Decline in drilling

Malaysia

TOGY talks to Thomas Ng, general manager for Weatherford in Malaysia, Brunei, and the Philippines, about the company’s global and local operations, new technologies that are being applied to the local industry and Weatherford’s strategy to expand its business in the region. In Malaysia, the company is focused on helping their customers to develop their deepwater wells efficiently and maximise production from their ageing reservoirs.

Established in 1978 in Kuala Lumpur, Weatherford Malaysia operates as an oilfield services and drilling company specialising in services that focus on aging reservoirs, deepwater and unconventional wells in Malaysia’s hydrocarbons market. The company is a primary provider of managed pressure drilling technology for the country. The company is the local subsidiary of Weatherford International.
Weatherford Malaysia’s clients include oil majors such as Shell and Petronas Carigali. The company has a storage yard and shipping logistics centre in Ranca-Ranca industrial estate, Labuan.

• On describing the downturned market: “The drilling activity in Malaysia, as in most Asia Pacific countries with exposure to the offshore market, is greatly reduced from peak times when the oil price was above USD 100 per barrel and when close to 30 offshore rigs were operating. The significant drop in the oil price has led to dramatic multi-year cuts in capital expenditure by most of the operators.”

• On reservoir properties in Malaysia: “Malaysia has some of the most diverse, challenging and prolific offshore hydrocarbon reservoirs in both shallow and deep waters. Optimum production and recovery of these wells and fields, many of which are characterised by high pressures and high temperatures, requires a strong understanding of reservoir properties plus the deployment of the right well construction and production technologies.”

• On Malaysia’s rig count: “Currently, the number of offshore rigs operating in Malaysia is less than 10. If all goes well and the oil price further increases this year, we hear from some of our customers that we should be seeing a modest increase in rig count by year end.”

• On comparing Malaysia to the region: “Generally, the activity level in Malaysia is similar to the activity levels in neighbouring countries that are mainly offshore focused. Of course, there are some variations among countries depending on the presence of national and international oil companies, the different objectives of each operator and other factors aside from the price of oil.”

Besides touching on these topics, TOGY talked at length to Thomas Ng about challenges faced in the Malaysian market. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Thomas Ng below.

How would you describe the drilling activity in Malaysia?
The drilling activity in Malaysia, as in most Asia Pacific countries with exposure to the offshore market, is greatly reduced from peak times when the oil price was above USD 100 per barrel and when close to 30 offshore rigs were operating. The significant drop in the oil price has led to dramatic multi-year cuts in capital expenditure by most of the operators. Although there seems to have been some stabilisation in recent months, our customers forecast the drilling activity in 2017 to remain close to 2016 levels.

How would you describe reservoir properties in Malaysia?
Malaysia has some of the most diverse, challenging and prolific offshore hydrocarbon reservoirs in both shallow and deep waters. Optimum production and recovery of these wells and fields, many of which are characterised by high pressures and high temperatures, requires a strong understanding of reservoir properties plus the deployment of the right well construction and production technologies. By providing best-in-class solutions in each of these areas, Weatherford has helped many operators achieve success in some of the toughest environments.
For example, we helped an operator avoid well-control incidents through the installation of our SeaShield Rotating Control Device, which contains and diverts annual gas. We have also helped an operator reach total depth with zero non-productive time by installing liners of multiple sizes in an offshore Malaysia well.
Another key challenge in Malaysian reservoirs is the high production decline rate where intervention services are often planned in advance to restore production levels. In one case, we helped our client restore production to 200 bopd by installing a new subsurface safety valve on a well without the use of a rig or workover unit, which resulted in significant time and cost savings. In another case, we used a thru-tubing gravel pack system to restore production to a well that had been shut in due to sand problems.
Additionally, slightly north of Malaysia in the Gulf of Thailand, we successfully ran our HeatWave Extreme triple-combo logging-while-drilling tool string at 200 degrees Celsius.

What do you think the rig count will be in 2017 in Malaysia?
Currently, the number of offshore rigs operating in Malaysia is less than 10. If all goes well and the oil price further increases this year, we hear from some of our customers that we should be seeing a modest increase in rig count by year end.

What do you think the future is for production here?
The primary way to counter declines in production is to add reserves through exploration and appraisal activities, and to bring more wells online. Given the multi-year reduction in global exploration activity, this process will not be fast or easy. However, there are many technologies available in the marketplace that help reduce the rate of decline and improve recovery factors in producing fields. These technologies include enhanced reservoir and production monitoring solutions as well as lift systems that span the production cycle of a given well.
For example, our OmniWell reservoir monitoring system physically integrates multiple measurement sources and visualises well-performance data in real time to provide information that helps accelerate production, reduce operational risk and maximise reservoir recovery.

