Technically Famous: Rig Census | 4D Cutters | Aquaterra Energy Transcript
00:12 Michael Gaines: Hello, and welcome to Technically Famous, a quarterly segment from NOV Today that focuses on experts and leaders who are helping NOV make contributions in the areas of technical articles and publications. I'm your host, Michael Gaines. In this episode, we're talking with two NOV authors and one customer, who have either written or co-authored articles in the past few months that were linked to NOV. Get their take on the piece and discuss the major takeaways. We first talk with Carlos Huerta about NOV's 65th Annual Rig Census, and the outlook for 2019. Next, we speak with Dr. Reza Rahmani, and get insight into a revolutionary type of drilling cutter. Finally, we have a conversation with Stewart Maxwell, the technical director of Aquaterra Energy, and discuss the collaboration with NOV on the development of an innovative solution for marginal fields. First up is Carlos Huerta, the director for technical marketing and research in the rig technology segment. Carlos, thanks for being here.
01:15 Carlos Huerta: Hi, Mike. How are you?
01:16 Michael Gaines: Good. Good. Today, we're talking about an article that was published in the November/December issue of Drilling Contractor magazine. It was NOV's 65th Annual Rig Census. I know that's something that you've had a lot of input and experience in helping produce. I just wanted to talk a little bit about that, and maybe start out by asking, what is the Rig Census for those that might not be familiar?
01:43 Carlos Huerta: Well, the Rig Census is a data-driven review of the entire offshore and land rig fleets across the world. For that, the census combines many data sources, some of our own intelligence. And basically what we say is, we try to segment the market, and give the industry a sense of how much supply of a certain type of rig is out there in the world. And that drives their decisions to hire or build rigs. We rely very heavily on a certain number of databases from third parties. One of them, obviously, the biggest one are IHS. And we lean on them for the offshore metrics. On the land side, we lean on rig data mostly, and then some IHS. And then, internally, we do our own... Basically, we consult our systems to be able to say, "Well, we can, for sure, say that this rig is an AC 1500 HP rig, for example.
02:48 Carlos Huerta: We weave that data that we get from outside. And internally, there's a component to the census that is an actual survey. That is a theme that changes every year that Clay or somebody in our leadership will present to the IEDC at the end of the year. And for that, that is Steve Thompson and his group in corporate.
03:06 Michael Gaines: Okay, great. Maybe diving into the census itself for this year, what were some of the key highlights and takeaways that you and the crew came up with?
03:18 Carlos Huerta: Well, the biggest point is that the worldwide rig market is starting an expansion cycle. As we know, since 2015, the industry went through a severe downturn, obviously, investment in rigs kind of dried up. But as we are moving into the third year in recovery in North America land markets, and we finally have seen the bottom in offshore, globally. We are starting to see that investment is flowing back into rigs. That's what we wanted to bring attention to in this edition.
03:55 Michael Gaines: As you look at the US forecast and look ahead, what are some of the trends and expectations that you all are potentially seeing?
04:03 Carlos Huerta: Well, for the US, the biggest takeaway is for inland, the supply for the best tier, the Tier 1 rigs that you hear Clay mention in the earnings calls, that supply, that utilization level, the number of rigs that are utilized is about 90%. What that indicates is that drilling contractors are having to build new or upgrade some of the not-so-good rigs in order to make them compete. What that gives us is a very strong backdrop. Even in the face of this fourth quarter weakness that we've seen in the market, Tier 1 rigs are still almost essentially fully utilized. And we expect capital intensity of the incremental rig to be higher than it's been.
04:48 Michael Gaines: Okay. Great. Any other takeaways, either that was maybe it's just a surprise to you, or things that you think might be of interest to folks that read this particular report?
