2019IADC, Regulation, and LegislationJanuary/February

2019 IADC Chairman: Industry must keep its culture modern, evolving

Precision Drilling’s Kevin Neveu sets sights on engaging with next generation, supporting IADC’s technical committees, enhancing advocacy

By Linda Hsieh, Editor & Publisher

When you’re third-generation oilfield and your father starts taking you on rig visits at age 5, you might say that an oilfield career is hardwired into you. It’s perhaps incomprehensible in today’s industry, but around rigs is where Kevin Neveu grew up.

“I loved those trips to the rig with my dad. I loved seeing the machinery and crews in action,” Mr Neveu recalls. “I would come home from a rig visit and build model drilling rigs with a Meccano set – a model construction system consisting of reusable metal parts.” By age 14, he had started working summers at his father’s rig fabrication yard, located in Edmonton. This work continued into his high school and university years.

The rig construction boom throughout the 1970s and early ’80s meant that the family business was thriving through most Mr Neveu’s adolescent years. And it was the plan that he would enter the family business full-time after getting his mechanical engineering degree from the University of Alberta.

But life likes to throw curveballs. In 1981, during Mr Neveu’s final year at university, the Canadian government implemented a federal energy policy that essentially stripped away capital for the oil industry, effectively shutting it down. “Rigs were canceled mid-construction. The industry just stopped. Our business went from 150 employees down to five in a matter of weeks,” he said. Soon, the family business shuttered, and Mr Neveu suddenly found himself having to make new plans and seek a new direction in his career.

Early Career

He first went to work for Dreco Energy Services, an Edmonton-based manufacturer of rig components. Then, upon graduating with his engineering degree in 1982, he joined National Supply, working in a welding shop to provide shop floor procedures for welders.

As a first career step for a graduate engineer, it wasn’t an encouraging start, Mr Neveu admits. Yet, he never considered leaving the drilling industry and going elsewhere. “I was raised by my father to believe that this industry has a long future. It’s always cyclical, but people who work hard and deliver results will be successful.”

Over the next decade, Mr Neveu persisted in the drilling industry despite a prolonged period of slow activity. From the welding shop, he went to field engineering and then was promoted into a managerial role overseeing the Canadian division of National Supply’s production services group. In 1989, after the company merged with Oilwell, Mr Neveu was asked to move to London and run the Europe, Africa and Middle East operations for all of National Oilwell’s equipment lines.

A unique offer came his way in 1992, when his former employer, Dreco Energy Services, recruited him to move to Moscow and set up the company’s Russian operations. “The country was facing declining oil production when oil was their primary source of revenue, so they were looking to improve the quality, safety and reliability of their operations. It was a good time to be there,” he said.

By 1999, he had moved to Houston to run National Oilwell’s downhole tools division, after its acquisition of Dreco. Then in 2002, he turned his attention to the company’s rig technology division.

The 1,200-hp Super Triple Rig 464 is drilling in the Niobrara.
The 1,200-hp Super Triple Rig 464 is drilling in the Niobrara.

It was an exciting time to be overseeing rig innovations at a major OEM, he noted. Offshore, the industry was kicking off both a deepwater and jackup build cycle. Mr Neveu led a team that launched multiple technologies around rig automation, rig controls and pipe handling.

Onshore was equally exciting, as the shale plays were just beginning to emerge around 2002. The company – now National Oilwell Varco after the Varco acquisition in 2004 – recognized and seized significant opportunity with changes happening in natural gas and horizontal drilling. During the 2000s, the group, under Mr Neveu’s leadership, built high-efficiency rigs with top drives and AC controls that helped the industry to drill more accurately and with more control.

Move to Precision Drilling

By 2007, the land shale drilling business was established, and many of the technologies that NOV launched into the market had become proven. Mr Neveu, recognizing that he was ready for the next phase in his career, turned to Precision Drilling. The Canadian company had always been on Mr Neveu’s radar because it was founded by Hank Swarthout – who happened to be Mr Neveu’s first boss when he worked at Dreco while attending the University of Alberta.

Kevin Neveu gave the keynote at the 2018 IADC Advanced Rig Technology Conference in Austin, Texas.
Kevin Neveu gave the keynote at the 2018 IADC Advanced Rig Technology Conference in Austin, Texas.

“I watched them build the company as a Canadian driller, as an international driller and as a global technology services provider. And I was impressed with the culture of the company and the capabilities they were developing,” he said.

When Mr Swarthout retired from Precision in 2007, Mr Neveu was brought in as the new President and CEO, with a mandate to grow the company in the US and internationally. It was a perfect fit, Mr Neveu said. “As I thought about my career opportunities, leading a company like Precision Drilling was at the top of my personal aspirations.”

To strategically grow the company’s assets and footprint, one of the first steps he took was to acquire Grey Wolf Drilling in August 2008. Then, after surviving a sharp downturn in 2009, “we aggressively built the company by building new rigs from 2010 into 2014. We came out of the 2009 downturn very strong and fit.”

