Luis Alfonso Garrido Lutzow
Director General
View from the Top

Tubular Tools Reduce Downtime on Rigs

Wed, 01/21/2015 - 15:13

Q: What market opportunities motivated the creation of SIIESA two years ago?

A: The creation of Servicios Industriales de Ingeniería y Energía S.A. de C.V. (SIIESA) came in response to several factors, the main one being the approval of the Energy Reform. Although there are many Mexican suppliers and service providers in the oil and gas sector, we identified a niche opportunity in the supply of specialized drilling tools and services to PEMEX and international companies in Mexico

Q: Why did SIIESA decide to position itself in the tool rental business, instead of selling this type of equipment?

A: We made this decision for various reasons. Although selling specialized drilling tools is a good business, and many of our customers have been interested in buying them from us, that is not our niche. There are already companies in the market that sell these products, but few of them give a complete service. Our objective is not only to deliver the tubular tools at the well site, but also to provide the specialized maintenance processes required for such tools, like welding, coating, and finishing. We offer this comprehensive maintenance service for both our tools and those of our customers. Our clients usually have a fixed stock of tools, but when the drilling operation is at its peak they are often overwhelmed. Taking care of these time and labor consuming activities is a burden for large companies, and we remove that burden.

Q: How can SIIESA’s downhole tools help reduce risk during drilling operations?

A: Accidents that affect drilling operations occur mainly when companies do not pay enough attention to the quality of their tools. When sub-par tools are deployed, or if tools are being used for too long without maintenance, a drill string can get stuck or damaged. If this happens, the entire operation may  have to be stopped for several days. The costs of this downtime can run into the millions of dollars. In extreme cases, the drill string cannot be repaired and must be replaced. However, some companies continue to use these low-quality tools. If we see a tool that presents even the smallest risk of affecting a drill string or causing any other kind of accident, we replace it. This gives our customers peace of mind.

Q: How can SIIESA stand out in this competitive market?

A: When a market is in crisis, good opportunities arise for companies that invest in training, certification, and quality. We see that as our best chance to stand out from our biggest competitors. Round One is introducing high quality standards for the country. We expect that when newcomers begin operations here, some of our direct competitors will struggle after not meeting the quality standards during audits by these companies. Fortunately, SIIESA has passed all audits that it has undergone to date. Our main supplier is a Houston-based company, Stabiltec, which is a leader in the manufacturing of state- of-the-art downhole tools for the oil and gas industry. It is a globally recognized firm that buys high-quality steel in Germany and Italy, which is superior to the steel that most Chinese companies use, to manufacture downhole tools that are made according to API standards. Stabiltec offers downhole tools with a long lifespan at very competitive prices relative to the market average.

Q: What strategy has SIIESA adopted in order to deal with the current market downturn?

A: The downturn over the last year has been dramatic as the number of wells being drilled has plummeted. Unfortunately, it will take longer for the market to recover than many had expected. It may well take two more years to return to the previous level of drilling activity. Our strategy in this situation is based on preparation, certification under ISO standards, social responsibility, and constantly developing and introducing new technologies. The Mexican market is large and there is enough work for all those who want to do things right. That is where we see the main opportunity.

Q: When do you expect SIIESA to start working with PEMEX directly?

A: This is something quite complicated. PEMEX has its own technical and economic reasons for tightening its belt, financially speaking. It now requires proven experience of at least three to five years for the majority of its service providers. In my opinion, this is a mistake because even if a company has no experience, its people can provide the necessary expertise. This requirement affects us as a new company and the scarce projects that are being announced leave us out. Therefore, we must proceed in partnership with other companies that have the minimum level of experience required. In this market, those who want to go it alone without seeking alliances will be in a delicate situation.