Personnel, equipment supply challenge industry in time of growth

While that is a fundamental reality, it’s also a reality that production from mature fields continue to decline. In fact, Mr Chur said, in about 10 years it’s expected that there will be a gap between supply and demand similar to today’s production, approximately 120 million bbl/day of oil equivalent.

“For our industry, this means we will have to drill more wells,” he said.

Already the industry has seen significant increases in rig activity globally since 2004: up more than 18% offshore and more than 40% on land. KCA DEUTAG alone has more than doubled its revenues since that same year, Mr Chur said, and plans to continue growing by 15%-20% every year.

Amid all this growth, equipment supply is still a critical problem. While the strain on supplies has eased somewhat in the last couple of years, he noted that delivery times for major rig components still run into 30-50 weeks.

Prices for supplies and equipment continue to spiral upwards as well, he said, having gone up 30%-60% since 2004. “It looks like the increases haven’t stopped yet, and that has consequences.”

This means that drilling contractors are having to look to so-called low-cost suppliers, and Mr Chur cautioned that in doing so, quality assurance must become a priority to ensure integrity and quality of the equipment received.

Pointing to a presentation he made at the World Drilling 2006 Conference, in which he said human resources was industry’s biggest challenge, Mr Chur said that doesn’t appear to have changed as we begin the second half of 2008. As much as ever, personnel remains the top issue we’re confronting.

He’s seen more young faces at this year’s World Drilling event than he did at the 2006 conference, and that’s a sign that industry is making some progress on the people issue, he said. But a significant portion of the industry is still made up of people close to retirement age, and it is the whole industry’s obligation to recruit and train the next generation of employees. “We must find ways to transfer know-how and knowledge from the senior employes to the junior employees,” he said.

One program KCA DEUTAG has implemented to help that effort is Safe 2 Lead, a safety, behavior and leadership training program that focuses on behavior leading to safety and operational performance improvement. More than 1,200 employees have been through the one-week training, which KCA DEUTAG runs in languages such as Arabic, Russian and German. Training venues in 2008 include Bad Bentheim, Budapest, Lagos, Muscat, Nicosia, Tripoli and Tyumen.

KCA DEUTAG has devoted significant resources to the program, and it has turned out to be a big success, Mr Chur said.

The company also employs simulator training through DART (Drilling & Advanced Rig Training). This real-time drilling simulation and downhole modeling tool can be programmed to reproduce downhole conditions at no risk to personnel or environment and is capable of a variety of training options:

• • Used extensively for mechanized rig training enhancing rig-up time.
  • Helps with performance improvement – drillstring failure and stuck pipe prevention, etc.
  • Personnel development opportunities – graduate program, drilling practices, etc.
  • Basic and advanced well control WellCAP- and IWCF-approved, horizontal, stripping, etc.

KCA DEUTAG now has three full-scale multi-chair simulators, three fully functional portable single-chair mini-DARTs and two super-portable well control simulators. More than 1,500 employees have been trained with DART so far.

Mr Chur ended by praising the industry for keeping its safety performance flat even as manhours have gone up significantly since 2002. “It’s quite an achievement of contractors and service companies, together with operators,” he said. “However, this doesn’t mean we’re satisfied and can relax. We must continue to manage safety.”