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Home / Issue Archive / 2007 / November #11 / Kogalymnefteprogress Celebrates Its 15th Anniversary and Shares the Recipe of Success

№ 11 (November 2007)

Kogalymnefteprogress Celebrates Its 15th Anniversary and Shares the Recipe of Success

By Elena Zhuk

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In search of high-quality oil-and-gas service, production companies operating in Russia today often give preference to major international service giants with their vast technological experience acquired over a long period of operation in different regions of the world.

Unfortunately, very few Russian service companies can compete with reputable global brands. One of the specialized enterprises that competes successfully in this market and offers services that meet a ready market in many regions of the country is Kogalymnefteprogress. Its 15th anniversary, celebrated this year, coincides with the equally significant anniversary of the well-known Russian innovation company RITEK: the enterprise was established in the early 1990s on RITEK’s initiative to provide a strong alternative to expensive Western service.

The enterprise, headquartered in Kogalym, became one of the first service departments (the so-called “oil progress companies,” or “nefteprogress” in Russian) that RITEK created to work in the field of well workover and innovative technologies development. During the economic crisis of the early 1990s, when oil production was plummeting all over Russia, Kogalymnefteprogress chose well reconstruction as the main development trend.

“The oil industry had to survive in difficult conditions when oil and gas prices remained fixed and tools and equipment prices were at the market level,” according to Minigaly Galiullin, general director of Kogalymnefteprogress. “It was extremely difficult to develop production in such a situation. Thousands of people who had worked for dozens of years in the industry were left unemployed. We had to save the industry and its human resources. That was when it occurred to us that if we couldn’t drill new wells, we had to make the old wells work.”

The founders of the enterprise were RITEK, Kogalymnefteprogress, Tevlinneft, Birsk Drilling Department, the trading company LUKOIL and the city administration of Kogalym.

RITEK’s efforts to create a service company with high intellectual potential were appreciated most of all by specialists, for whom the company came as a rope that they had to grab to be saved. “In the transition period of the 1990s, due to lack of equipment, the well workover volume was decreasing. Such conditions were catastrophic for the shift workers who flew from Bashkiria, Tatarstan, Ukraine, Belarus and Krasnodar, because shift workers are the breadwinners in the family,” recollects Leonid Zakharenko, one of those who were at the very start of Kogalymnefteprogress and who worked in RITEK for many years as the acting department director and deputy chief engineer, and is now retired.

Four crews of experts undertook well reconstruction, having rented special equipment from the Birsk drilling department. Thus the enterprise solved a range of issues concerning the organization of workplaces for highly-qualified specialists, reducing the inactive well stock and increasing production without extra drilling costs. Kogalymnefteprogress finished the first well in 1992 at the Tevlin-Russkinskoye field.

Mindiyan Khalimov has been working at the enterprise for more than 13 years, and has been the chief engineer for nine. Now he heads up Menzelinskburservice. “Well workover is like a complex treatment course in a good hospital: there’s no need to visit various doctors, the experts undertake everything from scratch and fully solve the problem with their own resources until the patient is healthy. That’s why we are called ‘well doctors.’ We open a well, diagnose and then treat it. If the result is good, the well starts ‘smiling’ again with oil.”

With regard to customer relations, the company chose a format untraditional for the times. A contract with a subsoil user gave the departments of Kogalymnefteprogress access to inactive wells with a basic production level. During the workover of such wells, 50 percent of the extra oil production was shared with the subsoil user. In 1992, the first 50,000 t of oil were produced by RITEK and Kogalymnefteprogress.

It was clear that it would be difficult to compete on equal terms with famous international service brands that were entering the Russian market, so from the very beginning the company bet on new technologies to increase oil production. The first asset in the sphere of innovation technologies and methods was a license for using technologies of effective drainage area cleaning with a АPК + АМК (drilling rate measurement apparatus) formula. In 1996 LUKOIL reported the highest production in Kogalymnefteprogress: 18.9 per crew with a high level of workover.

Over the course of its development the enterprise constantly expanded the range of methods employed, adding new developments to the technology bank of RITEK, the parent company. Implementing the technology of enhanced oil recovery using a polymer-helium “RITIN-10” system contributed to a considerable increase in the company’s oil recovery volume.
In 2004, when the RITEK management decided to organize offshoots drilling in the Kogalym region of Western Siberia, Kogalymnefteprogress took on the development of the method. The service company had a short time to train specialists to perform testing and adjustment of the drilling equipment and choose a contractor for navigation and drilling mud maintenance. When offshoot drilling was developed, the company began its successful implementation at the RITEK fields in Western Siberia.

The service company also actively implements hydrofracturing technology, which is spreading in Russia. This year the number of operations with the successfully applied technology, indispensable for oil recovery enhancement and inactive wells reconstruction, does not exceed 50. This figure might not look significant compared to the reports of giant service companies, but it illustrates the fact that the development of modern oil recovery enhancement technologies is feasible for small national companies that want to keep up with the times.

Kogalymnefteprogress doesn’t ignore foreign experience and technical achievements and widely uses not only national but also foreign equipment. “Foreign equipment is expensive but one can’t do without it, especially if an enterprise is actively developing,” says Khalimov. This year the company created a subsidiary in Perm, consisting of a hydrofracturing fleet with the further addition of five well workover crews, second wellbore drilling crews, oil recovery enhancement links and a site for the production of drill rod scratchalizers. Next year it plans to open a separate subsidiary in Tatarstan. Khalimov personally chose special hydraulic fracturing equipment in the United States.

Kogalymnefteprogress uses national equipment as well and often improves it on its own. An example of that are ARB-100 lifters. Workers on drilling crews developed a system of drilling mud preparation and cleaning for these lifters. Even though the enterprise drills the wells 5-10 days longer than Schlumberger, the costs are much lower, according to Khalimov. 

As a confirmation of the high quality of its services, in 2005 Kogalymnefteprogress received a certificate of conformance to OHSAS 18001:1999 in Quality Management and ISO 14001:2004 in occupational, industrial and environmental safety. In 2006 it received an ISO 9001:2000 certificate of conformance to Quality Management requirements in well workover, offshoot drilling, well preparation, oil recovery enhancement and drill rod scratchalizers production.

Kogalymnefteprogress grew from a small enterprise that in the early 1990s consisted of four crews to an interregional company comprising 36 well workover crews, three drilling crews, 5 chemical agents pumping units, five brine plant facilities and fracturing fleet. Its staff exceeds 2,000. One of the factors essential for success was a well-chosen enterprise format. Its flexibility, characteristic of small companies, allows a maximum efficiency in using sites that are of no interest to big corporations combining relatively low costs and high innovation sensitivity. Kogalymnefteprogress has a good reputation and a time-proven track record among companies specializing in services.
Today the employees who once put their trust in Kogalymnefteprogress don’t regret the choice they made 15 years ago.

Unlike many other branch companies of the Russian oil industry, Kogalymnefteprogress doesn’t resort to attracting substantial dept capital. The company has big plans, such as developing activities in new regions , reingineering  equipment and developing new directions in service, enshuring an integrated approach to rational mining. This success story of a small Russian company that implements high technologies in everyday practice is probably not too complicated to be used by other small and middle-sized enterprises.

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