we’ve had a successful year. We’ve achieved our targets and have a very aggressive forecast for 2012-13 and expect to be very busy over the coming two to three years too,” he concludes.
