Closure Interview, Boris Ivanov, General Manager, TDE Energy Services Ltd
Please tell me about TDE and its services.
TDE is a leading provider of services and innovative technology to the international oil and gas industry. The company’s major goal is integrated control and monitoring for drilling operations and analysis of sensor data to quantify and further examine all drilling processes. TDE’s mission is to gauge and increase drilling efficiency and reduce well construction costs through daily monitoring and efficiency analysis.
The proNova system, TDE’s core product, is a pioneering instrument and service which remotely assesses both the drilling time and real-time drilling efficiency of crews based on surface logging history and morning reporting. To assess efficiency in the drilling process including tripping, drilling, making-up, casing and liner running in and pulling out, etc., a range of KPI’s are applied to identify invisible lost time and potential improvements, thus confirming the appropriateness of the company’s current choice of the standard time required for standard drilling operations.
Please tell me about your career at TDE and the ProNova system launch in Russia.
My career began at TDE as data processing analyst in Austria in 2011, where I learned the subtle details of new technology for automated well log interpretation and analysis of rig operations. While working at the Real Time Operational Center (RTOC), I remotely analyzed over 500 wells for the leading oil and gas companies from the North Sea, the Gulf of Mexico, USA, and Canada. Russian companies were not on the list, so I proposed to promote this technology in Russia. In my role as business development manager, I had been very active in promoting the technology in the Russian oil and gas service market. I had delivered a large number of technical sales presentations and pilot projects to demonstrate the benefits of using automated systems like proNova to major Russian operators and drilling service companies. The main goals of such projects were to show all available features of the system and identify savings potential (ILT), which might be optimized without any additional investments, only because of daily monitoring. For the last 5 years I’m working as a General Director of TDE in Russia and actively promote innovative technologies, which allows companies optimize drilling costs.
How ready are the Russian companies to embrace this type of innovative technology? What issues did you face?
At that time, very few Russian drillers were familiar with this type of automated systems, let alone their practical use. That’s why, our first, main goal was to demonstrate all the benefits of using such advanced measuring and drilling analytic systems to engineers, managers and other related specialist in Russian companies. We also had some problems with the quality of the sensor’s data, but today we see that Russian companies can provide almost 100% quality data, including the possibilities to work in the real time mode and transfer the data via WITSML.
Unfortunately, if we talk about post-anlyzes and rig operations analyzes, we see that even today, many Russian companies use only the supervisor’s daily reports to monitor drill efficiency. At that time, and as is still the case for many Russian companies, these reports showed only the actual productive time and non-productive time. Well drilling efficiency was actually assessed on the basis of total non-productive time. In contrast, we advocate a distinctly different approach to analyzing the well drilling data with help from the cutting-edge automated log interpretation and analysis systems that support a very detailed, per-second quantification of every operation in the drilling process and its analysis.
Another key issue is the drilling service contractor’s reluctance to apply efficiency tracking and monitoring system that essentially evaluates its quality and exposes hidden down time. As they work with the daily rate contracts for the rig, for the drilling company it is more profitable to drill slower, instead of faster. And if it’s the turn-key contract, than for drilling contractor would be more profitable to drill faster and optimize costs. But, in Russia, in the last few year’s we have much less turn-key contracts and almost all the companies switched to separated service contracts. So, it seems that our service is more important for Operator in Russia, who requires system to control and analyze the efficiency of rig operations. But, unfortunately not many companies are ready to change thier current relations and contract details with contractors and apply such a modern analytic systems.
What progress did you make over 5-years working in Russia?
We opened the RTOC (Real Time Operational Center) in Russia, Samara, where today engineers from Europe and Russia are working together, and could monitor and analyze the data from more than 100 rigs, operated in any location in the world in the real time mode.
We successfully analyzed more than 10,000 days of drilling on a variety of wells for the leading Russian upstream and drilling service companies. The proNova system, once introduced and implemented, improves efficiency and safety of all operations at the drilling site, cuts well construction time, and reduces drilling costs. We signed long-term contracts with several big Russian oil companies, which allowed us to continue developing our business in Russia and improve our system.
