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№ 9 (September 2009)

Market Trends: Demand for Drilling Tools Is Set to Grow

What is the current state of the domestic drilling services market? The averages rarely correspond to the “real McCoy” – as conventional wisdom goes, averaged temperature of hospital patients will be normal because though some patients have high temperature, others will have temperature below normal.

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   The same applies to the drilling projects – while some companies more than halved their drilling volumes due to the crisis, others even managed to boost their drilling operations. All in all, experts estimate that drilling volumes in the industry fell 15-20 percent compared to the pre-crisis times. But this is not the reason for a bad mood. The general feeling is that the market growth will start next year.

   Putin’s Prospective
Recently approved by the government Russia’s Energy Strategy till 2030 also instills optimism.

“The proven reserves of energy carriers aren’t endless,” Russian Prime Minister Vladimir Putin was quoted as saying in a recent government report. “The strategy envisions growth of oil reserves, including offshore fields, at the rates of 10-15 percent for oil and 20-25 percent for natural gas.”

   This growth will be based on the development of the new fields in Eastern Siberia, Far East and in the Arctic. By 2030 Russia must produce 530-535 million tons of oil, compared to 482 million tons in 2009. Some 60 trillion rubles required for implementing these ambitious plans; the state wants to get these funds by being flexible in tax on natural resources production, export duty and income tax. With that, the domestically manufactured equipment must take up at least 50 percent of equipment supplies for the energy segment.

   The Individual Approach
This means more drilling – short-term demand for drilling projects could grow 30-50 percent. Respectively, the demand for drill bits and diamond tools is set to grow, just as, considering the current market trends, will the popularity of cost-minimization strategies.

   Drilling bits are the key part of well installation projects, yet represent only a share – one to five per cent – of the total cost of the well.
“Time is money” – for the drilling engineers, this proverb captures the essence of work. Every hour of operation of an on-shore drilling unit consumes about ten expensive drilling bits, leave alone offshore drilling projects. Drilling time depends on the mechanical speed of the drilling bit and its usage rate, i.e. durability. Right selection of the drilling bit, with guaranteed quality parameters, lowers the number of round trips. Since average change of drilling bit takes some five hours, omission of even one trip would save the sum equaling the cost of about 50 drilling bits.

   Each new well means new geotechnical specifications, and the best method of correct selection is a custom order.

   “Production of the VBM-Grupp complies with the global quality standards. Yet, for us the most important parameter is to what extent our drill bits ensure successful solution of the challenges which drilling crew faces,” explains Sergei Valerievich Mamedov, chairman of the board of VBM-Grupp. “Accordingly, our company has individual approach to the customers. Designing and manufacturing the drill bit, we’re taking into account drilling method, specifics of drilling bits, available servicing vehicles, etc.”

   VBM-Grupp is already producing over 200 sets of PDC drilling bits with diameter from 83 to 444.5 mm and over 1,000 drill bit roller cutters with open and sealed bearings diameter from 74.6 to 711.2 mm.

   A Positive Outlook
Securing the required drilling volumes for sustainable operation of upstream industry largely depends on the producers of oil and gas production equipment. In fact, drilling bits construction is a strategic industry for the state. However, advancement of R&D and manufacturing in general in this direction is being done by the producers alone. The flagship of the whole “drill bits science”, the only one in Russia with proprietary design center for drill bits, was established over half-century ago. Over this time, the company implemented many R&D cooperation projects with drilling and upstream companies all over the world. Cooperation resulted in structures, which put a new impetus into drill bits and diamond tools industry and received a number of awards. Thus, in 1990 the company received an award of the USSR Ministry of Oil and Gas Industry for creating a special cone-rock bit for Surgutneftegaz fields.

   In the new millennium the work became even more dynamic and interesting, since oil and gas industry is now one of the most fast-moving sectors of the economy both by production growth and innovation-wise. VBM-Grupp is engaged in the research aimed at creating new drill bits for both domestic and foreign clients. Every year, the company rolls out 30-40 new products. In parallel with the research of conceptually new constructions, work is being done on modernization of already existing models. This parallel work is possible due to constant renewal of the technology. For the past few years, VBM-Grupp acquired and launched dozens of most up-to-date multiaxial NC  units, coating units, furnaces for chemical and heat treatment of the drill bit parts, equipment for producing proprietary hard alloys, etc. The company focuses on creating ever more hardened materials – steel grades, hard alloys, oils and rubbers.

   Russian drilling companies appreciate high level of production and customer servicing principles of the VBM-Grupp – the company occupies over 80 percent of the domestic market, while international certification became a “pass-card” to the global market. VBM-Grupp quality management system is compliant to API and ISO standards. During voluntary certification, provided by the global consultancy Moody International, the Health, Safety and Environment (HSE) system implemented at the VBM-Grupp was judged compliant to the key international standards ISO and OHSAS. Currently, VBM-Grupp equipment is drilling in more than 40 countries.

   Next step in conquering the global market will be the start of industrial production of PDC drill bits with matrix body, which is penciled for the end of the year.

   The main difference from the PDC drill bits with steel body is that the matrix body consists of highly durable sintered hard-alloy matrix, which ensures significant growth of abrasion resistance and tolerance to erosive wear. Production technology for drill bits with matrix body ensures maximum protection of the blades by improved layout of PDC cutters, also providing the optimal washing and cooling system. Due to  this, such drill bits are particularly needed at the fields with hard rock and abrasive rock formations, which exist in Russia as well.

   The accumulated experience, existing resources and mastered cutting-edge technologies ensure that VBM-Grupp faces the future with confidence, apt in taking up new projects and guarantees its partners a wide range and high quality of the production.

Contact details:
Russia, 125212, Moscow, 39, Leningradskoe shosse, block 7
Tel: +7 495 642-08-07    Fax: +7 495 642-09-70
e-mail: [email protected]

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