The Future of Drilling Technology with H&P

00:00:03 Todd Fox
This episode of the Energy Pipeline is sponsored by Caterpillar Oil and gas. Since the 1930s, Caterpillar has manufactured engines for drilling, production, well service, and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions. 

00:00:28 Russell Stewart
Welcome to the Energy Pipeline Podcast with your host, Russell Stewart. Tune in each week to learn more about industry issues, tools and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective, this podcast is your knowledge transfer hub. Welcome to the Energy Pipeline. Hey, everybody. As always, thanks for listening. Today, my guest on the show is Todd Fox, and Todd is. Is with what we call H and P. And some of you know that means helmer campaign. Todd, thanks for coming on the show today. 

00:01:06 Todd Fox
Appreciate the invite. 

00:01:07 Russell Stewart
Oh, it's my pleasure. Todd, what is your actual title at H and P? 

00:01:14 Todd Fox
I am the Director of Product Management. 

00:01:16 Russell Stewart
At H and P. Director of Product Management. Okay, so you're the guy that's involved in product, what, all the new technologies on a drilling rig. 

00:01:30 Todd Fox
That's right. We deploy a number of technologies to optimize performance. And my team and I get the pleasure of working with a lot of really talented people at H and P and are the group that helps develop, create, and implement various technologies to optimize the performance of our crews and our rigs. 

00:01:54 Russell Stewart
Yeah, in fact, we. We had J.T. brady on the show last year, and I think it was the title was Powering the Future. And he talked about what you guys call flex rigs. And, you know, he, in the interview said, I'm sure he wasn't prejudiced or anything, but he said these were the best rigs out there. 

00:02:19 Todd Fox
That's right. Well said, jt. 

00:02:21 Russell Stewart
Well, what really caught my ATT was he said we. We sleep in the bed we make, and so we want to make sure it's a good bed. 

00:02:29 Todd Fox
That's right. That's a good analogy. 

00:02:32 Russell Stewart
So you guys are, let's see, hp, you're in Houston, right. 

00:02:38 Todd Fox
So our headquarters is in Tulsa, Oklahoma. I'm in Houston. We've got a lot of customers here and a lot of different suppliers. So we're a little spread out all over the lower 48, but lot of activity in Houston, so we maintain an office here. 

00:02:55 Russell Stewart
Okay. And I had one of your HSE guys, Michael Baclund, on my HSE show two or three years ago, and then I went and met with his HSE people, and he was located in Seguin, I believe is that, right? 

00:03:12 Todd Fox
That's right. Seguin and beautiful country out there. 

00:03:15 Russell Stewart
Yeah. So that, that's one of your. That's one of your larger yards, right? It is. 

00:03:21 Todd Fox
We have approximately nine yards. That's one of the larger ones. And it supports our rigs in South Texas. 

00:03:27 Russell Stewart
And then you're scattered all over the lower 48, is that right? 

00:03:32 Todd Fox
That's it. Every major basin, we have a large presence where the. We have the largest market share of activity of drilling rigs in the lower 48. 

00:03:41 Russell Stewart
And so this is all onshore. We're not doing any offshore. Is that right? 

00:03:46 Todd Fox
So we do have an offshore element. With the acquisition of KCA Deutag, it's been about six months now, but we became the largest platform rig contractor with that acquisition. 

00:04:06 Russell Stewart
So I started going on drilling rigs back in 1997, 1998, something like that. I worked for a small service company, Little Drilling Fluids company. And unfortunately I wasn't on any nice H and P rigs. But there's been a lot of changes in that, in that time frame with drilling rigs, huh? 

00:04:36 Todd Fox
There really have. It's, it's. You know, I've heard of the shale revolution. You know, H and P was a predominant driver in the amazing improvements and enhancements and efficiency. And it's really helped. I think at one point, I guess in the late 70s, there, there was a fear that we were going to run out. And that really turned the tables. 

00:05:04 Russell Stewart
Yes, it did. Talk about some of these new technologies. What's the latest and greatest? 