05:02 Carlos Huerta: Well, I think there's... Internationally, it's a little more art than science, but one of the cool things we were able to do is estimate the... For the land rig markets internationally, a level of utilization. And obviously, that is a little more qualitative, but it does offer some insight into which areas of the world are more likely to build the next incremental rig. And obviously, the Middle East looks the most attractive, and those are big, very big rigs, and they have an older fleet, and they will need some retooling of that fleet. In Latin America, you're seeing areas like Mexico that went through a very, very, very steep downturn, coming back at a great rate of speed, and they will require some repairs and capital equipment to get back to work. Colombia as well, Argentina, obviously, is the best market for a new build potential in Latin America. And Asia-Pacific is also going through a very long overdue process of retooling.
06:11 Michael Gaines: Okay, great. I know this was just some of the highlights, but if people wanna look at the report, I know that it's in the November and December issue of Drilling Contractor Magazine. And I've been talking with Carlos Huerta, the director of technical marketing and industry research for NOV's rig technology segment. Carlos, thanks for sharing your insight today.
06:35 Carlos Huerta: Thank you.
06:46 Michael Gaines: Next, we have Dr. Reza Rahmani, engineering manager focusing on shape cutter design initiative within Reed-Hycalog. Dr. Rahmani, thank you for calling in today.
06:57 Dr. Reza Rahmani: Thank you for having me.
07:00 Michael Gaines: I wanted to talk about an article you wrote in the October 2018 issue of World Oil Magazine titled "PDC bit technology evolves to 4D cutters". As the title suggests, it's about 4D cutters. The 4D makes me think, "Okay, well, was there a 3D and a 2D? And what does this particular iteration of cutters provide customers as opposed to their previous iteration?" Could you maybe talk a little bit about that?
07:25 Dr. Reza Rahmani: Yeah, sure. 4D is the latest shape cutter technology that commercialization is staged by Reed-Hycalog. Yeah, you're right. It follows the other shape cutters, 2D and 3D. 2D in specific was designed for shale applications. Depending on the type of the rock that we drill, we have different challenges. For example, if you're drilling in shale, evacuation of the cuttings is of a greater importance than initiation of the crack and breaking the rock. You don't necessarily do require a lot of energy to break the rock, but more than that, you have to handle the cuttings in a proper and efficient way. 2D was focused on the latter, on evacuation of the cuttings. By changing the face of the cutter or going with the ramp on the non-cutting side of the cutter, we basically opened a flow channel there to break the cuttings that form on the face of the cutter, to help with breakage of those cuttings and evacuation of the cuttings. But later, we focused on 3D cutters that was designed for medium to hard applications.
08:39 Dr. Reza Rahmani: In this [08:39] ____, we're focusing on the limestone applications that... We have plenty of those in Middle East, and as well as the rest of the world. For limestone applications or for medium to hard applications, our focus was how to initiate the fractures in the rock more efficiently. We proposed this new geometry with a pointed tip to help with initiation and propagation of the fractures in the rock to basically improve the efficiency and ROP in those applications. And then later, we combine the lessons learned from development of those shape cutters, combined them together to come up with the 4D geometry. It has a plough-shaped tip focusing on increasing stress concentration at the tip, but also have the ramp or a channel on the non-cutting side to basically help with breakage of the cuttings and evacuation of those. Basically, being a multi-purpose cutter, not only for one application but can cover a range of formation that we normally drill... While drilling in, for example, interbed application and so forth.
09:52 Michael Gaines: Right, right. And I see in the article here, I have in front of me, the shape that you're describing is definitely... Well, a very unique shape as opposed to maybe what you'd see with a conventional cutter. What are some of the other benefits of using the 4D cutter as opposed to a traditional cutter, and especially in the applications that you talked about in the shale place?
