John D. Lawrence
CEO
DTK Group
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View from the Top

Broad Geological Analysis Defines Well Potential

Wed, 01/22/2014 - 10:02

Q: Which industry developments have the strongest influence on your business?

A: We have seen changes in our two main business lines, core analysis and mud logging. In the last few months we acquired a very important three year contract at the national level for onshore mud logging. The biggest contract that we have at the moment is due to finish at the end of the year and will be extended for another three to six months. Additionally, we are also hopeful to win replacement contracts. Over the last year, we have seen increased demand and the monthly growth of our services is now probably 70% more than it was at this time last year. Therefore, we expect to continue growing. The entrance of operating companies following the Energy Reform is very positive and will create new opportunities for local service companies such as DTK Group, while also acting as a spring for potential growth for PEMEX and Mexico. Recent industry demands have tended to favor integrated service packages but most of our work deals with specialized niche services that large companies cannot provide, meaning they have to turn to us. For this reason, the integrated service contracts will bring plenty of opportunities for DTK Group.

Q: How does DTK deal with specific geological analysis challenges that Mexico poses?

A: DTK Group offers all geological services that might be needed. Mud logging is our most basic service, while our wellsite geologists provide paleontology and petrographic services. In the lab, our lines of work involve petrography, sedimentology, and stratigraphy. Additionally, we have two X-ray diffraction instruments, one scanning electron microscope and a CT scanner, which are the most advanced geological analysis instruments available. At a deeper scale, we work with pore-throat analysis at a microscopic level. We complement all of these methods and instruments with another cutting-edge tool: e-core analysis. This involves studying microscopic digital images to provide petrophysical analyses on electronic models of the internal structure of the rock. Another important asset for DTK is our staff, comprised of a wide variety of geologists, ranging from recent graduates to experienced PhDs. We also have specialists who are fully dedicated to providing training for PEMEX’s geologists and petroleum engineers through courses that are held either in PEMEX facilities or in our own lab. These trainings are often focused on making the NOC’s staff more aware of the technologies that are out there.

Q: How have your capabilities been expanded through the construction of your facilities in Poza Rica?

A: We began a new contract at the beginning of the year in Poza Rica for core analysis of the North region, based on Chicontepec, and we made an investment on that lab. Unfortunately, there has not been much work due to Chicontepec been virtually left without budget on the basis of it being shifted to ISCs. We have had a difficult time so far in Chicontepec, as the teams working there have been able to contract very few services. With that in mind, most of what we are doing in that lab is working for other projects in the North region. So, even though this contract belongs to Chicontepec, we have been doing some work for all other projects in the North region. It is not as much work as we had hoped for, but we believe operations will resume once the service providers settle and start evaluating the area.

Q: How are core analysis and flow studies contributing to improving PEMEX’s performance?

A: We have an enormous amount of data and experience doing conventional core analysis in all the producing fields in Mexico. As of today, there is an increasing demand for EOR, either with cores that have been previously analyzed or through potential new analyses. PEMEX’s production of heavy oil is also an area that requires our services. Flow studies are used to determine the best production techniques for specific reservoirs, which is a very significant advantage that we can provide to our clients. Essentially, we have seen an increasing interest in flow studies and special core analyses in the industry. DTK Group has analyzed the majority of the cores that were cut in deepwater exploration wells, such as Yoka-1 in Holok-Temoa and Yaxché-301 in Litoral de Tabasco, which is perhaps our firm’s most important recent contribution. More recently, we began analyzing cores of Exploratus-1, a recent deepwater well located in the Perdido Fold Belt. Moving forward, we are expecting to get four cores from the Piklis-1 well in Veracruz, which will give us a lot of work. Unfortunately, due to high costs, not many cores have been cut in deepwater wells. Nonetheless, the information obtained from the cores of potential reservoirs is extremely valuable for the industry. On another note, the fact that there have been a number of unsuccessful wells paired with the high cost of cutting cores has allowed us to shift our objective towards e-core analysis on drill cuttings, which are a lot easier to obtain and a lot cheaper.

Unconventional reservoir exploration is another area of opportunity for DTK Group because of its large potential for e-core analyses. The advantage of e-core technology is its ability to characterize the variations in the microscopic internal structures of the rock, which are not observable through conventional methods. As a result, data can be obtained much more rapidly and provide our client the necessary information to devise a production strategy.

Q: How would you describe the relationship between successful core analysis and increased drilling efficiency?

A: Drilling efficiency can be aided by core analysis, especially in the area of rock mechanics, which is a specialty of our lab in Houston. That lab has sophisticated analysis tools that can provide all the necessary information to determine the efficiency of drilling wells in terms of pressure differentials and rock characteristics such as hardness and brittleness, amongst others. We also provide rock mechanics services in Villahermosa, Tabasco.

Q: How is the position of Mexico evolving within DTK’s global project portfolio?

A: Mexico holds the top spot in DTK Group’s global portfolio, since this is where our main business operations are located. We plan to continue focusing our efforts and resources on conventional core analysis as well as e-core analysis throughout the PEMEX system. We have already seen increased demand for conventional analysis over the last year, while the gap between the use of conventional core analysis and e-core analysis has been largely closed, since both are now seen as complementary. Before using e-core analysis, PEMEX’s operators are usually interested in the reliability of the technology to gain confidence that the information produced is as good as a complete physical analysis. There are a number of places around the world where conventional core analysis and e-core analysis are being offered by the same company, mainly by member companies of our group, so it is only a question of time before it gets accepted here. We will also continue offering our services to private operators that require specific reservoir data as we did for Petrofac. The next focus is the offshore area, where two contracts will be awarded before the end of the year, and we believe we have a good chance of winning at least one of them.