Bruce Malcom
Consultant
Alpha Deepwater Services
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View from the Top

Improved Drilling Methods to Cut Costs

Wed, 01/20/2016 - 18:36

Q: Which sectors within the Mexican oil and gas industry represent an attractive option for Alpha Deepwater Services’ involvement?

A: Alpha Deepwater Services has continued its advisory services in the deepwater segment, and beginning this year, we will expand in order to provide the same services in shallow water and shelf drilling. We also provide technical peer-review support to PEMEX’s development group, developing conceptual plans for fields that have moved from prospect to discovery, and subsequently to the development stage. We also provide continuous support to the exploration group in identifying and ranking drilling prospects. We are continuing to deepen our relationship with PEMEX, because after seven years of collaboration, we feel we have developed a solid relationship with the various divisions within PEMEX and we are delighted that the NOC has expanded our services into the shallow waters area. Nevertheless, we will continue to seek potential opportunities with other companies in the Mexican oil and gas industry, but this must be balanced with our continuing commitments under our PEMEX contract, and we must ensure that there is no conflict of interest in our service to other prospective operators.

Q: What are the main trends in the US side of the Gulf of Mexico in terms of efficiency?

A: Most of the cost reductions come from application of traditional industrial engineering methods, which entails studying the individual elements in drilling a well, finding ways to reduce non-productive time, and developing methods to reduce the time and cost to accomplish each step in the drilling process. In offshore drilling, the cost and time decreases are rarely found in increased rate of penetration since the most time consuming part of drilling a well lies not in the drilling itself, but rather in all the ancillary activities such as running casing, tripping, and logging.

Q: What novel approaches for shallow water field development could you bring to the table for the Mexican industry?

A: We have attempted to provide PEMEX with exposure to the planning and execution processes used consistently in development activities around the world, but in truth, we have not worked closely with PEMEX in development execution programs. Improvements in drilling performance have been steady and extremely noticeable recently, and we hope for this trend to continue as we increase our involvement in shallow waters. I think that everyone recognizes the short term will be a difficult period for PEMEX, and it will take a significant amount of effort both from us and from them to ensure that we maintain the basic core programs and mitigate interruption. There is no easy solution to the current need to reduce capital expenditure, and this not only applies to PEMEX, but to all oil majors globally. This will provoke a much more insightful approach to the programs that will need to be focused on and developed.

Q: How has the position of Mexico in your global portfolio changed in the last year?

A: PEMEX has been, and we believe will continue to be, an important client to Alpha Deepwater Services. However, the extent and scope of our services for PEMEX continues to change. One of the things that we have witnessed in the last year is an opportunity to provide technical support to PEMEX in the areas of identifying potential partners and working on the necessary agreements with those partners, whether PEMEX remains the operating partner or becomes a non-operating partner. Outside of PEMEX, we expect to provide our services to oil companies coming into Mexico through the bid rounds and to indigenous Mexican oil companies that have been and are being formed to participate in the new petroleum environment in Mexico. We also think we are well positioned to advise Mexican companies on investing in and developing the infrastructure that will be required to support the influx of the exploration and production companies that will enter the country as a result of the reform and the bidding rounds. The current infrastructure is woefully inadequate when considering the requirements of the entering companies, and significant fortunes can be made by prudent investment in and development of infrastructure.