00:05:10 Todd Fox
Sure. Well, all of our rigs are, you know, you see various photos of control rooms and power plants and the like, and our rigs are set up in a similar way. And that the driller has at their fingertips the ability to control almost every piece of equipment on the rig. And a lot of the technology that we focused on is how to enhance and improve the performance of the driller and so that the overall cycle time of the well is reduced. And so we spend fewer days drilling a well, and therefore it's much more cost effective for the operator. And it makes our value proposition that much better. You know, some of the technologies that we focus on are how to optimize the rate of penetration so the speed at which we drill through the formation. And there's a number of technologies that we use to control how we control the draw works, which in turn controls the top drive, which moves the drill string, which ultimately turns and moves the bit. 

00:06:23 Russell Stewart
And how have you done that? Give me some examples. 

00:06:27 Todd Fox
So a lot of it is in modeling, looking at different ways to model because the formation is unique and it's always different and it's, it's unknown. In a lot of ways. We've got a pretty good idea what we're up against from offset wells, but there's, it's never the same. And so as, as we drill through different geology, there's different rock hardness, there's different fluid types that we drill with, and we don't provide the bits. And the bha, the operator selects the bottom hole assembly is the bha. They'll select which particular bit they'll select at what depth we run casing and how we drill through that rock is then a joint effort with us and the operator and sometimes other oil field services providers. But we work as a team very closely with the operator, and we deploy the different technologies. Some technologies are a la carte and some come standard with an H and P rig, but they're aimed at how to optimize the drilling practice and optimize and reduce days versus depth. So ROP is just one of those technologies. And so in addition to that, there are anomalies that happen down hole. And so those different anomalies can cause different dysfunctions with the drill string. And the drill string may experience, for example, bit whirl. We could have losses, we could have a kick, we could add different things. And how, how we handle the BHA is really important to the life of the bha, that bottom hole assembly. So how we tag bottom with the bit, how we come off bottom with a bit, how we transition from sliding to rotating, all of that weighs in on that life of the bit. And what we're after, that team at the rig side of the operator and H and P, what we're after is, is just one trip per whole section. So we can drill the entire section of that well in one run without having to make a bit trip or a motor trip or a BHA trip, and then get casing a bottom in one run and then drill the next hole section until we TD that well. We hit total depth for that particular well. And then from there we'll walk or skid the rig, typically anywhere from 20 to 40ft. And then we'll spud that next well and, and do it again. And almost all without probably exception. All the wells that we drill are directional wells, mostly horizontal wells today. So how we guide the bit and steer the well is also a technology that we deploy down hole. And it's using the accelerometers, the magnetometers down in the BHA or a different oil field service provider that provides the bha, then pumps that information up in a form of Morris code in terms of a pressure pulse that they decode and then feed us that information of where we are in terms of magnetic north versus tree north. We'll correct that survey with technology that we have on the surface. That all happens in about two minutes. And then we'll calculate whether or not we should slide or rotate at various points during the drilling of that next stand. So we're drilling a stand is three joints of pipe about 93ft. And every stand we may be sliding, we may be rotating at different intervals in order to reach the optimum wellbore trajectory for that particular hole section. 

00:10:29 Russell Stewart
So you say you're not making multiple wiper trips? 

00:10:32 Todd Fox
We're trying not to for sure. No crew likes to trip. 

00:10:37 Russell Stewart
Well, I understand that. And so does any of your technologies you mentioned, you mentioned fluid types and you know, I mentioned while ago I come from that mud engineering background, so when I hear that my ears perk up. Are the, are, does the fluid types, does that have anything to do with helping keep the clean holes or the hole clean so you don't have to make these multiple wiper trips? What's, what's the deal on that? 

00:11:08 Todd Fox
Yeah, fluid quality is very important. And so, you know, we invest with the operator in making sure we've got premium shaker technology to remove solids. The solids control is another group that the operator brings to the well site to run high and low speed centrifuges. 

00:11:29 Russell Stewart
I was just going to say centrifuges. 

00:11:31 Todd Fox
Yeah, that's right. A good rule of thumb is really high quality fluid. Drilling fluid means you're going to maximize rop, you want good, good hole cleaning. And you know, the, the faster we drill, the more cuttings we generate and we, we rely on that drilling fluid to carry those cuttings up to the surface and, and then we remove the, the cuttings, the solids, the dissolved solids, and then recycle that fluid back through the drill strain. 

00:12:03 Russell Stewart
So is this diesel based oil based mud? 

