Technology the Differentiator for World-leading Service ProviderBy Peter Appleby | Thu, 08/13/2020 - 09:18
Q: How will Halliburton adapt to the COVID-19 pandemic and the collapse in oil prices?
A: The situation is complex. The company has internal protocols and is aligned with government guidelines for operating and re-opening. While the government has deemed some businesses within the oil and gas sector as “essential” and those have continued to operate, other suppliers with whom we work have not. Some of these companies are necessary for the continuity of our industry. Therefore, we are working together - providers, service companies, operators and government - to solve possible disruption concerns. As of today, we are not witnessing supply chain disruption but we have to continue working collaboratively to maintain activity levels.
With the cyclical nature of the oil and gas industry, Halliburton is always prepared for whatever market may come. In the last three or four years, the decisions we made – adjusting our structure – have paid off. We have benefitted from the increase in performance on other projects, including technology and efficiencies. However, the dual impact of the commodity price decline and decrease in oil demand is unprecedented and has caused disruptions to the entire sector. Discussions are underway with our customers to determine how we can reduce the total cost of ownership for them. This is the differentiator we offer from competitors and apply the techniques we have learned over the last few years through collaboration and continuous improvement. We will reduce waste within our processes and evaluate how to make certain drilling and completion processes more effective for our customers. This will lead to reduced time and reduced costs, increasing margins for both the clients and ourselves.
Q: Why has Halliburton reduced its R&D investment in recent years and how is that money being used for greater value?
A: Halliburton is evolving with the market, which helps us pivot to products and services that provide and engineer solutions that maximize customer asset value and greater returns for stakeholders. To do this, we are targeting key areas that will make a major difference between Halliburton and our competitors.
In Mexico, we face challenges with HTHP and deepwater wells. The exploratory and developing wells we are drilling today are extremely deep, presenting pressures beyond 15,000 psi and temperatures above 175°C, for both land and offshore. Our global portfolio is expansive and includes mature fields, deepwater fields, and HTHP opportunities. We can bring all of this experience to Mexico’s environment. The impact of Halliburton’s R&D will directly benefit our work in country because of the wells that exist here and the solutions we can provide to help our customers to maximize their asset value. Therefore, technology continues to be an important part of our value proposition. The adjustment does not jeopardize the focus on the solutions the customers need, but is more how to navigate the challenging times we are all facing.
Q: Which divisions drove the 8 percent growth of the company’s Drilling and Evaluation line in Mexico last year?
A: Halliburton experienced a ramp-up of business in Mexico last year as operators continued with projects in exploration and development, land, deepwater and shallow water fields. This was particularly true in well construction, which is why our Drilling and Evaluation division experienced such growth.
As a leading oil and gas service provider, we believe that our people and our technology, amongst robust processes, are our differentiators when collaborating with customers and the whole sector. Our drilling and evaluation projects in Mexico run the entire spectrum and require extremely specialized equipment; directional drilling, drilling tools, bits and fluids, cementing services, logging tools and managed pressure drilling equipment. These services have grown the most over the last year, supported by the industry’s overall progress in Mexico.
Q: How important are mature field operations in Halliburton’s Mexico portfolio?
A: Mature fields offer a great opportunity in Mexico, and there are a significant number of local companies to execute this type of work. Halliburton has been collaborating with offshore operators regarding our Stim vessels for FEED design on wells. The results have been excellent.
Halliburton also supports jobs that require high technical capacity on land. Deep wells and HTHP wells are the challenges we enjoy the most. This is where our technologies and processes can make the greatest impact. For mature fields, Halliburton has three distinct areas of focus: well production optimization, improving asset recovery, and well abandonment. There are many risks associated with workover jobs since the wells are older and we do not know the exact condition before we go down. While we may have indications on paper, the reality of the field is often different. We are taking on complex mature field projects where a high technical ability and a high level of collaboration and synergy with the customer is required for success. This is where we focus our mature fields efforts.
Q: What is the value that Halliburton places on Mexico’s deepwater fields and what is the company doing to support developments?
A: Deepwater is a very important segment for Halliburton in Mexico. Though the potential is still being evaluated, we can compare it to the US Gulf of Mexico where there has been far more development. Deepwater requires intensive capital investment and most of the blocks are operated by IOCs. Based on this, we can say that Mexico’s deepwater projects are a strategic opportunity for the country, which will grow in the next five to 10 years. For Halliburton, Mexico’s deepwater also offers an opportunity to consolidate its offshore presence in the country.
Halliburton has invested in oil and gas facilities in Northern Mexico for deepwater projects and its associated logistical necessities. This was the spearhead of early involvement with first movers. Most operators are in the exploratory phase, so they are working in a context of uncertainty and have control over their footprint. At present, some risk has been transferred to the service companies, which minimizes contract administration. This is where integrated project management is a key differentiator. Managing an entire project for these new players and adding value is vital.
Halliburton has been drilling deepwater wells in Mexico since 2015, and there are only a few other companies with the capabilities to drill deepwater that we have. New operators to the area often face challenges in how to drill due to the complexity of geology, and this brings opportunity to our Company. We believe that the experience we have gained in the last five years in Mexico, our worldwide best practices in drilling deepwater wells, and the collaborative and detailed preventive planning that we provide is key to reducing operators’ uncertainty. When we combine our deepwater drilling experience in Mexico with the geological knowledge from the operators, we get the best outcomes.
Q: How has the company ensured its PM services remain attractive in a changing industry?
A: Halliburton has offered project management integration services in Mexico for over than 20 years. The industry evolves day after day, and the levels of integration are moving from services aggregation to a fully integrated service model. Likewise, supply chains aggregate more services in the form of vertical integration. Halliburton has been flexible in evolving with the market to offer a diverse portfolio that meets customers’ requirements. An organized, detailed and flexible portfolio is critical to succeed, especially in integrated projects. We respond accordingly to our customers, and this is what has driven the increased demand for these services.
Q: What is the role Mexico plays within Halliburton’s global portfolio and what will Mexico’s role be in the organic growth of the company?
A: Once we overcome this pandemic, we are confident that Mexico will be a key player for us in the Western Hemisphere. Mexico has the reserves available, as well as adaptive regulation and government guidelines that allow the international companies to come to the country and invest. This should help the country to continue increase FDI in the near future.
In the short term, we hope to see regulations that promote work on unconventional resources. Mexico has major potential for unconventional resources, which should be another future growth area for the country. Halliburton wants to support that activity when it arrives. We have a large amount of experience and are committed to mobilize those capabilities to Mexico if the sector moves in such direction. Even in these challenging times, we are optimistic in 2020. We believe our success comes from our value proposition and mainstays, and how we apply them within the context of each of the over 80 countries in which we work. Local content is key for our work and, in Mexico, more than 90 percent of our personnel are locals who we have trained for many years and who have a great level of skill.
Halliburton has had a presence in Mexico for more than 70 years and we will continue working together with NOCs and IOCs to develop their assets across the deepwater, shallow water, deep onshore fields and unconventional resources.
Halliburton is the world’s largest energy industry service provider with over 40,000 employees worldwide. The company specializes in helping clients maximize production through the life cycle of their assets, from exploration to well completion