Baker Hughes continues to invest heavily in R&D, having reorganized itself along ‘geo-market' lines over the last couple of years. During the recent SPE ATCE gathering in Denver, Russell McCulley caught up with the oilfield services giant's president of products & technology, Derek Mathieson, to get his take on the latest technology trends.
Unconventional gas dominated talk at the SPE ATCE meeting in Denver (see Analysis, page 16), and shale gas has been a focus of much of Baker Hughes' annual $500 million technology spending. But offshore E&P – particularly deepwater and deep gas – still commands a prominent share of the company's R&D effort.
Much of that focus is on the Gulf of Mexico, where Lower Tertiary developments and ultra-deep shelf gas wells are pushing technology to new limits, the company's products and technology leader Derek Mathieson told OE during a break at ATCE.
Pushing the boundaries
Those exploring deep gas on the US continental shelf ‘are really pushing the boundaries of pressures and temperatures that we've been able to handle before', he says. ‘They're asking some technology questions that no one really has answers for yet, in terms of the pressures and temperatures that we need the kit to work at, the depths of the wells.'
When Baker Hughes opened its Center for Technology Innovation in Houston less than three years ago, the company designed its six test wells to handle pressures up to 40,000psi and temperatures as high as 700°F – ‘at least twice the pressure and temperature that we believed we needed for our tests,' Mathieson says. ‘We thought that was going to be more than anyone ever needed.' Baker Hughes is working alongside others on the next generation of extreme HP/HT completion and production equipment and says customer demand has already pushed the upper limits of tests to 500°F and 30,000psi.
‘We have tested some equipment that's the start of technology that is going to function long-term at these pressures and temperatures,' he says. ‘And it's not just the [US] shelf. There are companies around the world that are going deeper and hotter.
‘We've found that we've had to reinvent the wheel, almost,' continues Mathieson, who joined Baker Hughes in late 2008 after a stint as CEO of WellDynamics. ‘The building blocks that we had for our technologists weren't enough to allow them to design this next generation of equipment. We've put a lot of money into materials, and nanotechnology in particular.'
To that end, the company has begun developing the elastomers and alloys required for equipment used in extreme HP/HT environments. Polymer technology has become ‘a sideline of sorts' for Baker Hughes, he says. ‘If you really want to get to 700°F and that type of operating range, there are some interesting materials that have the right characteristics to allow us to build the packers and seal assemblies of the future. And we're right at the point of a breakthrough there.'
Almost equally challenging as downhole conditions is the rapidly evolving US regulatory environment. While new post- Macondo deepwater drilling regulations apply primarily to offshore operators, the Obama administration has indicated that large service companies could also be held liable in the event of an accident.
Regulations are ‘driving an enormous amount of change, even in our standard business today', believes Mathieson. ‘That's across almost every product line.' New regulations ‘will cascade through operating companies, in terms of the type of equipment they use and how they're assuring the competency of staff. And while those are secondhand at the moment – the operators are the ones that must comply by law – it has already had a profound effect on the service sector in terms of focus on all factors around process safety.'
Baker Hughes maintains about 20 major product lines with some 70 sub-product lines: ‘businesses in their own rights around the world,' Mathieson points out. Getting a grasp on such an array of options can be a struggle for customers. ‘Seventy sub-product lines, and each of those may have five to 20 actual product families – if you think about the array of options there are for almost anything you want to do, it's almost too much for people to sift through.
‘We've got a solution for nearly any issue an operator may encounter. We are working to mine our solution space to make it easier for our customers to envision the impact our integrated technologies can make.'
Before the middle of the last decade, Mathieson explains, Baker Hughes was ‘arranged in product line companies, so we were very individually technologically focused. That suited the buying patterns of customers for decades: pick the best drilling system, pick the best completion solution, pick the best chemicals.' By 2005, however, E&P spending by national oil companies had caught up with the majors. ‘The NOCs' buying patterns were very different,' he says. ‘They were coming into new areas like deepwater or the unconventionals, and they didn't necessarily have the same procurement approach that the IOCs had developed over decades.'
NOCs were ‘asking simple questions that made us think about our technology in a different light, such as "I want to drill the best wells and have better production – how do I do that?" So it forced a lot of introspection on our side, to say, you know, we don't actually own all the capabilities to help them make the right kind of choices.' Baker Hughes went on an ‘acquisition trail' over the next few years, he explains, to bring more petroleum engineering and reservoir expertise to the company. Hundreds were added to the company's workforce with the acquisition of, among others, Gaffney, Cline & Associates (GCA) and GeoMechanics International in 2008, Helix RDS and EPIC Consulting Services in 2009 and BJ Services and JOA Oil & Gas in 2010.
The acquisitions have helped the company integrate services and offer turnkey solutions to NOCs, who may link remuneration to production targets.
‘It's started to rewire our work flows within the company, so that we're now looking at major projects that are risking services for a goal that's linked to production,' Mathieson continues. ‘So we set out to beat a production target. It's just a twist on our product services sales model, but with a very different set of time scales and a different risk and reward criteria – much more performance-based, and aligned with a customer's goal of either getting more production or improving recoverable reserves.' The difference is ‘not just bringing all the technologies to the table, but having an intellectual stake' in a client's project. ‘There are a number of big projects with NOCs around the world today, in that space where they're looking at a turnkey approach based on an end result, rather than individual services,' he says.
‘It's an exciting new business for us.' OE