Note: To produce this article, dozens of oilfield services stakeholders were interviewed. Due to the highly competitive nature of the oilfield services market, all were interviewed under the condition of anonymity. As such, all names have been fictionalized to preserve that anonymity.
Last week we discussed that "customer service" without results isn't enough to differentiate oilfield services companies. If customer service isn’t the calling card for the modern oilfield chemical services company, then what is?
To answer that question, we turned to their customers. The response from operators was nearly unanimous: Develop better chemistry as fast as possible to tackle the most complex production and pipeline problems.
“The number one value that service providers bring to us is they have to have chemistry that will work best for our field,” said Justin, a chemical advisor at a large independent. “They can have the best lab capabilities, the best manpower or resources, or the shiniest truck, but if they don’t have the chemistry that can help us address our problem then it’s just not going to work.”
Every customer we interviewed seconded the emphasis on quality, effective chemistry.
“We are obviously going to get on our chemical vendors about pumping the right rates and making sure the execution is there,” said Dillon, a production engineer, “but at the end of the day we value them as service providers to make the right chemical selection.”
William, another senior production engineer, put it as succinctly as possible: “They’re the chemists. I’m not a chemist.”
As operators continue to consolidate their focus on core activities, service companies are being called on to select the right chemistry for the job. And as we mentioned, new digital technologies are making it easier to track chemical usage and performance, so customers are getting a clearer picture of whether the chemistry is working much more quickly than they did in the past.
All this brings more attention to the actual chemistries being utilized and how they function effectively in the various North American oil and gas fields. Companies are experimenting with different types of chemistries, like non-triazine HsS scavengers or multi-functional inhibitors that promote both integrity and flow assurance.
Two oilfield workers catch crude oil samples for bottle tests. Results from these samples determine where chemistry is effective at solving specific production problems.
For Dillon, chemical performance even trumps cost, within reason. “Who can I trust to go out and solve an issue?” he asked. “Who can I trust is not going to just slap some chemical on it and pump it really fast? Who is going to pick the right chemical?”
The demand for effective chemistry isn’t new to the oilfield, but perhaps the cycles at which chemistries are being deployed, tested, and analyzed are shrinking, bringing a growing demand for chemical manufacturing abilities, better lab capacity, and shorter testing and R&D times.
“We are looking for R&D and how they’re in tune with the treatment of non-typical chemical problems,” offered Justin. “The issues are quite unique in US onshore. We have a lot of water, so corrosion and scale are going to be the major components, but different assets behave differently, so they need to be able to tailor and adapt, or they won’t be able to compete.”
Logan, a VP at an oilfield chemical services company, understands the need to continue generating effective chemistries to respond to new problems. His company leans on its ability to manufacture chemistry, which in a time when supply chain constraints are creating material delays that impact performance, has proven exceptionally valuable.
“There are only a select few vendors that have manufacturing capabilities," he said, "so that’s one differentiator for us is that we can manufacture our own products and control our raw material quality and costs a little more.”
Even smaller companies that aren’t vertically integrated with global chemical manufacturers are pursuing manufacturing options. Kevin is an Operations and Sales leader at a smaller, regionally focused chemical service company. His team has carved manufacturing out as a key differentiator for his team. “Our in-house manufacturing facility allows us to come up with different chemistries and improve on current chemistries and be nimble.”
The nimbleness has proven key in an oilfield where answers are expected ASAP. More demand has been placed by customers on lab capability and chemical R&D, a requirement that has only become more pressing during the current supply chain crisis.
Justin isn’t satisfied with the speed with which he is able to get lab results from the majority of his chemical vendors. “The feedback cycle [on lab data] is not fast enough,” he groaned. “If they could automate testing, they could shorten that timeframe.”
Because of his position, Justin wants to see more focus on lab performance and R&D, both in terms of selecting and developing chemistries, but also in analyzing their performance. He sees opportunities to automate lab analysis and sampling data to both shorten R&D cycles and improve field performance. “The number one thing I want to see from a service provider is more research and development on new chemistry to help us with new problems.”
Companies like Kevin’s are looking to respond, focusing on better R&D to meet the demand. “Our R&D cycle for really high-end products is shorter than some of the large companies, which has allowed us to move quicker and be more responsive to our customers.” He said their single-basin focus has made it easier to home in on specific problem-solving chemistries, as the range of problems they must address is narrower.
As operators shift their attention to their core business, chemical companies must do the same. Customers in 2022 demand better chemistry, and service companies must satisfy the demand.
If they want to grow, smaller chemical companies in focused geographies may have one of two options: specialize in particular chemistries or applications (for example, by focusing solely on water management or SWDs), or expand lab and R&D capabilities to better understand the problems that new regions and new reservoir characteristics bring.
Similarly, larger companies can’t lose sight of the need to quickly respond to new customer challenges, creating specialized R&D teams who deeply understand particular regions, applications, and production characteristics, and the nuance of their chemistry needs.
Better chemistry will lead to better performance. But what good is better performance if it can’t be backed up with proof? That’s where next week's post comes into play.
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