Getting to the core.

With its increasingly influence over the oil and gas industry, more and more companies are looking to work in the region and take advantage of the lucrative opportunities it offers. With an eye on the drilling sector, O&G managed to speak with three industry experts to get their opinions about what’s influencing the drilling sector and how they plan to develop in the region. Here’s what Jørgen Hallundbæk, CEO and President of Welltec, Leif Ove Svensen, International Sales Manager, Peak Well Solutions and Steve Zagdan, General Manager Russia & CIS Region, KMC Oiltools had to say.

O&G. How would you describe the current state of the drilling sector in the CIS region - what are the main factors influencing its development?
JH. The CIS region is clearly an area of growth and we forecast that the region has not yet experienced its peak. From our perspective the region will benefit from the increasing internationalisation of its business activities and with the proper planning and development of infrastructure the CIS will see a tenfold increase in activities in the years to come. Furthermore, the region is centrally located in order to provide energy to growth areas such a China, India and the CIS region itself.

LS. The CIS region is increasing in activity together with the rest of the oil business worldwide. As we can see. the main factors are primarily delivery chains, relationships and getting the company name known. Secondary is the matter of delivery times on equipment and what type of technology to supply.

SW. The drilling activity in Russian is very favourable towards the purchase and rental of capital equipment from foreign manufacturing companies to improve their drilling performance by implementing new technology to increase their production needs.

Horizontal wells are becoming the norm today whereas eight years ago they were relatively new. The introduction of better solids control equipment has made this possible.

In many of the CIS countries they have been much slower in taking up the opportunities of purchasing or renting foreign manufacturer’s equipment, as the State Energy companies tend to continue using the older technology because of the lack of money to invest in capital equipment.

O&G. With this in mind, would you be able to provide a brief outline of your company's role and experience in the CIS region and how you have positively influenced the market?
SW. Just over 10 years ago we set up a representative office in Moscow and within a short period of time the major Russian oil and gas producers recognised the benefits of purchasing foreign solids control equipment. To date we have sold over 360 shale shakers and over 100 centrifuge units, which are still operating on the drilling rigs today.

Last year we decided to expand our activities by setting up a rental sales and service company and we have several sets of solids control equipment on rental now in Russia.

In the CIS countries where foreign operators are drilling and developing oil and gas fields, we have provided drilling waste management services on a contractual basis.

JH. Welltec has been active in the region for approximately five years and we have found that professionalism is growing and the frontier spirit is declining. This is a double-edged sword with both negative and positive effects. On the positive side, conducting operations is easier because there is a growing understanding of the necessity of the operations and of the importance to the region. On the other hand, part of the fun is planting your foot in the mud saying ‘this is my starting point’, and this is lost.

LS. Peak Well Solutions AS has experience mainly from the Norwegian sector as well as the UK and Danish sector, so the CIS region is a new challenge for us.

O&G. As a result, have you seen an increase in the demand for your products in the region and how do you foresee demand developing over the next two years?
JH. We have seen an almost explosive growth and we see no signs of the activities wearing off. On the contrary, Welltec has experienced how the requests have become more technically complex and the operations scenario bigger. To us this is an indication of a growth region where advanced well systems are projected and installed without having to pass through a set of intermediate phases, basically, combining ‘cutting edge’ technology (developed over the last decades) with the actual situation in the area.

SW. This is a difficult question to answer, as it partly depends on the different government tax regimes, which can have a dramatic affect on capital equipment sales. However, with the complex wells that need to be drilled, we would expect to see an increasing demand for our products.

LS. With our developed products we see a clear increase in demand. Over the next two years we will see an even greater increase based on the drilling and exploration activity as a result of the extreme energy demand worldwide. In addition to the increased activity it is also necessary to be more efficient, hence the need for more technology in this type of equipment and the development of this.

O&G. Would this be supported by developments in new technologies, or will the plan be to support your solutions already offered?
JH. Welltec has innovation as a key value. We are an international service provider and we provide an excellent service to our customers. Should a situation occur where we do not have the tools developed to solve a particular challenge, we will, together with the customer, develop the necessary technology to address the issues. Furthermore, Welltec is always trying to combine the experiences from worldwide operations to develop new solutions for the benefits of the industry.

LS. As mentioned above we see a clear demand in new technology in addition to existing equipment and services. With our own R&D department we have a strong focus on this.

SW. Clearly the existing products are able to achieve excellent results and allow drilling of more complex wells to continue. However, like all products there is continual development taking place with the aim of improving the overall efficiency and ease of use. We expect to launch new and improved products in our portfolio over the coming years.

O&G. What advantages would you therefore say your solutions provide over alternatives on the market?
SW. Our drilling waste management product line is a premium offering in the marketplace, improving solids control efficiencies and keeping waste volumes to a minimum. Our expertise in drilling waste management complements our new drilling fluids product line allowing us to provide truly integrated services ’reducing dilution at source’.

JH. Welltec is service! We solve challenges to the satisfaction of our customers in a timely and cost-efficient manner.

LS. Peak Well Solutions AS has, as a company, long experience in planning, developing and installation of equipment. All key employees have a greatdeal of experience from the oil business coming from all the large service companies such as Weatherford, Baker, Halliburton, BJ Services and Schlumberger.

As a result of having the R&D and production locally in Norway compared to Houston – as most of our large competitors – we have a much shorter response time to meet customer demands. In addition, we do not have the same prioritising levels to compete with.

O&G. Is there anything that's hindering development in the CIS region at present that concerns you and your company's advancement, if so, how are you approaching these issues?
JH. Welltec is at present not represented with a base in the region. As such, we are in negotiations with potential partners to set up a regional CIS base.

LS. The development of marked for Peak Well Solutions AS in the CIS region is based on the resources put in and information given. Based on this we will aim strategically where there is a need for our products.