00:12:08 Todd Fox
It varies, you know, from brine, diesel base, oil based, synthetic water base. We really use all different fluid types. It's, it's at the discretion of the operator really. 

00:12:22 Russell Stewart
Now does this, does this vary by region or, you know, you find one predominantly used in, in one section and maybe like for example, I guess you're, you're probably drilling in areas other than Texas and maybe they don't like oil, diesel based oil based mud or what do you find in there? 

00:12:45 Todd Fox
It does it, it does vary by basin and then even within a basin, particular areas within the basin, and it's driven off of best practice typically. And 1, 1 real strength of the lower 48 market is word tends to travel fast. And best practices are adopted pretty quickly. And so some areas, oil base for a particular whole section is really the number one choice. Other sections of the whole course drilling surface is water, water based only. But you know, I know there's been success with synthetic fluids and, and brine in particular regions as well. 

00:13:30 Russell Stewart
And so does that affect your drilling technologies? You have to make adjustments for that or how does that work? 

00:13:37 Todd Fox
Not so much. You know, we're looking at, we have, we have ongoing work on how to prevent for example, a surge in swab when we trip in the hole. So as we're running the drill string back in the end of the well, the speed at which that string enters the formation in that existing well bore, if we go too fast, we can induce the pressure wave which can break down the formation. Or when we're tripping out, it can create a, it can swab the well and bring a intrusion of formation fluid and cause a kick. And so the rate at which we go into the well and out of the well is carefully controlled. And today we rely heavily on the expertise of our drillers. We have some of the most knowledgeable drillers I believe in the business. But you know, part of our job is how can we make their job even easier in its. By controlling, for example, the acceleration of the block as we come out of the hole or as we go back in the well, we can control surge swap. And so implementing controls like that to prevent that from happening is, is beneficial. 

00:15:00 Russell Stewart
Well, it's interesting that you mentioned that because that was kind of where I wanted to go next. The role of, you know, I keep calling them digital technologies, I guess. Is that the right word to be using? 

00:15:16 Todd Fox
It is. And one of the things, as the technologies continue to progress and more and more technologies are brought to bear, what we're starting to see is, and we've got a product called the Digital Roadmap and where we can lay out ahead of the well by depth. We can lay out every set point for any particular task. And what we found is we're reaching a point where you have over 70 different set points that could theoretically be optimized every 100 to 200ft of a well. And when you're drilling a 28,000 foot measured well, that's a bunch of, that's a lot of set Points really, it's really not feasible. The other element that we've got is the days per well have continued to go down. 

00:16:11 Russell Stewart
Oh yeah, you mentioned, you mentioned starting the shale technology. I mean those wells were taking what, 30, 45 days to some of those that were taking 30 to 45 days to drill. You're doing them in less than a week now, right? 

00:16:28 Todd Fox
That's right. I mean when I was up in Pinedale for, for years for Wyoming and, and Colorado area and those wells at one point were 60 days and now we're regularly drilling them and under 10 and we've got, we've got a rig in the DJ basin which is, it's a, a very forgiving formation. So it's probably one of the faster drilling areas, basins wise. And that particular rig is going to drill well over a million feet in one year by itself. And so the days per depth continue to go down. And so what's happening is that it has enabled more wells per pad and so the operators have traditionally held back drilling more wells per pad because they need to get a frac spread in on that particular pad and get their rate of return that they need to make all this work. And as the days per well go down, we can be on that pad, for example, for 90 days and drill a lot more wells. And so it's, the rate at which the execution is occurring is pretty impressive, pretty staggering. And so going back to the example of 70 set points every 200ft on a 28,000 foot measured well, you know, that's well over 7,000 set points. And it's not reasonable for a human to have to input that much information and to truly optimize it. And so the advent of technology that is really going to make a difference is using external models and using AI machine learning to optimize every one of those set points real time based upon live data from the rig. And that technology would not have been possible without some other technology as a predecessor. So for example, having the ability to control the rig with data, having a reliable ability to get the data off site in real time, which Starlink is enabled, and then the AI technology and the modeling that we're able to do off site, we've got a lot of PhDs at H& P, some really, really sharp people and to create models that can be fed real time data from the rig, optimize, you know, all of those 70 set points and then feed it back to the rig in a, in a cyber safe way is, is not too far away. So we're we'll begin testing some of that here in the coming weeks, but we expect it to expand. 

