CRITICAL ISSUES IN DRILLING & COMPLETIONS
Financial and human capital
challenges call for the industry
to adopt new ways of thinking
Drilling contractors can address workforce, efficiency
needs through cultural shifts and capital allocation
strategies that focus on long-term sustainability
Subodh Saxena, Senior Vice President,
Nabors Industries
BY LINDA HSIEH, EDITOR & PUBLISHER
Subodh Saxena is Senior Vice President at
Nabors Industries.
What is your outlook for the upstream
business, particularly the drilling con-
tractor segment, and do you see any
looming challenges?
There is a lot to celebrate today. Even
with some economic uncertainty, the fore-
seeable future is positive for our industry
as we head into the so-called “supercycle.”
Drilling contractors have pulled out a lot
of stops to service customers and their
need for additional rigs despite challenges
around the workforce and the supply chain,
so there really is a lot worth celebrating.
With that said, I see two key structural
issues and challenges that exist within the
drilling contractor space. One is around
human capital, and the other is around
financial capital.
In terms of human capital, we have to
recognize that today’s workforce requires
a sense of purpose, and they want to work
for organizations that have a similar sense
of purpose. They also need their employers
to provide both psychological safety and
physical safety.
The first element is more of a cultural
challenge. Our industry’s culture is some-
times not very endearing to the younger
generation, and that impacts drillers’ ability
to attract, retain and protect our employees.
The second element revolves around the
industry’s HSE performance, which has
struggled in the recent activity ramp-up.
That is a huge deterrent to our recruitment
efforts. 28
Is that increase in incidents related to
the new people coming into our
industry? Partly. We do have a younger workforce
who need to be coached and mentored. If
you go to any rig today, you will see at least
30%, sometimes even 40%, of the workers
wearing orange hats, which means they’re
a short-service employee. It is our job to
protect them and make them aware of
all the risks they may encounter during a
drilling operation.
But these incidents are happening
across the upstream sector and not just
happening with short-service employees.
Whether its drilling, completions or pro-
duction, all segments need to be more vigi-
lant on safety with all of our employees.
Nabors has invested a lot in automa-
tion in recent years. Are those technol-
ogies helping at all with easing some
of these safety challenges?
Absolutely, I think technology will play
a huge role in removing people from risky
activities like working at height or inter-
acting with the pipe. A customer once said
to me that, in any interaction between pipe
and human, the pipe always wins. That is
so true. So, Nabors’ approach is to focus
on the top tier of the hierarchy of con-
trols pyramid, which is elimination of the
risk, substitution of the risk, and putting
in engineering controls. Automation is
definitely part of the solution. Last year we
proved we can fully automate any AC rig,
which will enable not only Nabors but any
drilling contractor to remove crews from
red zone areas while delivering consistent
best-in-class results to customers. But, like
most things, it has to mature..
Going back to what you said about
the human capital and how our cul-
ture impacts our attractiveness to
young workers – can you expand on
that a little bit?
Younger people today really have option-
ality. Drilling contractors are not competing
for crews with each other; we are compet-
ing for the same people against industries
from fast food to the high-tech industry.
I think it’s important that people, like
me, who have been in the industry for
30 years, understand that the new gen-
eration thinks differently. And we have to
remember that young people are the only
workforce available to us. That means it
is up to us to move toward them. We can’t
just expect them to move fully toward us,
because that is not going to happen.
The cultural change involves under-
standing who today’s workers are and
recognizing that we have to transform
ourselves and move toward them.
Finally, automation also has a role to
play in cultural impacts and the attractive-
ness of our industry. Software and robotics
are the exact cool factor we need to recruit
the next generation to our industry.
On your earlier point around the finan-
cial capital challenge, does that refer
to maintaining capital discipline?
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CRITICAL ISSUES IN DRILLING & COMPLETIONS
That is part of it and is very important,
but I believe how we allocate the capital
is equally as important. Considering the
state of our industry, I believe there are
three areas where we need to deploy our
capital. First, it needs to go into making our
rigs more efficient because that is the only
way we provide value to our customers.
Second, it needs to go toward improving
safety on our rigs because that will help us
retain and protect our employees. Lastly,
our capital should be spent on improving
the general well-being of our employees.
What does that general well-being
encompass? From a field perspective, today’s work-
force is very much willing and capable
to work hard for their 12-hour shifts, but
when they are off, they want a reason-
able quality of living. At a minimum, this
means employers need to provide some
element of privacy in the living quarters,
as well as WiFi. Those investments need
to happen. If we don’t do that, we will
not be able to attract and retain those
employees because they see those things
as necessities, not luxuries.
Even though our industry appears
headed into a supercycle, we know
that this will always be a volatile busi-
ness. What can drilling contractors do
now to better prepare for the next
downturn, whenever it may come?
We have to take a long-term view, which
means focusing on the things that will
give us long-term sustainability rather
than short-term gains. Traditionally,
whenever the demand and supply become
tight, the first reaction is to build more rigs.
But right now, if a company decides to go
and manufacture new rigs, that capital is
not being wisely spent. As an industry,
we have repeatedly given negative return
on investment for the last six to seven
years. We have to do things that will bring
value for us, for our customers and for our
employees over the next 10-15 years. Short-
term gains should not be the focus.
Are there any new ways in which our
industry can approach technology
development that will allow us to
The newly launched RZR Rig Floor Automation Module is one example of automation
that can improve both safety and effi ciency. The system provides full control of
tubular handling from the driller’s cabin, removing people from red zones.
maintain financial discipline at the
same time?
One of the challenges we have in our
industry is that, because it’s a very com-
petitive industry, we somehow believe that
we always have to build our own solutions.
But if everybody builds their own solutions,
I think that can be very destructive in the
bigger picture. Despite the competitiveness,
we should be able to understand where we
can collaborate with our peers and cross-
license where it makes sense.
We have to overcome this cultural bar-
rier of build versus buy. We do not have
to build everything; we should be able to
buy what is available off the shelf, even if
it’s coming from one of my competitors.
That is actually an important element of
Nabors’ approach, which is to empower
other drilling contractors with our tech-
nologies. We hope drilling contractors can
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