CRITICAL ISSUES IN DRILLING & COMPLETIONS
Old views of drilling, contracting
must be shed so industry can
drive meaningful improvements
By adopting new contracting strategies, as well
as automation and AI, ARO Drilling seeks to push
for true step changes in rig performance
Mohamed Hegazi, CEO, ARO Drilling
BY LINDA HSIEH, EDITOR & PUBLISHER
From your perspective as CEO of ARO
Drilling, what do you see as the big-
gest near-term challenges for the
drilling industry, both for your com-
pany specifically and for the global
drilling industry?
I think the challenge is twofold. The
first is around how the public perception
of our industry is changing as people are
increasingly exposed to social media and
messaging from different bodies, whether
government or non-government, on cli-
mate change and sustainability. That will
have an impact on our industry.
Second is attracting and retaining tal-
ent. We need to make sure that people
understand that this industry has both
longevity and stability, because hydrocar-
bons will be a part of the world’s energy
mix for many years to come. The energy
transition is not an on/off switch ; it will
be gradual .
I think that operators and even compa-
nies like ARO Drilling have to start reach-
ing out to the general public, like regular
commercial brands. Instead of thinking
about being B2B (business to business)
or B2C (business to consumers), we have
to think in terms of B2H – business to
humans . We have to try and make sure
people understand how our industry con-
tributes to the world and how we’re taking
steps to help with the transition .
Is workforce attraction and retention
as difficult a challenge in the Middle
East as it is in other parts of the world?
28 It is definitely becoming increasingly
more difficult to attract top talent . Here in
the Kingdom of Saudi Arabia, for example,
there is an ongoing transformation, and
many new sectors are being built up, such
as financial services, media and tourism.
That’s putting a lot of pressure on the
labor market, even though those sectors
aren’t necessarily recruiting people with
the same technical expertise as we are. But
our industry needs more than just engi-
neers – we also need people in support
functions throughout the supply chain .
For ARO Drilling, we have committed to
building 20 new jackups in the Kingdom
with our partner, International Maritime
Industries (IMI) in Ras al Khair . This is a
multibillion-dollar project, and it’s almost
like building a new city. You need to create
a whole new supply chain ecosystem that
encompasses logistics, medical services,
food & catering, training – everything you
can think of. This is creating tremendous
job opportunities.
As you mentioned, ARO Drilling is in the
early stages of a significant newbuild
program, which is rare in the industry
today. Since you have that opportu-
nity to build new jackups, can you talk
about how ARO intends to evolve rig
design and/or technologies to create
“rigs of the future”?
Because the IMI yard i s a brand-new
shipyard, it’s going to have a learning
curve. For our first two rigs – the Kingdom
1, delivered in November, and Kingdom 2,
scheduled for delivery in March – we’ve
opted for designs that are modern, yet have
high compatibility with existing rigs .
As we kick off Kingdom 3 and Kingdom
4, we’ll be looking at different designs to
make the rigs even more mobile and more
environmentally friendly . We’ll be work-
ing to adopt a lot more emerging and new
technologies around automation, the inte-
gration of data and artificial intelligence.
B y the time we reach midway through this
project, we want to be building rigs that are
not only fit for Saudi Aramco’s operations
but that also embody all the newest tech-
nology advances available on the market.
As you mentioned, this is really the
only major offshore newbuild project hap-
pening in the world today. I think we’ll
definitely attract a lot of the innovators to
contribute to it.
I would imagine you’re already seeing
a lot of companies wanting to enter
this market.
Yes, we have met with a lot of com-
panies that want to be a part of this big
ecosystem being built up in the Kingdom.
However, I see that a lot of them have not
taken the decision to set up their business
here in Saudi Arabia.
I think that, if you believe in this mar-
ket , you need to be here physically. This
kind of business cannot be done remotely.
There’s a very high level of involvement
required, from engineering to planning to
having a very detailed supply chain loop .
For companies that want to be involved,
they need to come and physically be here
in Saudi Arabia.
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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
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