00:19:27 Russell Stewart
And so you, you are using Starlink? 

00:19:30 Todd Fox
We are, we sure are. It's, it's, it's really been a game changer. Most of our locations are out in the middle of nowhere and, and there's no broadband available in the ground, so we rely on satellites, and satellites have latency, but the low Earth orbit Starlink reduces that latency and it's a much more reliable bandwidth. 

00:19:54 Russell Stewart
Oh, that's very interesting. Okay. And yet something you mentioned a couple of minutes ago, and I wanted to expand upon that you mentioned still the importance of, and one of the things that, that sets HP apart is your knowledgeable drillers. Despite all this tremendous and wonderful technology and all the things it can do that a human can't do, you still gotta have that human element, right? 

00:20:22 Todd Fox
That's right. And I think everybody's probably had that experience. When you're at 30 some thousand feet in an aircraft and you hit very, very rough turbulence, you're pretty thankful that there's a knowledgeable crew up, up in the cockpit of that aircraft. And, and it's the same way on a drilling rig that there are things that, that are surprises and they're not HSC risks, but they could cause a lot more work at the, at the rig site. And having a steady hand and money. 

00:20:53 Russell Stewart
And expense and, and, and, and that does affect HSE too. 

00:20:58 Todd Fox
That's right. It's, you know, the spread rate that the operators are paying is, is likely, you know, in the 80 to $140,000 a day range. And so every hour counts and one mishap and it could cause a sidetrack or stuck pipe event or a twist off. And that can be very costly. 

00:21:19 Russell Stewart
Absolutely. Yeah. Okay, so any new equipment initiatives on the horizon, other than what you just mentioned about using the Starlinks and that sort of thing? 

00:21:34 Todd Fox
There sure are. You know, outside of just all of the different digital technology that we're bringing to bear during the execution of the well and one, one sidebar on that, the other really fascinating AI technology that's coming online now is the ability to predict an anomaly. And so an anomaly being, for example, a stuck pipe event or a washout in the drill string down hole bit balling. In the past it took a driller to be able, not a very knowledgeable driller to be able to kind of read all the tea leaves because there's subtle indications of that event potential. And the driller would have to be able to recognize and then advise, hey, I think that we're about to get stuck, for example. And that driller would typically call the well site leader up. They would, and the, and our driller would receive the advice from the well site leader how they wanted us to handle that particular issue. And what we're seeing being brought to bear here soon is the ability for those external models to be able to see those things without the driller being able to see them. And then advise the driller of a risk potential. Say, hey, you've got a 70% chance that in the next two hours you're going to get stuck. And here's why. Here's the data that shows that. And presenting that to the driller in a logical way I think is going to be very impactful because you know, we're able to drill at a very high level. And one thing drives an operator crazy. You know, you have 10 very, very good wells and then you have one well that ends up in a sidetrack and it wrecks your average. 

00:23:26 Russell Stewart
Huh. 

00:23:27 Todd Fox
And so if you can prevent those events, it makes their afes predictable, makes their return on capital employed more predictable and it just makes for a better execution. 

00:23:41 Russell Stewart
Okay, so we said you're in Houston and I wanted to come get you to comment or wanted to introduce maybe a sort of separate subject, but you're in Houston. So you're on the International association of Drilling Contractors, the iadc, I think Houston Chapter Board of directors, is that right? 

00:24:05 Todd Fox
That's right. We, and we've got a reception tomorrow evening actually from 4 to 6:30. I'm not sure when this podcast will, it won't quite make that one. 

00:24:15 Russell Stewart
It won't make that one. But if you go to the, probably the IDC Houston Chapter website, you can, you can find these events and what are you having a networking thing tomorrow? 

00:24:30 Todd Fox
Yes. And if you can't, you won't make, if you don't make that one Friday, September 12, a annual scholarship golf tournament at Cypress Wood Golf golf club on September 12th. That'll be another good one. 

00:24:42 Russell Stewart
Okay, and you guys have sporting clays and you got a couple of other things right, especially for people in the, in the Houston area. IDC Houston chapter is a great organization. Most people know I'm associated with API Houston chapter and of course we have our monthly luncheons as well. But we actually have a joint with you guys every year and have had for years. And so go to these websites folks and check out, check out these events because you guys use these events to fund scholarships and that's what API Houston chapter does is use them to fund scholarships. So would encourage everybody out there to, to support that. I, I got one final question. I just saw an article in World Oil yesterday talking about drilling permits being down. What, what do you think about that? 

