Cover story: Changing the face of drilling
Nicholas Kjaer, general manager, Middle East for Churchill Drilling Tools, says that the ambtious firm’s rapid growth has been underpinned by its relationship with its clients
It’s been an amazing journey,” says Churchill Drilling Tools’ charismatic and enthusiastic general manager for the Middle East Nicholas Kjaer, with a glint in his eye. And he isn’t referring to the brief hop over from his firm’s base in Jebel Ali to our offices in Dubai Media City.
But rather the impressively rapid growth and reach that his firm has achieved over the past two years since setting up a base in the UAE. Churchill Drilling Tools, a family owned firm, originates from Aberdeen, Scotland, the traditional launch pad for many of the UK’s oilfield support services to the North Sea oil industry.
In early 2016, Kjaer tells me, the firm’s regional operation consisted of “just a desk in Dubai”, but within a year, Churchill had already opened a maintenance and client-support facility and workshop in Abu Dhabi as the take-up of its innovative products accelerated. It is no surprise that the company is now working across multiple regions around the globe. From offshore operations in the Arabian Gulf to onshore US sites, Churchill is carefully evaluating its next steps.
Churchill Drilling Tools started life as the brainchild of founder Andy Churchill, now the firm’s chairman, who began designing drilling tool prototypes before forming a drilling tools rental business. Churchill’s core business is essentially down-hole tools, which are activated by pumping darts. But the firm’s innovative research and design (R&D) work has led to the development of a growing portfolio of cutting edge products and, matched by its resolute commitment to growth, Kjaer believes the company can offer clients ever-wider solutions and – in so doing, become one of the major players in the region and beyond.
“Our main area, and where we started, is drilling, and that is also where we have currently the biggest activity within the company and among our products. However, having said that, we have recognised, and so have our clients, that we could bring something of value to other parts (not just drilling, it could be completions, it could be abandonment etc) with our innovative technology.
“So this has actually moved us in a direction where now − and this is our own company vision − we want to be the leading supplier of activating equipment in this region from exploration all the way to abandonment.”
When it is put to Kjaer that this represents a lofty ambition, bearing in mind the competition in the sector, he remains unfazed and refers to the “significant interest” operators have shown not only in the firm’s technology and how it deals with, and supports, the challenges they face, but, just as significantly, in Churchill’s provision of “solutions of value”.
As a case in point is one of Churchill’s many innovations − its “smart darts” technology, which allows operators to drill faster, enabling them to accomplish tasks ahead of time and thus benefit from a commercial saving, while the technology brings greater efficiency and reliability. Kjaer explains that he sees Churchill’s products effectively “ticking off the boxes” of what operators are looking for in a particular solution or product.
“With the existing developed technologies that we have, the USPs for those are that the operator will drill faster and more efficiently. So obviously they will see both an efficiency gain as well as a commercial gain which, taking into consideration the downturn that we have experienced over the last many years, is something they are very interested in.”
Although Churchill Drilling Tools continues to build up a diverse range of down-hole products, much of its focus has been with offshore operators. But Kjaer does not see the firm as simply specialists in this segment.
“Offshore operators see a great benefit from using our equipment and technology, and that’s everywhere around the world. We are starting to see a great interest onshore for some of our equipment – again, it all becomes a value proposition. Where can we provide the most value? And for what technologies can we provide the most value? Some technologies might not be applicable onshore, all of our technologies are applicable offshore.”
Communication is the key
Kjaer believes the size of the company enables it to benefit from the adaptability and flexibility to partner with its clients in order to listen to what issues and challenges they have and then work on providing a bespoke, and rapid, solution if required.
“We had a specific operator that had a challenge with some of their operations and we had a formal meeting with them, where they went into details about what that challenge was. We then figured out this was definitely within our expertise. We went back to the drawing board, R&D came up with a solution and within three months we actually had physical assets on the ground, which obviously given our size is, I guess, one of our advantages. We can turn this around very quickly. This has happened on numerous occasions − several occasions in the Middle East and also worldwide.”
If the firm’s approach to problem solving demonstrates its adaptability, its rigorous R&D work similarly enables its products to transcend all manner of drilling environments and conditions making it increasingly viable for operators. Kjaer says that as Churchill’s tools and equipment will be used in some of the toughest circumstances imaginable in the drilling sector, such as under deep water, all of its technologies are tested under the “harshest” conditions and are “extremely robust”.
Its R&D work continues apace and, again, communication from clients is an integral part of the design process.
“We are a company that is both continuously innovating ourselves but also obviously innovating equipment and technologies that are particularly based on feedback from the clients that we could then develop − as well as what we believe could be a good value proposition for an operator.”
Initially, Churchill started with just “one or two products” but now the firm has three distinct product lines with almost a dozen different technologies, many of which are available within the Middle East region. The firm currently dedicates some of its R&D to tailored solutions for clients and then uses that knowledge to help inform its more general research into potential commercial products.
Regionally, the firm has seen many clients take up its HyPR HoleSaver product to guard against ramifications from issues such as stuck pipe, where a pipe cannot be freed from the hole without causing damage. Churchill continues to look at further variants of this technology down the line.
