Maximise production, minimise risksMay 12, 2021
Frederico Bicho, ChampionX’s district manager for Angola, talks to The Energy Year about the impetus behind ChampionX’s merger with Apergy Corporation and its strategy in Angola. ChampionX provides upstream and midstream oilfield technology solutions, chemistry programmes and services, drilling technology, artificial lift solutions and automation technologies for the oil and gas industry.
What was the impetus behind ChampionX’s merger with Apergy Corporation?
ChampionX was merged with Texas-based company Apergy Corporation to create a broader range of solutions that can serve our customers and improve the longevity of their production and equipment. The idea was to create an unmatched production portfolio that combines market-leading chemical solutions with the industry’s most comprehensive suite of artificial lift and drilling technology and services.
In June 2020, Apergy and ChampionX merged to create the “new” ChampionX. Together, we help companies drill, complete, produce and transport oil and gas safely, sustainably, and efficiently around the world. Our services enable efficient operation throughout the lifecycle of a well – from drilling to completion to production.
How has ChampionX adapted its operations in the face of the Covid-19 pandemic?
The safety of our employees, customers and communities is our top priority. We’ve been working closely with our customers in Angola to ensure our teams work safely while complying with all Covid-19 precautions.
All our employees have made adjustments to the way they typically work, but our teams deployed offshore have faced more challenges, like additional testing requirements and extended stays and isolation periods before being allowed offshore. These challenges have been costly and made an impact on employee morale.
Despite all this, we managed to increase our revenue and keep our three bases in Luanda, Soyo and Cabinda open and operational in 2020. In Luanda and Cabinda, we have been rotating our teams to ensure that if there is a Covid-19 case, we’ll have the other team available to continue working so we are always able to provide products to our customers.
To what extent has the company invested in digitalisation to spur innovation?
Everyone is seeking to invest in digitalisation these days, and ChampionX is no exception. Our merger with Apergy means we have access to their advanced digital capabilities, which help optimise production, prevent downtime and minimise costs for customers. We’re excited to bring these to our customers in Angola, and in fact, we are in the final stages of implementing these digital capabilities here.
Our focus on digitalisation has led to the creation of automation tools that optimise order management and logistics delivery processes, increasing efficiency throughout our supply chain and speed in delivery for our customers. These programmes are launching in North America and will be expanded globally.
In addition to providing production and efficiency benefits, digital solutions deliver important people benefits, too. Remote connectivity enables technicians to monitor and service equipment without having to travel to the field. We can see how important that is in times like these when travelling is restricted.
The global oilfield chemicals market is expected to reach USD 32 billion by 2027. What future trends do you foresee in the Angolan market?
Before Covid-19, several companies were planning to invest in Angola, and drilling ships were due to arrive. However, everything retracted due to the pandemic. I think it’s likely that the current level of spend in the market will stay static due to the country’s ageing fields and the delays to new developments. In my opinion, if the operators in Angola can maintain the current production of around 1.4 million bopd, it would be good, given the circumstances.
What new opportunities do you see in Angola’s downstream sector following the recent FID taken on the Cabinda Refinery?
ChampionX has a lot of expertise in this area. We’ve been providing services to the Luanda Refinery for over 30 years. I believe we’re in a good position to provide our services to the new refinery in Cabinda, based on our experience in the downstream business in Angola, and the innovation and optimisation tools we’ve developed and implemented in this sector. We hope to see the other planned refineries in Soyo and Lobito come to fruition as well.
Which upstream blocks do you provide services for in Angola?
We are servicing Blocks 15 and 14, as well as Blocks 3 and 4. Also, all the FPSO laboratories on Block 17 are serviced by ChampionX. We currently hold about 35% of the domestic oilfield chemicals market and hope to gain an additional 15-20% market share in the next two to three years.
Angola has laid out an ambitious exploration strategy to revitalise mature fields. What does this mean for service companies such as ChampionX?
We are best able to help our customers maximise their production and minimise their risks when we’re involved in a project from the earliest stage of field development. Our executive accounts and technical excellence teams have global experience with this type of work.
As a service company, we’re here to help our customers. We have developed and proven, locally, the efficiency of our production maximisation (ProMax) and enhanced oil recovery (EOR) product lines. These products are designed for ageing fields and can help improve or maintain production rates.
Our automation and optimisation group has designed technology innovations for better lift optimisation that are being used by our customers in Angola today. This not only provides production optimisation, but also reduces failures frequency and improves equipment lifecycles by allowing easy access to data and autonomous control.
How has the cost of local chemical manufacturing versus importing chemicals changed due to the dual shock of Covid-19 and the oil price drop?
ChampionX has always been committed to investing in local content in Angola. We have two blending plants here that are capable of producing speciality chemicals using local solvents. Over the past year, our localisation strategy has not changed, and we have continued with local manufacturing of our products.
During the height of the pandemic and oil price reduction, we saw some fluctuation in the costs of the raw materials. These types of changes strengthen our strategy of producing our chemicals locally as part of the Angolan industrial sector, as it reduces our dependence on external factors. In addition, because we end up importing lesser volumes of chemicals, we decrease our carbon footprint through decreased shipping and travel overall.
What has ChampionX done to improve cost efficiency?
When oil prices crashed back in 2015, we began a global, internal project that looked for ways we could become more efficient through all areas of our organisation. This work is never really over. In 2013 and 2014, here in Angola, we had been working to build new bases around the country. Unfortunately, in 2015, just as these local investments were becoming operational, we were affected by the dropping oil prices.
So, we had to readjust. We purchased a plant in the industrial area of Viana, Luanda, which led to tremendous cost reduction, as we’re now able to control the operating costs. We did the same in Cabinda and managed to secure good savings with our Kwanda Base as well. In recent years, we improved our supply chain and established a new procurement department that allows us to get the best rates from local and international contractors and suppliers.
We’ve also increased the blending and manufacturing of our ChampionX products in-country. We’ll continue to import specialised products from abroad when needed, but we’ll use solvents that are available in Angola. By doing this work in-country, we’ll improve local content and can secure additional savings for our customers.
Do you see more room for local chemicals manufacturing and control in Angola?
Yes, I see tremendous opportunity with the new refineries that will be built in the coming years. If we improve the availability of petrochemicals in Angola, more of our products can be manufactured here. Today, some of our products require specific solvents that cannot be found in Angola, which increases costs overall. We would certainly prefer to purchase those solvents locally and do the chemical blending here. ChampionX has the right equipment and capabilities to blend any complex product locally.
What are your expectations for 2021?
Our first priority is achieving our safety goal of zero accidents, zero incidents and zero environmental releases, which we’ve achieved since 2019. In 2021, I believe our business in Angola will grow. We plan on increasing the number of our personnel, which will require us to focus on training and development of our team. We want to continue improving the quality of our processes, and we hope to achieve strong output and revenue growth this year.