CRITICAL ISSUES IN DRILLING & COMPLETIONS
requirements are almost definitely going
to go up. We’re also starting to look at
whether to evolve from 10,000-lb to 15,000-
lb pressure-pumping systems and what
type of substantial upgrade to drilling rigs
that would require.
Can this all be done? Absolutely. Is there
a cost to it? Absolutely. Is there an expect-
ed return on that cost? Absolutely. I don’t
believe drilling contractors can continue
to foot the bill for these upgrades without
a return to their shareholders being an
outcome of that equation.
Are drilling contractors and operators
aligned on who should bear what
costs, or is that a conversation the
industry still needs to have?
It depends on what level that conversa-
tion is happening, and which companies
are having that conversation. Everybody
has a different view.
This is a conversation that requires
a high degree of emotional intelligence.
This isn’t about being adversarial. The
operator’s shareholders can easily be the
same shareholders that drilling contrac-
tors have, and if that shareholder doesn’t
get the same degree or likelihood of return
on their investment, in both places, they’re
going to choose one company to back. As
soon as one of those companies runs out of
shareholders, we become challenged with
the inability to create the outcome desired
by the other company.
This is where you go back to the disci-
pline of those companies. Some compa-
nies are going to have that discipline, and
others may just need the cash flow to keep
working so they might make a different
decision. In the long run, the companies
that maintain capital discipline and don’t
take an emotional approach to these con-
versations are going to be the ones left
standing. Going back to digitalization, what’s
your opinion on whether the industry is
making the best use of its data ? If you
don’t think that’s happening, how can
the industry get better at that?
I think the industry is still trying to
figure out how to scrub the data for value,
or what is relevant data they should be
26 looking at. There are also legal challenges
around data ownership.
One of the big disconnects I see of new
technology being brought to market – you
can maybe call it a criticism – is the con-
dition under which it was developed. Was
it developed under a condition where you
have good relevant data, where you truly
understand the dynamics of the prod-
uct and the operator’s needs combined
with the drilling contractor’s needs? That’s
where you see a lot of the shortcomings
in data and data transfers. How does this
data directly translate to the tools we’re
using? As we go up the ladder, how do
we integrate that tool onto the drilling rig
or into the process to generate a desired
outcome? Another disconnect I see is that many of
these companies developing data-reliant
tools don’t own drilling rigs and never
have. Without that level of understanding
of the day-to-day operation of the drill-
ing rig, how do you know what to imple-
ment? Many times, a tool will look like
a great plug-and-play model in the shop,
but when you get to the rig site, who actu-
ally attaches it to the drilling rig? Who’s
responsible for the maintenance of that
product? Where is the labor going to come
from to manage it?
The drilling rig moves a lot – different
sizes of rigs that move from every few
days to once or twice a month. When we’re
moving the rig, who becomes responsible
for the third-party equipment? How do we
bring your tool down? How do we bring it
up? Where does it sit?
As a drilling contractor, we see hun-
dreds of service companies approach the
E&P company with a doghouse proposi-
tion, and we’re left on the outside getting
something handed to us that we have to
use. And yet, we weren’t a part of the con-
versation. That makes it really difficult for
that digital asset or new technology to be
adopted with open arms.
That begs a question about standard-
izing digital interfaces. Citadel has its
own OS, and you’re having to work
with all these different systems, some
of them coming from the E&Ps with
little input from you. Do you think the
industry is embracing some kind of
standardization? If not, do you see
that as a problem?
It is a problem, but it can also be a dif-
ferentiator for a company. We’re in a free
market. We don’t have standardization
across drilling rigs. There are different
pumps on the market that we can all buy.
There are different top drives, different
drill pipe. We get to make a free choice in
regard to how we see our future play out,
and that’s our bet to make.
If we had built the same rig that any
of the most respected drilling contractors
in the industry had, they would beat us
senseless just with the volume of rigs that
they have versus what we have. I can’t
come to the market with the same product;
I have to have a differentiated product and
service. This is a competitive industry, and I
think that’s one of the things that keeps
the industry moving forward the fastest.
Standardization might seem like a really
great concept to the digital provider, but to
the smaller companies that are trying to
get in, it limits our ability to exist or grow.
Standardization is the fastest way to get
something adopted by the most amount of
people, but it cuts out new ideas, concepts
and new entrants to the market.
As automated systems become more
prevalent on the rig, where do you see
the driller fitting in? Do you share the
view that automation is there to
enhance the role of the human on the
rig, not replace him or her entirely?
I share the view that continuing to trans-
fer tasks from human hands to more of a
mechanized or semi-automated process is
a good thing. Sequenced tasks, like a drill
pipe connection, are the low-hanging fruit.
However, I do see humans continuing to
play an extremely critical role on the rig. It
goes back to that disconnect around inte-
gration with the rig – many of the compa-
nies bringing in high-level automation to
the market don’t own or operate drilling
rigs. Is it now another screen that has to be
added because it doesn’t work inside the
rig’s OS, and the driller now has one more
thing to be trained on. If the result is to just
bolt on another operating system, this now
becomes an additional risk.
