Closure interview with Paul Higginson, Region Manager Europe, Russia & CIS, Packers Plus

November 1, 2013

Packers Plus in the Russian and Caspian market

My position is Region Manager of Packers Plus Energy Services (PPES) for the Europe/Russia and CIS area. PPES offers innovative completion solutions for Open Hole multistage Fracturing (OHMSF) which is a key and growing part of the Russian market. PPES pioneered this technology back in 2001 and since then have been leading the way in system solutions for the OHMSF market. We have a vast experience of over 12500 wells and 160000 stages with the most stages in one well being 60, which is quite an achievement. As such we have the relevant experience as well as technology to help Russian customers get the best results from their wells.

How is regional business for you in Russia and CIS? How do you see your regional growth developing over the coming years?

Growth in Russia has been steady and roughly in line with the growth of horizontal drilling in Russia over the last 3-4 years. Our systems were some of the first to be run in Russia and helped prove that the technology would help deliver the additional oil per well that Russian customers required. The activity in CIS is fairly minimal, there have been a number of projects that have come and gone, but we hope that going forward that area takes a lead from Russia where they have looked at the market and applied the right technology from the start to develop their unconventional horizontal applications. In terms of future development, we think it’s bright with a steep growth curve, much like North America has seen over the last 10 years. We would like to see horizontal lengths start to increase and more fracs placed per wellbore as that really is where the true value lies in getting the most from each well. The North American experience has proven this in all types of formations, not just shale, and it’s fair to say that in unconventional formations like sandstone and limestone the average number of stages per well in North America is at least 15-20. They have gotten to this stage over many years of trials, but Russia has the advantage of being able to take some of this learning and move ahead at a much quicker rate.

This year PPES took the step of setting up our Russian entity to complement the relationship we have had with our local representative, Consolidated Services, over the last 2-3 years. Also for the last couple of years, we have had a Russian version of our website and literature and have a Russian speaking General Manager. We plan to hire more local personnel to support all the businesses activities and generally invest in our local infrastructure to ensure we can support our customers growing needs.

With a variety of “packer” options available on the market – why should your tools be implemented downhole by the region’s operators and service companies? What benefits do they get from choosing Packers Plus as a technology partner?

The big benefit is our experience. We have installed equipment that has been used to stimulate over 160,000 stages over the last 10+ years across all types of reservoirs. We have helped customers achieve good results in the hottest, deepest, and longest wells, and our range of equipment sizes is the broadest in the industry. When we entered the Russian market, we quickly identified that there were some specific Russian sizes and technical specifications and we have designed systems to specifically suit the market and the customer’s needs. Most importantly we have installed many of them, so our experience is also local to the market.

The specific advantages and disadvantages of the type of packer available are well known and I believe it is very hard to argue against using a dual element mechanical packer and given we have installed over 160000 of them in wells around the world, including Russia, PPES makes its offering from a sound knowledge base.

Tell us about a recent success story for Packers Plus in the region.

We performed a trial of 4 wells in the Priobskoye field last year for one of the biggest Russian operators. The jobs were performed as planned with little or no issues and the production results from all the wells were very good. The operator in question went on to write a detailed article on the project in the ROGTEC Magazine (Issue 30) and this is still available on the website to read.

There is also a corresponding SPE paper on that project (SPE 162031). These results were not an isolated success; we went on to repeat them for a different operator in the same field. In both projects the wells flowed naturally at very good rates for a number of months before an ESP pump was installed.

We are hearing a lot recently about the future development of the region’s unconventional reserves – what potential does this hold for you?

At PPES we think it holds tremendous potential and we believe our technology and experience is at the forefront when it comes to truly unlocking the potential. At the moment, operators are predominantly performing 5-stage jobs in fairly short horizontal laterals. With our background we can help operators push this out to longer laterals with more stages, thereby significantly increasing the amount of oil recovered from a single well with minimal additional effort and time from what is currently being performed. This sort of approach will bring huge efficiencies, and coupled with technologies like our StackFRAC® (SF) Cementor™ stage collar, which can be used to isolate open hole junctions in a sidetracked well, the number of wells that operators can apply the technology to in a cost effective manner increases by an order of magnitude.

You have now been traveling the region for many years, but what do you most like about the region – what is your favourite part of Russia?

Russia is a great place to travel because it’s very diverse and each area has its own culture. Being out in Western Siberia in the middle of winter when its -40°C with a wind chill is an experience. For a lot of non-Russians this would sound like a pretty harsh environment, but when you see how the towns use this and create the wonderful ice sculptures and children’s ice slides that are found in many cities you can see that even the extreme cold can be used to create if you put your mind to it.

The Russian oilfields are spread over vast areas with a need to mobilize very large equipment and machinery such as rigs, coiled tubing and fracture spreads. It seems to me that the Russian people have learnt to adapt very well to challenges and are good at finding the right tools for the job. This is something that is evident in selecting OHMSF to develop their horizontal wells from the start and something I am personally thankful for as it has allowed me and PPES to be an integral part of the Russian oil and gas industry.

How do you see the region’s O&G market developing in the next few years?

We see the number of horizontal open hole wells per year growing steadily as the rig replacement programs take effect and also as operators complete trials in various fields. As mentioned previously, it would seem to make sense that the horizontal sections would get longer and that the number of stages per well would move towards 15-20. The market can only drill so many horizontal wells per year, so it seems logical to increase the output from each well in this way. Increasing the stages also helps to de-risk the operations as the contribution from one frac is less in percentage terms and, therefore, should any issues occur operationally or with the reservoir, the overall oil output from these wells will not be significantly affected.

There seems to be plenty of scope for drilling wells in the numerous fields that are currently being targeted, but at some point there will be a need to move into deeper, hotter, more challenging environments. This is an area where PPES particularly stands out as our experience stretches out into reservoirs with high temperature (up to 600°F), deep wells (down to 5532 m TVD) and also long wells (7435 m measured depth) with big horizontal sections (4475 m lateral). With the track record of supplying systems for such applications, we are ideally placed to help operators de-risk what will undoubtedly be more costly wells to drill and complete.

Finally, the shale market in Russia will hopefully be a big part of the energy mix in the long term. The Bazhenov shale has great potential, but is very much at an embryonic stage in the life cycle. It has been seen from shale plays in North America that the results don’t always come in the first few wells and although North America is very successful in exploiting their shale resources, they too went through a long learning curve across reservoir engineering, drilling, completions, stimulation and flowback. Ultimately, they kept trying and reaped the rewards in the long term. Russia generally has huge potential, probably more potential than North America and will no doubt continue to be the largest oil producing country in the world for a long time.