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Sat 10 Oct 2009 04:00 AM

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Market appraisal

The biggest names in the Middle East drilling business reveal how 2009 has rolled out, and their expectations for 2010.

Market appraisal
GTSC’s training well is the most advanced of its kind in the Middle East.
Market appraisal
Liam Burns, marketing manager, Middle East and Asia, Schlumberger Drilling & Measurements.
Market appraisal
Khaled Nouh, president - Middle East, Baker Hughes.

The biggest names in the Middle East drilling business reveal how 2009 has rolled out, and their expectations for 2010.

Drilling activity in the Middle East has dropped from the 2007-2008 peak. However, the big challenge for drilling technology and service providers has been downward cost pressure by the oil companies. To stay ahead, it seems that whether you are a downhole tool provider, a service company, or anything in between, delivering and packaging your goods into an integrated offering has been the dominant trend affecting your business in 2009.

This month the Oil & Gas Middle East special report brings you the biggest names in the regional drilling business. Exclusive insights from the dominant oilfield service companies, leading technology providers, safety experts and international tool and bit manufacturers, this is the definitive market review for the Middle East.

Weatherford Drilling Review

Brod Sutcliffe, Global Business Development Director for Drilling Services at Weatherford says Middle East activity has been strong, outperforming other markets. "Demand for drilling solutions in this region has been prominent. The Middle East and North Africa had a very strong year and this performance helped offset some of the weaker performing areas like North America."

Though no particular hotspots of activity have dominated the company's regional performance, Sutcliffe says the typical markets have performed largely as usual. "I think that changing oil prices have necessitated a review of activities and contracting strategies amongst the NOC and IOC companies across the region, but our rig count remains high across the region, with declines in one area offset by dramatic increases in others."

The period of low oil prices which characterised the first quarter of this year may have been a major contributor in a shift in attitudes towards upstream strategies by the region's biggest players, he says.

"Services that Weatherford provides than can reduce overall cost have proven particularly popular this year. Project management, single-source solutions which reduces headcount and subsequently reduces cost has been in strong demand. Coupling this with technology changers in managed pressure drilling, performance drilling, reservoir characterization, revitalized well construction designs and generally a better understanding of the formations is also seeing significant pick up throughout the region," explains Sutcliffe.

For oil companies, improving cost-control abilities has become the dominant trend in 2009. Sutcliffe says this is largely in-line with previous years, but with renewed focus in the Middle East this year.

"The most significant trending we've noticed is the shift towards single sourcing of integrated drilling and workover capability."

The biggest gains in the drilling business will be made by better understanding the characteristics of the reservoir and understanding the difference between value and cost when considering a drilling and ultimate level of field recovery.

"To enable this, the combined application of motorized rotary steerable performance drilling systems, BHA vibration management tools and managed pressure drilling to drill at balance will allow operators to maximise the on-bottom ROP, maximize BHA reliability and reduce drilling risk and associated flat time," he says.

Weatherford has positioned itself as an integrated solution provider across the whole drilling spectrum of services and is focused on bringing that approach to the Middle East says Sutcliffe.

"We provide almost everything for drilling and workover services. Being a single-source provider means less contractors for the oil companies, with better communication, improved efficiency,  more effective knowledge management and overall cost-savings." Upbeat about the business climate as 2009 begins to draw to a close; Sutcliffe says he expects the Weatherford drilling services and solutions divisions to see continuous double figure growth in 2010.

Earlier this year Weatherford scooped a major performance-based evergreen contract for integrated service provision for the Amal and other fields in the south of Oman. Schlumberger Middle East Drilling Review

Liam Burns, marketing manager, Middle East and Asia, Schlumberger Drilling & Measurements says business has in general been very challenging in 2009 for drilling operators and specialists. "In response to the global economic downtown a number of projects have been delayed or drilling plans reduced. In addition, the complexity of projects has changed with a current trend to more conventional designs. Compared to global performances, though affected, the sudden changes seen in other parts of the world are not realised here in the Middle East."

With the oil price collapse, and subsequent recovery, drilling operations in the region have suffered. "There has been a general rig activity drop throughout the Middle East, with perhaps Qatar seeing a higher percentage. That being said there is continued drilling activity in all of the Middle East with of course Saudi Arabia having the highest number of drilling rigs."

