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Strong path ahead for Weatherford

Dec 06, 2018
8 min read
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Mark A. McCollum, President and Chief Executive Officer, Weatherford International sat down with Julian Walker from Pipeline Magazine at ADIPEC to talk about embracing digitalisation and preparing for the future of the global energy industry

With the end of 2018 approaching, it was clear that the Weatherford President and CEO was looking to the horizon. “My outlook is very positive. Weatherford has embarked on an ambitious transformation plan to strengthen the company and create sustainable profitability and cash flow, regardless of the market environment. Our results throughout the year validate the effectiveness of our hard work and reinforce our commitment to our strategic objectives,” McCollum said. Weatherford is embracing digitalisation to help the company and its customers prepare for the future of the global energy industry.

 

“I think the company’s path forward involves automation and digitalisation. For me, the key aspect of digitalisation is that it is an enabler. Digitalisation will ultimately lead to creating value. Value creation is what we are focused on,” explained McCollum.

Weatherford is continually bringing on board new technologies as McCollum highlighted.

“It is our mandate to invest in technologies that pass value onto our customers. One recently commercialized technology—our Magnus™ push-the-bit rotary steerable system—offers a cost effective tool that reliably functions in nearly all well conditions. We have also made investments in managed pressure drilling (MPD) and artificial lift.” Digitalisation can help the industry in terms of two major areas: health and safety.

“For me, the single biggest advantage is enhancing safety by taking people out of the red zone. We have a real problem around safety – removing people from zones where they can get hurt. The oilfield industry is a very dangerous one to work in. Beyond the safety issues in our industry, the cost of failure is enormous.”

He added: “The other big advantage to digitalisation is improving judgment. Human influences create risks that often leads to failures. We can reduce these risks by automating decision-making, or at least improving our ability to make decisions by obtaining more empirical data and by using the Industrial Internet of Things (IIoT) to collect information. The more data that employees have to go through, the more certain we can make our decisions. In McCollum’s view, digitalisation will be a game changer for the oil and gas industry.

Automation opportunities

Weatherford will look at pushing the automation angle even more in the future as the industry adapts to the new energy landscape. “Some areas of opportunity with huge potential are automation and digitalisation— including principles such as the Internet of Things, Big Data, and Machine Learning— not only for production but also for drilling. The last decade focused on intelligent completion design. Now the frontier is applying digital technology to other lifecycle segments,” he said. “We do a lot of things that lend themselves to automation. In well construction, connection integrity is critical. Improperly making up pipe connections could lead to massive failure costs. By adding automation to the pipe makeup process, we can help our customers to reduce these kinds of issues and the associated annual costs, which could be in the tens of millions of dollars.”

McCollum said that in the upstream sector in terms of drilling and wireline space, Weatherford has a lot of products that apply digitalisation. “This is a more developed product line from us, for example our drilling earth modeling, which uses well software to construct 3D model from seismic data. Further downstream in the production space, the focus is on maximising reservoir drainage.”

Production rates

McCollum feels there is a shift taking place within the industry and markets, with a growing focus on production rates over just adding new reserves. “Our recovery factors in the U.S. are sometimes in single digits. In the Permian Basin, our recovery rates are 8 percent. However, doubling rates to 16 percent could have a real impact on the supply base in the U.S. and around the world,” he said. Digitalisation can play a key part here as it enables taking information, from smart completions to production data. “The possibilities become exponential in the digital space for our industry. Historically, we have ignored this area, but now we are fully committed.”

McCollum touched on efforts in the Middle East and Norway to address production rates. “Across the Middle East, NOCs like Saudi Aramco, ADNOC and KOC have spent a lot of time and energy around thinking about the issue of production rates. The Norwegian’s have done a great job in the North Sea. They have moved the needle from 35 or 40 percent to a 50 percent rate.”

Innovating Technology

On the technology front, Weatherford is fully embracing the latest applications from edge computing to artificial intelligence. “We are still at the front end of what I would call edge computing and the use of artificial intelligence. We have all this data, but some questions remain. What do I do with it, and how do I separate the relevant data that will enable me to make better decisions?” For McCollum, data communication is vital to the proper functioning of new technology. “Data communication and devices make up a key area for us. How do we move data fast? We need the next generation of bandwidth for the new technologies to really work, and we are all waiting for it. Internally, we are developing the required communication tools. Owning the platform for the data is a big focus for us. In fact, we have already put a lot of our software on the Cloud.”

New Generation

The oil and gas industry is facing a widening talent gap as more and more engineers start to retire. “Our industry faces the challenge of an aging workforce. The average age of a Weatherford employee is someone in their 40s today, and we have gone through a whole series of downturns that have created a huge talent gap. I have big gaps that I need to fill, which will be a big problem for us down the line. I feel that the shift to more automation and digitalisation will help us to fill those gaps. When my experienced employees leave, I can begin to diversify the group with new hires who have a broader level of expertise around digital tools,” noted McCollum. This gap poses a challenge that can only be solved by change and attracting others to the oil and gas industry.

“The industry’s talent profile requires a change. We need to create a workforce that strikes the right balance between technical and technological brainpower. While traditional oil and gas disciplines such as engineering are critically important, we also need expertise in digital operations, software engineering and data science.” McCollum touched on the ample opportunity for young talent in the oil and gas industry, and the value of their contributions. “At Weatherford, we are firmly committed to recruiting new employees and accelerating their development.

For example, our NextGen program identifies the next generation of company leadership. In the first year of the program, we hired approximately 200 graduates to participate in a five-year structured rotation. We intend to increase this number every year and to hire a significant percentage of females.”

Positive Outlook

As Weatherford looks to the future, McCollum said that one can never forget that oil and gas is a commodity industry that will face a wave-like recovery. “Our industry is a commodity industry, and we are driven by supply and demand. It would be difficult for me to sit here and say that demand is improving markedly. While activity in the U.S. has been very strong, there is a lot of concern about weakness in China and other developing countries. Having said that, we have significantly underinvested, and production growth has slowed. We are continually narrowing the gap between demand and supply.

“I think that demand is tempering and so is production. This prepares us for constant growth, although it may be a little choppy. I feel that oil prices will rise again in the first part of 2019, and then we will hit a plateau in the second quarter. Thus, the recovery will ebb and flow,” McCollum concluded.

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