Panel: Collaboration between operators and contractors is crucial, and must begin early

By Kelli Ainsworth, Editorial Coordinator

 It is crucial that the end goal – the construction of the well – drive the direction of innovation in rig technologies, panelists said at the 2015 IADC Advanced Rig Technology Conference, held 13-14 October in Amsterdam. During a session titled “Advanced Rig Technology: What is Missing?” panelists from Shell, Statoil, BP and TOTAL discussed how greater levels of collaboration among the operator, drilling contractor and equipment supplier that begin earlier can achieve this goal.

Léon van den Broek, Drilling Rig Global Category Manager for Shell, said greater collaboration between drilling contractors and operators, where each puts more skin in the game, can “provide that sustainable business that we all want.” Shell, for example, has signed very long drilling contracts for many of its operated rigs. These long contracts, Mr van den Broek said, enable drilling contractors to focus more on building rigs with differentiating technology.

Further, he added, Shell has entered into a venture with a Chinese partner to jointly construct, develop and design land rigs that are very fit-for-purpose. “The end project is the lowest-cost land wells that we can possibly think of,” he said. “Both parties are willing to talk and come up with commercial terms that put skin in the game.”

These sorts of collaborations between operators and contractors must start as early as possible, said Geir Ove Eikill, Vice President of Mobile Newbuilds for Statoil. In the past, he said, Statoil sometimes signed contracts for rigs after the contractors had already signed their own contract with the rig manufacturer. “We ended up with one contract between the drilling contractor and the operator, and a totally different one with the contractor and the yard.” As a result, there were times when the resulting rigs were not entirely fit-for-purpose for the wells Statoil wanted to use them to drill, and “we ended up in Norwegian yards and we started to rebuild those units … which doesn’t make sense from a cost perspective and a value creation perspective.”

Now, Statoil begins working with the contractor much earlier in the process to communicate their needs. This was the case with the recent contract for the Maersk Integrator jackup, which Statoil took delivery of this year. Getting involved earlier allowed the rig to go straight into operation, without Statoil having to go into the yard and retool the rig.

Brian Hay, Director of Rig Engineering at BP, urged other operators to not only begin working with contractors and equipment suppliers earlier in the process but also to be more clear in articulating their expectations for rig design and performance. “I think in the past, if you look back a few years, we were not very clear on what was required to meet our expectations,” he said. “We could do a lot more around articulating better.” To that end, BP has put increased focus on making the language in their contracts with contractors and service companies more precise.

In addition, Mr Hay said, developing the procedures for the operation of a particular rig should be developed early on, and those procedures should be made readily available and easily accessible to the contractor and rig crews. “We’ve looked at our high-potential incidents over the last number of years, and 70-80% come back to procedures,” he said. “Either the procedure itself was inadequate, or the individual or individuals didn’t follow it or understand it.”

Benoȋt Ludot, Vice President Drilling & Wells, TOTAL Upstream, added that contracts could be made much more efficient than they currently are, particularly through integrating services, rather than bringing in dozens of specialized companies for various jobs. “Today, to prepare a drilling and completion campaign, we have to involve about 50, 60, 70 contracts,” he said. “That is not efficient at all.”

However, there are some barriers to integration, he added. First, local content regulations imposed by the governments in many countries could limit the ability to integrate and consolidate services. Additionally, in the past, Mr Ludot noted, drilling contractors have been, at times, resistant to integration, although he has noticed this resistance has softened in recent years. “I think now the world is changing,” he said. “Maybe we can start that discussion again.