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Cameron Archer
By
February 16, 2022

Oilfield chemical services companies must do more with less

This blog is the fifth excerpt from The State of Oilfield Chemicals in 2022Each week, we'll release an additional excerpt as a blog. For those that want to read ahead, click the link above.

 

 

 

a planner that includes a note to do more with less

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.

 


 

COVID-19 brought a downturn that caught many in the industry off guard. The persistent ramifications of the pandemic and other worldwide forces signal that great challenges still lay before the oilfield chemical services industry. And yet, most in the industry feel positive about the outlook for 2022. With oil prices on the rise, oilfield chemical companies see a great opportunity to go and grab market share.

 

“Quarters 3 and 4 in 2021 gave us a strong trajectory and a lot of momentum,“ observed Kevin, an oilfield chemicals executive in the Bakken. “We’re expecting in 2022 that a lot of our customers will be bringing back their drilling programs and completing some wells, which in 2021 really stagnated. We expect it will be a lot more active, probably closer to what 2019 was like.”

 

Logan, another executive in the MidCon area, seconded the opportunity. “When the country kind of reopened, it sparked a little bit of activity for us. We started to see new business come online and additional vendors go into RFP and bid, so a lot of opportunities have appeared for us.”

 

The downturn in the industry has created a vacuum. Many chemical vendors were fired, or programs downsized, due to financial constraints, performance failures, or both. With activity picking back up, oilfield chemical companies of all sizes are looking to break into the void, supplanting incumbents to capture additional market share, revenue, and margin.

 

Quarters 3 and 4 in 2021 gave us a strong trajectory and a lot of momentum.

- Kevin, Ops & Sales VP

 

 

But, in a highly competitive market with extreme cost sensitivity, differentiation is key. And thus, oilfield services firms are making a big push to set themselves apart.

 

The winning playbook may differ from region to region, yet the same imperative applies across all American oilfields: Find cheaper, faster ways to solve customer’s most complex problems while maintaining or expanding revenue and profitability.

 

As we look at the oilfield landscape headed into 2022, the very best oilfield chemical services companies are figuring out one thing: how to do more with less.

 

a drilling rig drilling an oil or gas well in 2022

Oilfield chemical services companies see opportunity in 2022 as drilling programs pick back up.

 

Let's be clear, oilfield producers and transporters expect more from their oilfield chemical vendors in 2022. In the past, “more” may have meant more service, more manpower, more eyes in the field. But in the modern oilfield, more emphasis is now being placed on chemistry, R&D, problem-solving, and data sharing.

 

Because of the added emphasis on more valuable activities that require devoted time and attention, oilfield chemical companies are looking for ways to free up time in the field, eliminating unnecessary inventory trips, optimizing deliveries, and improving injection technologies.

 

“There’s a familiar theme that has been circulating around the oil and gas industry for the last two years now,” claimed Logan, “and it’s called ‘Do More with Less.’”

 

We heard this refrain over and over from both service companies and their customers. “It’s an imperative,” said Peter, an industry consultant. “The chemical providers… have learned their lesson on what happens when you can’t get staff and you don’t invest in [efficiency improvements]. So they’re becoming perhaps more grudgingly aware that they’re going to have to make some investments, because if they don’t, they’re going to get caught again.”

 

There’s a familiar theme that has been circulating around the oil and gas industry for the last two years now and it’s called ‘Do More with Less.’

- Logan, MidCon Executive

 

 

Kevin reflected on how the industry downturn allowed them to introspect and brainstorm ways to improve efficiencies. “Looking back at 2020, with a lot of drilling program curtailment, that allowed us a period to really focus on how we could be more efficient. How can we improve systems to do more with less?” For his company, efficiency has become a paramount focus this year. “Outside of our sales goals for 2022, we are mainly focused on what we can do to develop efficiencies with the tools we have, and bringing in tools that can make us more efficient.”

 

Curt, a District Manager in the Delaware Basin, chimed in, “A lot of how we are responding to the labor shortage is working towards managing more with less… so that our people can cover more ground.”

 

Doing more with less might be the great theme of 2022 for oilfield chemical services. Operators are demanding more and more value at the same or lower price point, and services companies will need to find ways to carve out efficiencies that enable them to deliver higher value services at competitive price points.

 

“So, how do you do that?” asked Logan, both rhetorically and earnestly. Many oilfield services executives and managers are asking the same question. We'll cover some possible answers in our next three blogs.

 

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