00:25:43 Todd Fox
Yes. You know, permits are, they're cyclical, very much like our industry. And different operators have different strategies with permits. You know, some areas will apply for permits in groups, in large swaths. They'll, they'll get their permits submitted and applied for. They may, for example, apply for permits for the whole year and in one month because sometimes it takes longer than others to get their permits approved. Other operators are applying for permits they might not necessarily drill. And some operators drill every permit that they apply for. So it's a, it's a pretty mixed bag. We watch it closely. You know, it is definitely one of the different indicators that we look at to try to, to guess is really what we're doing at what the future activity may hold is permits. 

00:26:40 Russell Stewart
Okay, so here I go asking a question. And folks, you know, those of you who've listened to my podcast over the years, I'm always asking questions I don't know the answers to, which gets me in trouble a lot of times. And so we haven't rehearsed this, folks, I can promise you. But Todd, from HP's perspective, the, does the future look bright? 

00:27:01 Todd Fox
I think it does. You know, I, I, I think we, we've come up an incredibly long way and five, six years ago, it's like, wow, how can we get any better than, you know, you, you, you think you've, you've got it figured out, and then you quickly realize that we're not even close to what, the capabilities that we have, what we could really achieve. And just as a case in point, I think someone shared a statistic that, that we're four times more efficient today than we were 10 years ago. And with the amount of technology that we're bringing to bear and, and I, I didn't hit it on, on the equipment side too much, but on the equipment side there's some really incredible things happening. So we expect to deploy in end of July, August, our first fully robotic rig floor. And so it'll have a robotic, commercially tried and true robotic arm that you would typically see in an automotive plant. But we'll have three robotic arms, two on the rig floor and one on the board, on the racking board. That rig will deploy end of July, early August, be drilling out in the Permian Basin. And it's fun just to Even watch those robotic arms work together with the other rig equipment. And pretty exciting stuff happening there. Obviously we got a lot to learn on those, but our plan is to we set an objective and I'm confident we're going to achieve it and that, that it will achieve the performance of our current average rig crew in terms of tripping and making connections. It'll be able to achieve average performance of a crew. We don't ever anticipate it displacing a crew. We're down to a standard rig. Crew on a US land rig is five crew members per tower or per 12 hour workday. And you know, we've got about five and a half million pounds worth of steel out there and if we're moving it every seven days and a lot of moving parts, it's everything to keep up with it for those five to six hands per crew. And so I believe it's not going to reduce the crew size, but it will greatly enhance the quality of life and reduce the amount of exposure on the rig floor and keep, keep our crews as far out of harm's way as we're reasonably able to. 

00:29:51 Russell Stewart
And that's exactly, that's exactly what we're trying to do. And I'm really glad you brought up that part about equipment because it gives me, as we close out the show here, a chance to do shameless advertising for Caterpillar. Because Caterpillar's on all your rigs, right? 

00:30:08 Todd Fox
That's right. 100% of our rigs. And we're really happy to have deployed their dynamic gas blending generation two engine that's able to displace up to 70% diesel with natural gas. So it's more emissions friendly, it's more cost effective and we've been really excited to be able to deploy that engine in scale. 

00:30:33 Russell Stewart
And those are just examples of what I always say. The oil and gas industry isn't the problem with the environment. The oil and gas industry is going to be the solution to the environment. And so we appreciate HP and their efforts and their cooperation, collaboration with Caterpillar. Todd, I really appreciate you coming on and talking about this and we'll do it again sometime. 

00:30:58 Todd Fox
Russell, thank you for having me. It's been a real pleasure. 

00:31:00 Russell Stewart
The pleasure's all mine and I hope the pleasure's the same for all the audience out there. Thank you for listening. Post us on LinkedIn, tell your friends to listen to us and we'll see you next time. 

00:31:13 Todd Fox
Thanks for listening to oggn, the world's. 

00:31:15 Russell Stewart
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00:31:19 Todd Fox
If you like this show, leave us a review and then go to oggn.com. 

00:31:23 Russell Stewart
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