WINTER 2010/11 No179 IN ISSUE 179 WINTER 2010/11 4 Marshalling 8 China 10 Iraqi 12 Travelling Marcellus currents intervention lean Hunting’s latest facility in Latrobe, China’s economic rise over the last Hunting Welltonic’s recent Embedding lean manufacturing Pennsylvania, is situated right decade has changed the course assignment in Kurdistan principles is a journey that at the heart of the strategically of international trade for cargo demonstrates how the company’s provides benefits for both the important Marcellus Shale play such as iron ore and coal. Gibson presence in well intervention is company’s workforce and to the Shipbrokers reports being taken to a global community bottom line 14 Walking in a 17 Introducing 20 Decathlon 23 Tools of winter wonderland Innova dream the trade London’s Royal Parks have a long Hunting’s latest acquisition Lacking energy? Find out how A newly established Hunting history of entertaining everyone is a manufacturer of intricate Hunting staff fared when they Energy Management Services from monarchs to the general mechanical, electrical and took part in the 2010 Aberdeen (HEMS) facility is leading the public - and long nights with cold integrated products for use Corporate Decathalon way in drilling equipment days provide the perfect setting for in the energy sector’s harsh rental festive fun environments 25 News from our community Hunting Review; the external house magazine of Hunting PLC 3 Cockspur Street, London SW1Y 5BQ, UK Cover 24 Relocation, [email protected] Edited by Victoria Bailey and Georgia St James’s Park relocation, relocation Langdon, Campaign PR. ©Giles Barnard [email protected] The integration of multiple Designed by Anthony B Ainley MCSD sites around Aberdeen into two [email protected] purpose-built facilities will give Produced and printed by Hunting Energy Services room for Duffield Printers Ltd future growth [email protected] 2 Foundations of our future For 136 years the Hunting name has been synonymous with promoting the principles of trust and quality. Thanks to these shared values and the economic success of the company we can also add longevity to this list. Last year marked a seminal year along the company’s growth path. We made our largest ever acquisition with the purchase of electronic manufacturing specialist Innova-Extel. This Houston-based company, now known as Hunting Innova, gives us the opportunity to grow our market presence in the upstream international oil and gas industry through the manufacturing of electronic components which complement Hunting’s existing mechanical capability. The Review’s introduction to Innova is accompanied by an operational case study for Hunting Welltonic, celebrating its first year in the fold and flying the Hunting horn - on this occasion to Iraqi Kurdistan. There is also an opportunity to describe how the company is putting down roots in new locations including Latrobe, PA to address the extraordinary development of the Marcellus natural gas shale basin. The success of these new ventures will be largely dependent on the good name and reputation that has been earned elsewhere. We also look at how the value proposition is constantly reinforced, in this instance through ‘lean’ manufacturing, whose journey will ultimately encompass all company facilities. Naturally the Hunting brand is not just about equipment supply. Without our loyal and hard-working staff around the world, and the service they provide, our products would mean very little. This issue also includes an expanded section covering what our community has been doing over the last six months. Many staff from Hunting’s Aberdeen facilities joined together to compete in a corporate decathlon while in the USA the achievements of our chosen corporate charity Oilfield Helping Hands have been recognised with a major oil industry award. At the start of another decade we wish colleagues, customers and friends a happy and prosperous New Year. 3 Marshalling Marcellus The grand opening of a new regional base for Hunting Drilling Tools in the northeastern USA is further evidence of the market appetite for the Hunting brand and product line 4 he United States has recently started developing the largest prospective Tunconventional gas reserve in the world due to the discovery of the Marcellus Shale play, in the Appalachian Basin, as a producible field. The Basin covers a 700 mile stretch from Tennessee to New York generally bordering the western flank of the Appalachian Mountains. The proximity of Marcellus to the largest US market for power and heat should lead to a ready outlet for the produced gas at a very competitive price - and cost. Already there has been a rapid growth in rig counts from an average of forty in 2009 to more than a hundred predicted by the year end. This foreshadows a potential for growth that is greater than any other US shale play. The The team at Latrobe highest concentrations of wells are in northeast Pennsylvania