Mr Neveu’s work over the past decade to grow Precision is evident. While in 2007 all but four of the company’s rigs were in Canada, just a decade later, the company saw its highest market share ever in the US. Out of 109 AC rigs, 27 are in Canada, six international and the balance in the US. The company’s biggest market is now the Permian.

Looking to the future, Mr Neveu said a strategic imperative for the company is to find a way to improve full-cycle returns for investors by optimizing the business model to best respond to market volatility.

Another key goal is to achieve Triple Target Zero – days when there are no environmental incidents, no recordable safety incidents and no motor vehicle incidents. “The industry has a habit of measuring safety by measuring how many people get hurt. I prefer to measure the days that are successful when we don’t hurt anyone,” he said.

Reaching this goal will require a confluence of complex factors, but Mr Neveu emphasized that automation or mechanization is not the answer to every safety challenge.

Precision’s Super-Triple Rig 533 is drilling in the Montney Doig in Canada.
Precision’s Super-Triple Rig 533 is drilling in the Montney Doig in Canada.

“This industry is going to involve people in the rig operation for a very long time. While we can use machines and automation to reduce the exposure, we still face a very challenging environment.” More stringent training and processes, more standardization and less activities off plan, as well as strong leadership, will all play key roles in the solution, he said.

Efficiency and Moving to Drilling 4.0

As the industry learns to build more sustainable businesses in a lower-price environment, performance and efficiency improvements have become key themes. For Mr Neveu, he believes that important enablers of such improvements will be process automation and data analytics. By joining the industrial revolution 4.0, the industry can get to a point where every new foot drilled incorporates lessons learned from all the previous feet drilled. Drilling 4.0, as he calls it, also encompasses eliminating human performance variances, enabling real-time collaboration and making actionable information available to the right people at the right time.

“A lot of work is being done in this area right now. I would say that every drilling contractor and probably every oil company has this objective in mind,” he said, noting that Drilling 4.0 may be achieved within the coming five to 10 years. “A confluence of standardized wells in the resource plays, standardized rigs and data mining can all help us get to this nirvana where every foot drilled makes the next foot better.”

However, even as drilling contractors push to make these step-changes in performance, one fundamental challenge remains and must be addressed. “Collaboration between the drilling contractors and the E&Ps generally tend to be biased toward the E&P company,” Mr Neveu said. “As a whole, the drilling contractors haven’t received the financial returns or benefits commensurate with the improvements we’ve made. We’ve drilled wells faster, safer and better than ever before, but financial returns are as challenged as they’ve ever been.

“There needs to be a shift in that collaborative balance,” he continued. “It needs to shift more toward the drilling contractor. The best results in the industry are achieved when the drilling contractor collaborates closely with the E&P company to come up with optimized solutions.”

A key goal at Precision Drilling is Triple Target Zero, which refers to days when there are no environmental incidents, no recordable safety incidents and no motor vehicle incidents.
A key goal at Precision Drilling is Triple Target Zero, which refers to days when there are no environmental incidents, no recordable safety incidents and no motor vehicle incidents.

While some parts of the industry have moved toward performance-based contracts, Mr Neveu said he has reservations about the sustainability of such a business model. “Performance-based models incentivize contractors to drill wells faster, and we get some performance bonuses for a short time. But, once that new benchmark is established, generally the bonuses go away. For a healthy long-term industry, I think that pendulum has to swing to a more balanced relationship.”

Brining Industry Together for Collaboration

All of these challenges, both technical and economic, can only be resolved through collaboration, he said, and that’s why IADC plays such an important role in bringing stakeholders together. Particularly, the work done through the association’s technical committees should attract wider-scale support from all parts of the industry, Mr Neveu encouraged.

“Work that is being done by groups like the IADC Advanced Rig Technology Committee is important and should continue to be emphasized. Being able to collaborate where it doesn’t interfere with the competitive advantage is a win for everyone.”

Besides supporting IADC’s technical committees, Mr Neveu noted that his goals as 2019 IADC Chairman also include enhancing the association’s work on public advocacy and on engaging with the next generation of employees. “It’s critical that we keep the drilling industry vital, and it’s critical that we keep our industry’s culture modern and evolving. To do that, we have to make sure that engineering students in 2022 or 2025 will view the drilling industry as an exciting, challenging and technology-driven industry.”

Finally, Mr Neveu also urged the industry to push ahead on leadership – not just in the office but also on rigs. “I’ve had the opportunity to work for some great leaders throughout my career, and that’s been really important in forming my thoughts on my career and the industry as a whole. There are great opportunities for mentorship and leadership by a lot of great leaders in our industry. I urge them to step up.” DC

About the author

Linda Hsieh is a graduate of the journalism program at the University of Texas at Austin, where she also completed the Business Foundations program at the U.T. McCombs School of Business and minored in Asian Studies. She has been writing for Drilling Contractor since 2005.


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