Think alongside the customerSeptember 8, 2020
Chimere Nkwocha, CEO of Geopro, talks to The Energy Year about how Covid-19 has reshaped the global and local energy industry and opportunities the company sees for future business in the UAE. Geopro is an oilfield services company and supplier that specialises in drilling optimisation.
How has Covid-19 reshaped the global and local energy industry?
I think Covid-19 is something we are going to have to live with. We just need to find a way to manage all the risks associated with doing business in a post-Covid-19 era. If we can reduce it to a level where it is manageable, business should return to normal. Regarding the oil and gas industry, people are afraid to drill, but you need to drill to add resources and production. And if you have an outbreak in the field, you’ll have to shut down the facility, which is what happened in Brazil with Equinor.
You cannot run the oil industry remotely, even if in the past 20 years we were trying hard to increase remote operations. The WTI index went negative, but this was because the American “mom and pop” companies never seem to understand that running an oil business is more about long-term than short-term gains. But now more people are understanding this, as Covid-19 has sent us back to the drawing board to look at how to maximise the value from the field while making sure there is equity across the board between your personnel, operations and liquidity.
What impact did this have specifically on your business?
We lost USD 500,000 worth of business in April 2020. However, in times of uncertainty Geopro has managed quite well. Every time there is a dip in the oil business, we have recovered.
We haven’t done much across the globe since 12 months ago, but at least we’ve introduced ourselves into Southeast Asia, Arabia and Nigeria. We do have tools running in Nigeria. In February, we ran a 7-inch version of our GeoproHYDRA for Seplat Petroleum, and it successfully and I believe we added value. Now they want to try our latest 9 ⅝-inch nGX tool in a 12 ¼-inch hole size to see if it adds value.
Just before the recession, we presented our technology to ADNOC and they seemed quite interested. We were asked to submit our technology in their TechRoad portal, and it looks like it passed the first step. So we hope that once the oil price comes back, we can restart discussions.
We have been seeking an opportunity with Saudi Aramco for about four years now, and finally this year we got an opportunity to trial our 4 ½-inch nGX in a well for them in August. We have an agent in-country that is eager to sell these tools.
Kuwait was actually surprising. We met with KOC there in early 2019 and discussed our technology with them. After that, there was a stumbling block. However, during the pandemic we were approached by three different companies in Kuwait that wanted to take this technology to KOC. Then together with Halliburton, we seem to have won a competitive tender against our main competitor. Companies want efficiency now more than ever, as oil prices continue to hover around or below the USD 40 per barrel mark. Now NOCs seem to understand that technology can make a significant impact to their bottom line.
All in all, Abu Dhabi has not really slowed down, and the same goes for Saudi Arabia. You can still bring in goods. In Nigeria, things are now beginning to move.
What opportunities do you see for your business in the UAE?
Oil is like every other business: Supply and demand creates the price. The pandemic will not last forever, but even if it did, we would still not see oil prices near USD 100, like during 2008 and 2009. Sooner or later energy will be required and unfortunately, or rather fortunately, fossil fuels still remain cheap options, so drilling will continue.
I think ADNOC and Saudi Aramco are doing the right thing by continuing to drill, and I understand where they are coming from. The current situation is just a blip. If you don’t get ready for the harvest, this blip could end up doing extensive damage to a business. Meanwhile, the company that made all the investment during that time will reap the benefits.
Once India kickstarts its economy, I can see oil going up to USD 50 or higher and going forward, we will reach a point where the oil price has not been for the last three to four years. Unfortunately, there is no quick replacement for fossil fuels. Even if you don’t need oil, you will need gas for many things, like cooking or heating.
What technologies have you been working on for cost optimisation and efficiency?
I am still fine-tuning the technology, but I’m confident we are doing the right thing. I have spent USD 3 million of my personal money to get our technology to where it is today. I have no other investors. I would not have spent that money if I didn’t believe in what the tools can offer. We still plan on developing other technology, all geared towards improving drilling efficiency, reducing environmental footprint and making well delivery a lot safer.
We have been modifying tools as part of a drive to differentiate ourselves. We have come up with what we call the nGX System, which is a fully customisable and scalable version of the Geopro HYDRA high-speed reamer shoe system. Now, if the customer wants to achieve X, Y and Z, we can fine-tune the tool according to that, without having to come up with a complete redesign. This creates value.
We have just built the first tools with that concept. We are pushing this. It does not change the manufacturing cost, but it is helping us to think alongside the customer. An advantage I have is my exposure to the service perspective as well as to that of the operator, from having worked for Schlumberger, Shell and BP. So I can understand each group’s drivers.