and the tri-state area of Ohio, West Virginia and Pennsylvania. Most of the rigs are drilling horizontal, rather than directional wells, Hunter A Wood II indicating the Marcellus basin where pricing is at a premium for drilling tools and mud motors. It is expected that the play will be developed in a manner similar to the Barnett Shale in Texas and the Haynesville Shale in Texas and Louisiana. Well depths are typically 6,000 - 8,000ft for horizontal wells and generally shallower for those fewer vertical wells. Positioning & location Following a careful study of the market characteristics, southwest Pennsylvania was selected as the best area in which to locate a new Hunting service facility. This places it at the heart of growth in the Marcellus. Most competitors are far to the south in the older fields of the Appalachian Basin broadly located on the I-79 corridor in northern West Virginia. The specific site selected is in Westmoreland County, in the city of Latrobe. It is located Polishing up for open day approximately forty miles to the east of Pittsburgh under the glide path to the Arnold Palmer regional airport. This facility also serves as a hub for servicing premium connections and well intervention products to a geographic area approximately 8 to 10 times larger than any of the existing service zones. It is also well placed to build a network of local satellite stockists if the market so requires. The quickest route to market for Hunting tools was to work with the existing directional drilling customers. Several of them have been active in the region already and others had plans to enter. With a local presence it is also possible to access a new regionally specific customer base. There is a definite need to be local since timely turnaround is critical. The main service centre at Casper is 48 hrs away and Oklahoma City is still too much of a stretch for a viable business. However the reputation gained out West, carries over to the East and there is considerable familiarity with the Hunting product line within led to the installation of a waste liquids collection configurations include stabilisers of varying the local drilling tool community. system, Watermaze processor and evaporator, so diameters, fixed bent housings with varying that any solid waste products can be disposed of bends, and bearing housing that is either slick Fitting out simply and effectively. or stabilised. The intention is that the new The site selected was a 28,296sq ft former tea centre will also have the ability to service warehouse that includes 3,296sq ft of office space Tooling up Hunting Seal-Lock Wedge and TKC 4040 RTC on a 3.5 acre parcel. The building is expandable Provision is made for seventy drilling motors threading requirements in due course. to 40,000sq ft, while some initial building and spare parts plus twenty vibration A new permanent stock is being purpose improvements and customisation were required. dampeners and twenty-five drill collars. A built for the directional and horizontal These included electrical service upgrade, bridge stock of 6½ in and 8in mud motors has been market, where Hunting’s motor technology is crane service, sumps, driveway modifications, transferred to kick start the new facility with greatly improving. The superior performance locker rooms, air lines and so on. Environmental suitable adaptations to reconfigure these encourages both the operating and directional considerations and good neighbour practices have tools for local purposes. Parts for alternative companies to use these products. However, 5 since that reputation was garnered for vertical straight wells, there is the need to re-craft that track record in the horizontal market. The directional tools have a higher initial cost than straight hole tools because of the adjustable bent housing and the need for harder wearing carbide coated rotors, instead of chrome ones. Air tends to be used as the medium for drilling which is much tougher on the tools but, together with the carbide, is preferred environmentally. It is also less susceptible to chemical attack, so the total life cost is less by eliminating the recoats. Utilisation is higher since the rotor is not out of service for several months getting recoated. A more respectful operating approach to the environment is also evident with the introduction of new fracking techniques to reduce environmental impact and assuage fears of water course contamination. People power There is no historic pool of local gas industry Welcoming visitors to the grand opening expertise to draw from and until recently out- of-state personnel with the experience of other shale plays have been the preferred resource. In the long term this is unsustainable and undesirable. In recognition of the situation local community colleges and universities, amongst them St Vincent’s in Latrobe, are putting in place the appropriate training programmes to satisfy the new industry requirements.