Based on the good references, letters of appreciation and positive feedback from our Russian customers, we can define the high quality level of our services during the last five years in Russia and more than 15 years in worldwide.
I would like to take this opportunity to congratulate all my colleagues from the Russian office on the fifth anniversary and thank for the personal contribution of each employee.
Digitalization and utilization of Big Data in the Russian oil industry is still at the early stages, so we all have a lot of work to do in this area in the future!
What are the key challenges facing the Russian drilling market?
I think the situation in the market is quite good due to the oil price increase over the last few weeks. This is a more or less stable situation that will allow oil and gas operating companies to proceed with their planned drilling campaign or even increase total number of drilled wells by the end of the year. We also see that Rosneft is giving more contracts to his own drilling contractor – RN-Burenie, so that means that other independent drilling service companies might lose some positions. As for the other Russian Operators, I think the competition between drilling contractors is becoming more aggressive and I hope the main factor will be the quality of the service and not the lowest price. We also need to take in to account that today we have less and less drilling operations in the more well-known oil and gas fields, so we have to move from the “comfort zone” and drill in extreme conditions in the north parts of Russia. And I think that these facts should bring additional investments and push the development & integration of new technologies on the drilling market in Russia. And as we are working in the area of drilling performance improvement, we are already seeing a lot of interest from interest from drilling and service companies in “technical limit” projects and ways to improve the efficiency of drilling rigs. So, we see a bright future for our service and similar automated systems which allow companies work with big data and benefit out of it.
We have seen many EU and US companies pull out of Russia due to the current political climate and the existing market sanctions. Have any of these factors affected your business?
Yes, unfortunately the decisions made by politicians reflect on the oil and gas market. However, not for our type of service. Two years ago, we were providing our service for the Rosneft and Statoil JV in the Okhotsk sea (offshore) and we had no problems at all, we just added a few aspects regarding the sanctions in our contract. Also, for more than a year we have been successfully providing our service for another Rosneft and Statoil JV in the Samara region, involving onshore exploration drilling for shale. I think the US sanctions just slow down the massive exploration of Arctic shelf and unconventional (“tight” oil) oil in Russia and the integration of new related technologies. But in the meantime, I see that the number of Russian manufacturers of drilling equipment and service companies are increasing rapidly, which is good for the country and brings competition on the market. Also, we can’t forget about our best friend – China, which has really benefitted from this sanction period and has used this time very productively to increase their presence in Russia. And to be honest, they really improved the quality of their products and services during the last few years, so let’s see how Europe and America can compete with them in the nearest future.
We have recently seen a steady increase in the price of oil, followed by a more optimistic outlook for the market in general. How do you see the market evolving over the next 5 years?
Much of the oil and gas industry has survived an especially tough few years with weak demand and low prices. It has been difficult to make strategic decisions and plan for the future. Only now is the sector beginning to emerge from its upheaval. It’s possible that we might see a spike in oil prices sometime in the next five to 10 years — if, because of the hiatus of investment in major projects since 2014, the industry finds it difficult to meet increasing demand. The resulting uncertainty would no doubt be welcomed by traders, who have largely avoided the oil market during its price plunge. An uptick in trading activity could in itself drive up oil prices significantly in the three to five year time frame. Oil and gas companies will need to ensure that their business models are prepared to manage and benefit from this volatility. Upstream companies will have to be diligent about containing other expenditure increases, particularly in the supply chain and resource development arenas. That may prove difficult, because the wave of worker layoffs eliminated significant experience, knowledge, and skills. The loss of these capabilities could push development project costs up substantially if they are not carefully monitored. Smart companies will embrace new digital initiatives as a means of offsetting expense escalation and furthering the cost and efficiency improvements they have already achieved.
The digital age is moving faster than the industrial revolution and will create winners and losers. However, companies that are willing to innovate and invest can unlock tremendous value and remain financially strong regardless of global oil supply and demand trends.