10:13 Dr. Reza Rahmani: Well, we can look at it in two ways. First thing, everybody is looking for reducing the cost. Increasing the ROP is the one major thing that most of the operators aim for. With 4D, we could improve ROP, not only in sandstones or limestone or shale, but in pretty much all the application that we drill. For example, in stalled applications. We know in Gulf of Mexico, we have many stalled applications and drilling fast through the soft section is one of the major challenges because of other problems that could cost if we have slow ROP in that section like creeping layers of salt that could cause a tight hold section. Being able to drill fast is one challenge that 4D provides. The other part is improving the efficiency. Nowadays, drilling optimization is focused on reducing the amount of energy that we put into the system. One indicator, for example, how the operators go with mechanical-specific energy, producing that to basically improve the efficiency of the drilling. For that, we need to reduce the torque. In addition to improving the ROP, we now can also reduce the torques.
11:33 Michael Gaines: When you talk about this particular cutter, I know that it's actually been run in the field. Can you talk a little bit about some of the field test and field runs that you've had with the 4D cutter?
11:47 Dr. Reza Rahmani: Yeah. For example, one of the examples that I had in the paper was a run in Pinedale, Wyoming. That was a interbedded application including salts, sandstone, limestone, and shale. And going with the 4D, we improved the gain in ROP 45% above the average ROP for that application, and it was 15% faster than the fastest run in that application. And that's just one example. We have numerous runs after that that proved what we saw. There's similar performance or even better in some of the applications.
12:29 Michael Gaines: I've been talking with Dr. Reza Rahmani, the engineering manager focusing on shape cutter initiative within the Reed-Hycalog business unit here at NOV, about his paper in the October 2018 edition of World Oil Magazine titled "PDC bit technology evolves to 4D cutters". Dr. Rahmani, thank you for being here.
12:49 Dr. Reza Rahmani: My pleasure.
13:01 Michael Gaines: Our third interview is with Stewart Maxwell, technical director with Aquaterra Energy. I'm here with Stewart Maxwell, the technical director with Aquaterra Energy about an article that he co-wrote with NOV in the November Edition of E&P magazine titled "Marginal Fields: Friend or Foe?" Stewart, thank you for being here.
13:21 Stewart Maxwell: I'm happy to be here.
13:25 Michael Gaines: As the title suggests, the article revolves around the idea and the concept of marginal fields, and I think there might be folks in the industry or even those that may not be in the oil and gas industry that aren't familiar with that term. Marginal fields, could you help define that for us?
13:44 Stewart Maxwell: Okay, yeah. I think different people have a different definition, but the way I've always looked at it is, a marginal field is one where your complete cost of development, and that would include obviously, the platform, the wells, any pipeline and installation of those various items makes this a level of recoverable hydrocarbons you have there potentially, so non-economical to produce.
14:09 Michael Gaines: Okay, yeah. Typically, I suppose that more traditional fields would be something that maybe some of the larger operators or other players would participate in as opposed to a marginal field?
14:25 Stewart Maxwell: Yeah, I think it's very area specific. What may be considered small or marginal in some locations, some areas of West Africa, some parts of the North Sea would be considered major developments or major finds in other locations. I think it's also dependent on the infrastructure available in each location. An area like the North Sea or an area such as the Gulf of Mexico, there's a great deal of existing companies, capabilities, equipment on-call that you can bring in to develop those assets, which isn't necessarily the case in some of the more remote or less developed parts of the world.
15:07 Michael Gaines: Got it, okay. Taking that definition and understanding, wanna move into the primary focus for our conversation which was around Sea Swift. Aquaterra Energy developed a conductor-supported offshore platform design utilizing NOV's XLC-S connectors. Again, they called it Sea Swift. Could you talk a little bit about what makes that unique and what advantages or savings does it provide over a conventional approach?
15:42 Stewart Maxwell: Yeah. I'd say, the definition is very much inherent in the name. A conductor supported platform uses the well conductors to provide that support for the platform topsides. In a lot of cases, what we've been looking at are platform topsides that you would be placing on a conventional jack-up on another type of support. You're not compromising on the facilities you'd want there. You're just looking for a different way to support that topside. Again, referring back to the discussion on marginal fields, quite often, if you want to use a conventional standard tripod or four-legged steel jacket, you need to have a heavy lift vessel or a large barge to install this. Now, again, in some areas, the more developed areas, that capability will be setting there, albeit very expensive, but they'll be available at your hand. Whereas, in other areas, you will have to mobilize and de-mobilize those vessels.
