Drilling Speed is Crucial

At the beginning of 2012, Key Energy Services was performing 70 well workovers in Chicontepec per month for Pemex; by the end, it was performing around 150. Through the acquisition of an established competitor, the company was able to grow its rig count from 23 to 42 over the course of the year, virtually doubling the size of its operations in Mexico. No less than 36 of these rigs are based in Chicontepec. Key Energy Services has been working with Pemex since 2007, and in addition to well workovers also supplies Pemex with coiled tubing, slickline and wireline services, as well as consulting and project management activities.

Héctor Cabrera Cuellar, Vice President of Latin America Operations at Key Energy Services, believes that the company’s main competitive advantage is its operating speed. “We have worked to enhance our drilling and extraction performance, which brings a serious competitive advantage to our operations, lowering the cost per barrel as a result. We have managed to improve drilling performance by 20%, and much of this improvement has come from properly incentivizing our employees. Training and rewarding our personnel is a priority for the company, and engaging with both our employees and their families is crucial in this respect.”

The use of its proprietary KeyView software was another success factor in Key Energy Services’ drilling efficiency improvement. This rig data capture system monitors specific operational parameters, thus enabling rig operators to perform their duties better by following optimal procedures. The KeyView software also contributes to worker safety by intervening as soon as the parameters it measures deviate slightly from pre-set limits, preventing errors and accidents.

The company’s innovations also contributed to its the success at Chicontepec, where the difficulty posed by the field’s geology complicates improving the output per well. By the means of its I am 101 program, the company studies an area provided by Pemex and consequently develops a customized drilling strategy. “As a result, we achieved a production increase of 3,500 b/d after working at Chicontepec for only two months,” says Cabrera Cuellar. At Chicontepec, Key Energy Services is also testing a new technology called Torpedo, which is used to stimulate oil  flow. “In essence, the Torpedo is a controlled explosion that fractures the rock at the bottom of a well to stimulate the flow of oil. It is similar to a controlled demolition at a building,” explains Cabrera Cuellar. “We are also trialing underbalanced drilling in the region, which we believe will increase production because it won’t damage oil fields as much as other types of perforations.”

Key Energy’s expansion has allowed the company to get involved in a growing number of onshore projects, such as Veracruz where the company has started working in multiple fields. Although Pemex is the company’s main customer – making up 95% of its business in Mexico – Key Energy Services is also working as a service provider for Schlumberger on its integrated service contracts in Tabasco and Tampico. The company has the ambition to move its well workover services offshore. “What we want to do is transform our current rigs into modular rigs and to install them at existing platforms. In other words, we want to use onshore rigs, modify them, and use them as modular rigs for offshore well workovers,” Cabrera Cuellar says. “This is our plan, and although we have not tried it yet ourselves, it is being done in other countries. We are also looking to probably buy or enter into a strategic alliance with a company that is well established in Mexico. We are aiming to start our offshore operations this year.”

The company’s growth targets for 2013 are no less ambitious than its record from the past year: “We aim to keep growing by increasing our operations in Mexico and expanding into Ecuador, Venezuela, and Colombia. Also, in the next year, we are planning to have at least 500 rigs and 60 work-over rigs. Growing hasn’t been difficult, but to sustain that growth is very complicated,” says Cabrera Cuellar. “We are planning to expand not only in drilling operations, but also in different areas, such as fluid management, fracking, coiled tubing, and fishing services. There is a lot of room for improvement regarding Pemex’s operations, because so many different companies perform a wide array of services to Pemex. We already have ample experience in all of these areas, so I believe that we can improve operations and management by working both with Pemex and its suppliers in these business lines,” Cabrera Cuellar reveals.