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CRITICAL ISSUES IN DRILLING & COMPLETIONS
Every sales pitch says, “plug and play
and walk away.” That’s great, but we then
have to be able to ensure we can quickly
develop competency among our drillers
to use that equipment. You can’t expect
the drillers to run everybody’s equipment,
and that seems to be the expectation right
now. We’re putting the driller into sensory
overload. The goal with automation is to create
a more consistent outcome, but if we are
creating task saturation, then we’ll actu-
ally create the opposite outcome.
Citadel offers fully automated man-
aged pressure drilling (MPD) systems
through your subsidiary, Opla Energy.
What value do you think MPD will pro-
vide for the industry in the near-term
future? I look at MPD in two specific categories,
and they’re opposite of each other. One
is kick control and one is performance-
based. On the kick control side, this is a
cautionary equipment measure to just take
on flow when we don’t want it to happen.
This is a very large slice of the business
out there today. The future of MPD, to me,
is performance-based, and I don’t even
know if you call it managed pressure any-
more. It’s a performance-based business
that leverages managed pressure drilling
techniques. I see these as two completely sepa-
rate business segments. One is merely a
flow control device that is utilized when
problems are encountered. The other is a
sophisticated combination of equipment,
software and behind-the-scenes engineer-
ing that has a primary focus on well
optimization and performance. With per-
formance-based MPD, the goal is increased
ROP, decreased fluid losses, decreased fluid
costs, improved hole stability, and repeat-
ability from well to well.
We’re moving toward a greater adoption
rate of this equipment and, as the opera-
tors learn more about it, they’re going to
see the need for this to evolve their well-
bore delivery programs in a more efficient
manner, as well.
The industry has seen a lot more focus
on reducing rigs’ carbon emissions in
recent years. What is your view on this,
and has the energy transition had any
impact on Citadel’s business?
It’s had a very big impact. Being a pri-
vate company, we have private sharehold-
ers. Private equity sponsorship is depen-
dent on competing for capital, and that
capital comes from global sources, which
demand you invest in an aligned sustain-
ability approach. If you don’t do that, you’re
not going to have access to that capital.
Access to capital, combined with it being
the right thing to do, is why sustainability
is a big part of our business.
The trend of operator consolidation is
also going to impact us. One example is
Oxy’s acquisition of CrownQuest (a sub-
sidiary of CrownRock) in December. While
both companies have been focused on
environmental performance and sustain-
ability efforts, you now have two compa-
nies coming together under one entity and
an even higher expectation on sustain-
ability due to the public lens and nature of
such a large deal.
As a drilling contractor, we have to
take these types of consolidations into
account and create that focus on sustain-
ability. This goes back to what I said about
maintaining the super-spec rig, including
investing in dual-fuel engines. If you don’t
have them, you’re out, or you’re going to
have to buy them. That’s going to be a
price tag to entry. By our calculation, we
saw a 54% reduction in CO 2 generated per
foot drilled by utilizing dual fuel compared
with diesel engines from 2019 to 2022.
While we have had all engines with dual-
fuel capabilities on all of our rigs from day
one, we are now reaping the benefits of
this decision.
Speed is another tool we have. For a
drilling contractor, continuous improve-
ment on ROP is going to be important.
That goes back to my point about having
the best equipment that’s going to drill the
fastest, and having the best people who are
going to drill the fastest.
By reducing the time to drill per well,
we may be generating the same emissions
over the course of a fully utilized year, but
we create more wells. If we increase the
level of performance, we also increase our
sustainability. The end result is a higher
well production count per emissions out-
put year over year.
The young workers coming up have
placed an increased value on sus-
tainability. How do you reach out to
people who have serious concerns
about the industry’s role in climate
change? I have those concerns. I had those 30
years ago. Honestly, I think the best con-
duit to change is not to fight that system,
but to join that system and become a part
of the improvement from within. We need
this energy, and this energy is going to be
produced regardless of who does it.
My pitch to the young people is, if you
have a moral connection to this and you
want to improve it, the best place to do it is
inside these companies. Become a drilling
engineer that has the focus on creating the
lowest carbon footprint per well possible.
Become a superintendent in a drilling con-
tractor company and ensure the moral
performance of that company. That can
only happen from the inside.
What are your main concerns around
rig safety right now?
To me, it’s the level of care. I’ll go back
30 years to the early parts of my career.
Where did we get our roughnecks from
then? Well, they were brothers and cous-
ins, they were from the family two farms
over, they were a best friend of somebody
that they knew. We didn’t have formalized
HR departments. A lot of times, the drill-
ers and rig managers were responsible
for staffing their own rigs. You invested
your time in this person to keep them safe
because you had a moral obligation to
them, their family and your family.
To me, that’s still the primary way for
us to impact safety around a rig. It is a per-
sonal target. It is a personal goal. It is about
people. We can add on all the wearable
technology, and we can have the comput-
er-generated training programs, but those
are all just tools to assist. Creating safety
is just a deep amount of caring for people,
and that has to be a cultural achievement
of your company. To me, that’s where the
industry has failed the most, and that’s
where the industry could increase our per-
formance to the greatest degree. We’ve got
to continue to care for each other at a level
like we’re related. DC
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