Oil price keeps outlook upbeat, but don’t forget critical challenges

By Linda Hsieh, assistant managing editor

TO THE AVERAGE energy consumer, the oil and gas industry probably looks like it’s sitting on top of the world with nary a dark cloud on its horizon. Oil prices are breaking record highs even as energy demand continues to grow. And all we’ve got to do is dig holes, pump out the oil and get it to a gas station. How hard can that be?

Very hard, considering the declining production from maturing reservoirs. Even harder than that, considering the harsher environments we’re moving into (deepwater, ultra-deepwater, HPHT, arctic). And extremely hard, if we want to do it all without safety incidents with an increasing number of new and inexperienced personnel.

Although oil prices have undoubtedly given this industry a healthy boost, you don’t have to look very hard to see the numerous challenges we are facing — and many of them have already begun to impact the business. In this issue, Drilling Contractor talks to 12 drilling industry experts from 11 companies to discuss their most critical issues, ranging from improving efficiency to protecting the environment to getting newbuilds ready to drill.

Not surprisingly, the most-cited No.1 challenge was people. Personnel has become one of the industry’s biggest headaches. And as the 40-plus scheduled offshore units leave the shipyards this year to begin operations, that headache has the potential to turn into a head-splitting migraine.

TAKING ACTION

Fortunately, it looks like the industry is really doing something about the problem (and not just hiring from each other anymore).

Nabors has significantly expanded its human resources staffing worldwide and has established training schools to grow its own workforce, said Denny Smith, director of corporate development (Q&A begins on Page 32). Nabors’ training rigs have been equipped with drilling simulators to familiarize drillers with A/C – PLC control systems, he said, and expanded recruiting in Eastern Europe, Russia and China have opened up new pools of talent.

National Oilwell Varco has opened a technical college in three locations — Norway, Houston, Singapore — and is committed to putting newhires through the school for a full year before they go into the field. “We know that some of these people will get hired away from NOV once they’re trained, but we will continue to put our people through this training because we know the industry needs it,” said Pete Miller, NOV chairman, president and CEO (Page 54).

Other critical issues we heard include:

• Rising costs. Prices for raw materials, labor, services and rigs have all increased, even affecting operators’ drilling programs. Breakthrough technologies, such as mono-diameter wells, could be a way out of that, said Rick Fontova, Enventure senior VP (Page 58).

• Efficiently tapping unconventional hydrocarbons, such as tight gas and heavy oil. This resource has an increasingly important role in meeting world energy demand, and industry must find economic ways to develop unconventional reserves, said Vik Rao, Halliburton senior VP of technology (Page 28).

• More cooperation among operators, drilling contractors and service companies. Many technologies (intelligent completions, MPD, drilling with casing) that can improve efficiency and recovery already exist yet aren’t widely utilized, said Keith Morley, Weatherford senior VP well construction and operations support and chief safety officer (Page 42). More cooperation is still needed to help push these technologies into the field.

As you’ll hear from our panel of experts, the industry’s tasks are surely hard, but with some innovation, some advanced planning and some collaboration, nothing’s impossible. Our special section starts on Page 18.

Have a comment? You can reach Linda Hsieh at linda.hsieh@iadc.org.