How does Malaysia’s oil and gas activity compare to the region?
Generally, the activity level in Malaysia is similar to the activity levels in neighbouring countries that are mainly offshore focused. Of course, there are some variations among countries depending on the presence of national and international oil companies, the different objectives of each operator and other factors aside from the price of oil.

How is your company structured in terms of servicing Southeast Asia?
Southeast Asia remains an important and integral part of Weatherford global operations. In spite of the activity declines seen in recent years, we continue to maintain a significant operational and support structure in the region, which enables us to respond to our clients in a relatively short period of time.
We maintain select regional product lines and functions in Malaysia, Singapore, Thailand and India. Our regional supply and distribution hub in Singapore ships and receives technologies from our engineering and manufacturing centres around the world. This hub-and-spoke structure allows for increased efficiency and timely delivery of products and services to our customers throughout Southeast Asia.
Additionally, we have relocated several global product-line teams from the United States to Dubai, the regional headquarters for the Middle East and Asia, to be closer to our clients and relieve time-zone challenges, all to better serve operators in this important part of the world.

What changes are being made at Weatherford around the globe?
Like the rest of the industry, Weatherford has had to adjust and adapt to the drop in activity globally.
We have transformed the company internally and positioned it well for the multi-year cycle that is about to begin. Going forward, we will intensify our focus on our core services in the areas of well construction and production optimisation, with a commitment to customer engagement, optimal and efficient execution of services as well as talent and cost management.

What are your most important projects in Malaysia in 2017?
We have many active contracts with our clients across East Malaysia [Peninsular Malaysia] and West Malaysia. Naturally, Petronas has always been a key client with whom we run multiple services. These include our GC-Tracer Surface Advanced Gas Detector, which helps to better define gas-oil and oil-water contacts that are unable to be measured using lower-resolution, conventional mud-logging methods; intervention and sand control services such as our Renaissance WDCL [Weatherford damaged-control line] System, Dura-Grip screens, and thru-tubing solutions; and rotating control devices that mitigate drilling-mud losses and well-control risks.
Another major project is the Malikai Deepwater project, which features Malaysia’s first tension leg platform, a floating oil production facility moored to the seabed 500 metres underwater. We are the current provider for tubular running services, [a] liner hanger system and our specialised borehole enlargement system.
Only recently, we ran a successful RFID [radio frequency identification] RipTide under-reamer job there to enlarge a 6.75 inch [17.2 centimetre] hole to 8.5 inches [21.6 centimetres] in a deviated well, without the need for a dedicated hole opening run and without a rat hole. This saved the client 20 hours of rig time and over USD 125,000 in associated rig operating costs.
We remain confident of our unique value-adding product lines and capabilities such as managed pressure drilling, tubular running services as well as fishing and recovery services in Malaysia.

Are integrated drilling contracts new to Malaysia?
Integrated drilling contracts are not new to Malaysia, but there have not been many offshore. Because of lower rig counts and activity levels, operators have been exploring integrated contracts in the hope that they will be more cost effective and deliver improved efficiency [over] the current status quo of discrete services provided by different services providers.
That said, at this point and due to the lack of full portfolio of products and services by any one services provider, it is still common for subcontracting to take place in order to achieve the goals of an integrated drilling project.

What new technologies are you bringing to Malaysia and what advantages do they bring?
We have already introduced several new technologies to Malaysia and will continue to do so as they develop. Recently, we launched a new mechanisation package system for running risers. We have already completed two jobs using this technology and anticipate more going forward.
The main advantage of mechanised tubular running systems is that they keep rig personnel out of harm’s way. The equipment used to run and pick up pipes is large; the units are the size of a room. Our riser- and tong-handling systems can generate 300,000 pounds feet [407,000 newton metre] of torque. There are only a few such systems that exist worldwide and we have two of them, a primary and a backup.
We are also running new radio-frequency identification technologies. Our RFID downhole tools can be remotely activated and deactivated on demand by dropping small yet durable RFID tags from the surface downhole, where they are carried by the drilling fluid. Our competitors use more traditional actuation methods, such as dropping a ball to change the configuration of the tool. RFID technology enables us to transmit a virtually unlimited number of tool commands downhole.
Another unique technology offering from Weatherford is our Compact family of logging tools. These high-quality logging tools can be deployed using a wide range of conveyance options and wellbore sizes and conditions. This technology represents a new way of collecting logs and is gaining traction in Malaysia, where we have multiple case studies that showcase its success.

For more information on Weatherford Malaysia, such as its work on the Malikai Deepwater Project and specific technologies offered to the local market, see our business intelligence platform TOGYiN.
TOGYiN features profiles on companies and institutions active in Malaysia’s oil and gas industry, and provides access to all our coverage and content, including our interviews with key players and industry leaders.
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