The popularity within the Arabian Gulf of Churchill Drilling Tools’ product line is of course testament to how rapidly the company has accelerated forwards from a single desk in Dubai barely two years ago. Once again Kjaer describes one of the initial building blocks as effective dialogue with clients.
“We hit the ground running, we had the equipment ready, we knew the market. We started by listening to the requirements of the operators, trying to understand what it is we can bring to the table that they would be interested in and this actually paved the way for our expansion.
“So besides having the superior technology in all areas, and then an unblemished service record, but also penetrating the market, understanding our clients and being there side by side in their planning phase and execution phase − the word spread, really.”
Churchill’s current expansion is not merely focused on the Middle East as its North, Central and South American operation is also experiencing strong interest in its portfolio due to the same fundamental reasons of drilling more safely, more efficiently and faster.
Meanwhile, in Europe, in its North Sea activities, Churchill is also seeing more take-up of its end of drilling operations product line such as plug and abandonment. Here, in the Arabian Peninsula, Kjaer is especially upbeat.
“In the Middle East, it’s going to be another number of fantastic years going ahead. I think we will see the operators going into expansion mode as well. There are numerous operators that are expanding their rig fleet, and obviously with that more activity for drilling, completion and abandonment.”
Kjaer will not be drawn on where specifically within the Arabian Gulf Churchill is working or who with − which might represent a challenge for an inquisitive journalist but indicates that discretion is another key part of the company’s modus operandi.
Kjaer concedes that the company is presently engaged in four countries within the region and Churchill is “fully embedded with the NOCs (national oil companies) in the markets that we operate in” as well as involved with independent operators.
But as much as the firm’s growth appears almost unrestrained, Kjaer is keen to stress that Churchill’s forward progress is in reality deliberate and cautious.
“We have experienced fantastic growth but one thing that we are very conscious about is – it needs to be a sustainable growth. We could reach out to every market in the world and we could penetrate them but that doesn’t mean we will. We want to ensure that when we do commit to a market, a country, an area, a specific client etc. that we can supply and that we exceed the operator’s expectations.”
The firm’s expansion plan seems more along the lines of evolution than revolution and the desire for operators to know that they can trust not only Churchill’s products, but can rely on them for “superior service”, is a vital part of the strategy. Kjaer admits that presently the firm is actually “holding back” rather than driving relentlessly forwards.
But Kjaer feels the ability of many of Churchill’s products to reduce or even eradicate invisible lost time, turning established “norms” of the industry on their head, and thus allow clients to drill faster and more safely – so crucial for some operators when assessing their potential daily overheads – will attract further interest from many regional players.
Staying strong in a recession
Indeed, Churchill’s overall “value proposition”, as Kjaer often refers to it, provides an important extra dimension to the company’s possible reach going forwards. Presently, the price of crude oil is as healthy as it has been in several years and oilfield services behemoth Schlumberger has predicted a positive year for the sector in 2018, but Churchill has grounds for optimism whatever the landscape.
Kjaer acknowledges, during more challenging economic conditions, a reduction in operational rigs naturally means less drilling is going on but such a scenario is not wholly bad from Churchill Drilling Tools’ perspective.
“With Churchill bringing out disruptive technology, so to speak, technology challenging the norm, saving crucial rig time that previously was just considered ‘how we do business’. We started in the UAE two years ago in the worst downturn of the industry ever and we managed to get a foothold very, very quickly and expanded significantly – so we have been growing in this downturn, probably bucking the trend compared to the industry.”
If another downturn was to materialise, Kjaer remains very confident Churchill would actually continue to thrive due to its innovative technology, its 24-hour support partnership with its clients and, perhaps most relevant of all at such a time, the fact that the firm is able to bring value to operators when oil prices are subdued.
Kjaer also emphasises that while many local oil producers are currently bound by the imposition of the OPEC cuts, Churchill has seen strong take-up of its drilling innovations and equipment from regional gas producers and this provides another profitable avenue for the firm. Kjaer says the fact Churchill’s equipment has been designed to withstand the harshest of conditions makes it “very suitable” for gas drilling.
Churchill’s equipment is also ideal for long-reach horizontal drilling work and the firm is involved with operators undertaking directional drilling within the region. This naturally begs the question whether Churchill could look at US tight oil production now that the sector is increasingly active, with crude prices on the rise?
“US land will be picking up, there’s no doubt about it. It’s a huge market. It’s a different complexity because the wells are typically quite short and very fast. There are certain technologies that we have that could be beneficial to the US land particularly and we are looking into areas where we could potentially bring more value proposition to US land as well.”
Kjaer is very positive about the state of the upstream sector in 2108 and clearly the year ahead should be one of opportunity for Churchill Drilling Tools across continents, sectors and even drilling environments, as its array of technologies find an ever increasing range of applications and clients, but Kjaer remains focused on a clearly defined strategy as the firm strengthens its hold.
“We don’t want to be everywhere tomorrow. We want to ensure that when we commit to something, we see it through and we can deliver, without our service quality being impaired. So, we are quite focused and that is actually what is driving our growth.”