Performance improvement and providing solution based answers to specific challenges are the two key areas Burns says Schlumberger can help oil companies in a cost-conscious year. "In both of these categories service quality and reliability are paramount to meeting and overcoming the challenges. Here Schlumberger strives to exceed our clients' expectations and deliver world class performance with safe and efficient operations."

For performance improvement Schlumberger's PowerDrive rotary steerable system (RSS) family has brought a step change in dealing with drilling related challenges. "With PowerDrive vorteX, powered RSS coupled with a downhole motor, this performance improvement will only increase," explains Burns.

StethoScope formation pressure-while-drilling service and EcoScope multifunction logging-while-drilling service have certainly provided solutions to drilling related challenges and are now in regular use across the Middle East. "EcoScope integrates a full suite of formation evaluation, well placement, and drilling optimisation measurements into a single collar. It has been very well received by all the clients to assist in reducing the drilling risks. The use of StethoScope is also increasing for formation evaluation and for pore pressure confirmation in higher risk wells," he adds.

New technology is arriving in the Gulf market that will improve drilling operations. "All of Schlumberger's local Operation Support Centers have been expanded to include drilling optimisation services with experienced directional drillers monitoring and advising on drilling activities from the support centers."

Burns is optimistic about a pick up in regional drilling activity. "In general the activity seen in the later part of 2009 will continue to the end of the year and to the early part of 2010. As for the main part of 2010, assuming that more recovery is seen in the economic outlook, then a gradual increase in activity with continued growing confidence will see more demand for all drilling services. Baker Hughes middle east Drilling Review

Khaled Nouh, Baker Hughes' president, Middle East, says that new and exciting opportunities are just around the corner for the Middle East drilling sector.

"I consider Iraq the biggest growth frontier in the region; we are witnessing a major improvement in security and the business environment is getting quite attractive. Kuwait is another hotbed of drilling activity in the region followed by the UAE. Saudi Arabia has always been and will continue to be the biggest player in the Middle East with very stable business and sustainable production capacity. Saudi Aramco successfully completed incremental drilling projects such as Khurais and AFK."

Baker Hughes offers a comprehensive array of solutions to address drilling-related challenges. "With the Baker Hughes geomarket structure, we will be able to customise our solution to address local market needs. For example, a drilling solution would be comprised of a bottom-hole system customised from both INTEQ (MWD-LWD) products and Hughes Christensen bits, along with Baker Hughes Drilling Fluids products designed specifically to optimise drilling performance and efficiency."

Some of the advantages of Baker Hughes technologies include the highest rate of penetration (ROP) using INTEQ X-treme mud motors combined with Hughes Christensen Quantec bits. Coil tubing drilling technologies with INTEQ CoilTrak rib steering motors and Baker Oil Tools Equalizer inflow control devices, along with Baker Drilling Fluids MicroWash, can also significantly improve results in this region.

The company also offers high-performance water-based mud systems that address the logistics and storage issues associated with oil-based mud - without sacrificing wellbore stability.

Nouh says that gas-related business has seen an upturn across the GCC markets. A perceptible trend is an activity shift towards drilling and exploration for natural gas (non-associated) specifically, as oil production is limited to demand and OPEC quotas while local gas demand is on the rise.

With such a broad product portfolio, Nouh says that tailoring the offering to the client is very much a part of the Baker Hughes mandate. "In the Middle East, we try to adapt our technology offering to address specific market challenges; we will address gas drilling needs in the Gulf, heavy oil needs in Kuwait, deepwater needs in the Mediterranean market, intervention needs in Qatar and much more."

On the conventional directional drilling side, Baker Hughes has recently introduced new sensors that address wellbore placement, drilling hazard mitigation and accurate formation evaluation while drilling. With these technologies and services, it is now possible to be able to drill wells faster and to more accurately place them in the reservoir.

"More wells drilled within the same time period means more production at lower cost. Also, increased reservoir contact means higher production can be achieved with fewer wells. Both of these benefits represent the significant value Baker Hughes delivers to our clients," says Nouh.

Nouh remains confident and upbeat looking ahead. "More than 30% of worldwide proven oil reserves reside in the Middle East; this will continue to fuel the market and sustain existing growth. I expect that the years to come will provide a platform for more collaboration between Baker Hughes and our customers. We will collaborate in designing better technologies and optimising workflows to enhance oil recovery and operations efficiency."

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