Neveu: Investing in asset integrity protects drilling contractors in volatile market

By Alex Endress, Editorial Coordinator

The boom and bust nature of the upstream oil and gas industry has forged resilience within the drilling contractor community, which knows well the importance of cost-cutting to persist through lean times. However, Kevin Neveu, President and CEO of Precision Drilling, urged the industry to maintain a comprehensive asset integrity program in the face of much lower drilling activity levels. “Even during a downturn, we have to continue the investment,” he said at the 2015 IADC Asset Integrity and Reliability Conference in Houston on 16 September. Mr Neveu suggested that companies consider the three pillars of asset integrity as part of their efforts: designed integrity, technical integrity and operational integrity.

It is understandable for companies to reduce maintenance budgets and stack rigs during a market slowdown, but companies must not let these cost-cutting efforts hamper long-term asset integrity. “There’s no question that stacked rigs deteriorate,” Mr Neveu said, but he noted that this deterioration can be avoided, or at least mitigated, through a robust asset integrity program. “We have to make the investment upfront, and it requires leadership from the CEO down through the organization.”

He added that asset maintenance practices have not evolved along with the automation of rigs. When rigs used to operate mechanically, using chains, clutches, gears and throttles, maintenance programs were failure-based, and assets were assessed for maintenance only when they broke down or failed to operate correctly. However, waiting until rigs break down presents significant HSE, as well as financial, risks.

“It requires discipline around management of change, and it requires balance through the organization,” he said. Through commitment to an established asset integrity program, drilling contractors would eventually see long-term cost reductions, he indicated “by eliminating unnecessary maintenance and by preventing unpredicted failures.”

Designed integrity implies that drilling contractors ensure rigs are built and architected for longevity, Mr Neveu explained, and technical integrity encompasses the maintenance standards and specifications that manufacturers implement. Operational integrity is the assurance that staff will implement those designs and procedures completely and correctly. “This involves having aligned philosophy through an organization, and it involves cost,” he said.

It is this type of investment that prepares companies to survive downturns like the one the industry is currently experiencing. And for those who haven’t focused investments on asset integrity, he urged drilling companies to use the current downturn “as a case for action to start to create an asset integrity program.” It will be a strong defense against future market volatility. “Having a comprehensive asset integrity program up and running, effective and consolidated before downturn hits is the best position to be in.”