16:45 Stewart Maxwell: For instance, many areas of the West Coast of Africa to bring a barge in capable of installing a jacket in 55-60 meters water depth, you can be looking at anything from $4 million to $10 million in just mobilization and de-mob costs that clearly with our conductor-supported platform such as a Sea Swift, when you're using the jack-up to do the bulk of that jacket installation, you avoid that cost straightaway. There's immediate cost savings with the Sea Swift and it uses less fuel than a conventional jacket. On a straight per ton basis, you're paying for less fabricated steel. But in the larger fields of complete cost and development I mentioned before, you're immediately saving multiples of millions in not having to bring specialist equipment into the area that you may only need to perform one or two tasks, and then it'd be sailing off again. It's that holistic cost saving, that's really the main driver for using these smaller, more modular platforms.
17:52 Michael Gaines: Right, yeah. It sounds like a design that not only is easily able to be deployed, but as you said already, a significant reduction in terms of support equipment and an outlay for development. Yeah, I can definitely see the attractive proposition there.
18:09 Stewart Maxwell: One of the drivers in the past for us has been these smaller operators coming to us saying, "Well, I'm going to have a jack-up there because I'm going to drill wells, and I'm going to have a boat that supports the jack-up. Can you work a platform around this without me having to do anything else?" And when you've got that as a bound to your available installation equipment, you become quite self-dynamic and innovative in the approach you have to come up with to provide that solution.
18:48 Michael Gaines: In looking at the application and development of Sea Swift and the underlying approach, do you see there's a shift in platform design for the future, or is this something that's more of a one-off or something of a temporary solution?
19:06 Stewart Maxwell: I certainly don't see it as a one-off or temporary solution. I think it's another tool in the toolbox. It works in specific areas for specific requirements. We've installed Sea Swift platforms from 20 meters water depth up to 65 meters water depth. They have a wide range of applicability, but if you are an oil company that's looking to put a 3,000 ton topsides on something, a Sea Swift may not be the ideal solution. If you're looking to install a number of Greenfield wellhead platforms, [19:42] ____ professional capability to a Greenfield development, it may well be a good way for you to develop that asset. One of the other, obviously, attributes of the platform that we've seen as being attractive to clients previously, is that, because you're not fabricating one large jacket, you're fabricating smaller parts. They can be made in smaller fabrication yards or shipyards. You're not necessarily relying on that major fabrication capability being set in there.
20:14 Stewart Maxwell: You can use just a smaller landmass to produce the platform. I see it as a development option that will carry on. There are a range of small platform options out here, and this is another one that has the uniqueness that you're only requiring a jack-up. You can install them with a lift port. You can install them with a small crane if you want, but one of the niche areas is that, if you're building a well, you generally always have a jack-up there to drill the well, and you can then use that jack-up to perform a large part of the installation of the structure.
20:53 Michael Gaines: I'm excited for the development of Sea Swift, and it sounds like a great solution for those applications that definitely need it. I've been talking with Stewart Maxwell, the technical director with Aquaterra Energy about the article co-written with NOV in the November edition of E&P magazine titled "Marginal Fields: Friend or Foe?" Stewart, thank you for the conversation today.
21:18 Stewart Maxwell: Thank you for giving me the opportunity to speak.
21:21 Michael Gaines: Thanks for listening to this episode of NOV today. We'd like to hear your feedback. Share your thoughts by tweeting us @NOVGlobal and using the hashtag NOVToday. Or, you can contact us by sending an email to [email protected]. To stay up-to-date on the latest episodes, visit our website at www.nov.com/podcast. There you can find show summaries and links to subscribe on iTunes, Google Podcasts, SoundCloud, or wherever you get your favorite podcasts. For NOV today, I'm Michael Gaines. Thanks for listening and we'll talk to you later.