CRITICAL ISSUES IN DRILLING & COMPLETIONS
The industry has been through signifi-
cant volatility over the past decade.
For a company like ARO, which is in the
heart of one of the busiest and most
dynamic markets in the drilling indus-
try, what are your considerations when
balancing between investing for
growth and exercising capital disci-
pline? The nature of our newbuild project is
that it’s a two-way commitment: It’s a very
CAPEX-intensive project, and it’s going
to take place over a long period of time.
Projects like this – you cannot switch
them on and off .
To circumvent the challenges you typi-
cally see associated with the up and down
business cycles, we engaged in offtake
agreements between ARO as a client to the
ship builder, and Saudi Aramco with ARO
as the client to us . Basically, that means
we commit to building the rigs, and Saudi
Aramco commits to contracting them. In a
way, this Kingdom series is shielded from
any potential ups and downs in the mar-
ket, so it gives us the bandwidth to focus
on innovation rather than having to spend
time on opportunistic business.
Is this type of operator/contractor
partnership something that compa-
nies could emulate in other parts of
the world?
They can, but it needs a very high-level
commitment from the government. In the
Kingdom, the project is underpinned by
the government’s strategy to secure ener-
gy, food and medical resources – three
things that were very tested during the
COVID pandemic . So this project is playing
a big part in their strategy to secure their
own manufacturing and supply of rigs to
be able to develop oil and gas fields, as well
as to undertake carbon injection and stor-
age in the future.
So, yes, I think it can be done, but it
needs a very high level of government
commitment, which is present here in the
Kingdom. What is your view on the value of
automation and digital technologies
in terms of drilling performance?
For the Kingdom 1 jackup, which was delivered in November, ARO Drilling opted for
a design that has high compatibility with existing rigs. However, moving forward
with its newbuild program, the contractor aims to incorporate more features that
will allow for much more advanced automation, data analytics and AI.
My view is that automation, the use of
data and even things that people some-
times talk about in a joking way – like
ChatGPT – are inevitable . They will make
their way into the industry , and you can
decide whether you want to manage it, or
you want them to manage you .
I firmly believe that automation will
help the industry to improve efficiency, as
well as lead to better safety by reducing
people’s exposure to hazards . Moreover, it
will make our operations more predictable
and reduce our carbon footprint .
Data analytics, I think, is still one of
the most underutilized technologies in
the drilling contractor business. Look at
the aerospace industry, for example, and
how they use data to analyze their jet
engines, predict potential failures and plan
for maintenance .
Our industry is still very far from
deploying that kind of predictive analyt-
ics, which is good and bad. It’s bad because
we’re late, but it’s good because it means
we have a lot of potential to really change
things in a short period of time. And we
don’t need to reinvent anything – we can
copy what’s being done in other sectors.
What’s the biggest obstacle to making
that change?
I think it’s related to people’s mindsets.
Some people still question the value of
those technologies ; they still believe the
traditional way of doing things is the only
way and that drilling is more art than sci-
ence . But science, data analytics, artificial
intelligence and things like ChatGPT are
all like co-pilots on a plane . The stronger
your co-pilots, the better the whole flight
can be. That’s where the industry is still
talking a lot but not really acting very
much. Why is that?
I think that’s related to what you men-
tioned earlier about the industry’s volatil-
ity and the need for companies to think
about how they’re committing their capi-
tal. I think most drilling contractors think
much more about that question of, what
happens if there’s another cycle? The dif-
ference with ARO – where we are unique
– is that we’ve eliminated that uncer-
tainty from the equation . We’re able to
D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024
29