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Lammert de Wit – General Manager, Balance Point Control – Netherlands

21.07.2015 / Energyboardroom

Lammert de Wit explains how BPC provides flexible services to complex well problems, the added value of having in-house engineering capacity and a strong R&D program, as well as the company’s on-going international expansion process. 

From the perspective of general manager, please describe the main challenges facing Balance Point Control (BPC) today, and what leadership directives you have pursued to overcome these challenges.

The main challenge that we face today, especially with the declining oil price, is staying on top of our quality, while continuing to deliver the best added-value services, which completely encompasses all aspects of well intervention support to get a business going. These days, clients are always looking to compare apples-to-apples during the tender process, so 100 percent focus on price. Challenging companies like us to demonstrate the fact that we bring more to the table than just a service and can provide more add than just supporting the customer’s bottom line. It’s difficult to compare if apples for apples is the strategy.

As such, we’ve invested a significant amount of time and money in refining our products and services, whether it’s in-house development in engineering, equipment, or registration, to further justify a unique and high-end positioning in the market. The other challenge focuses on expanding BPC’s international presence in a way that accommodates our yearly growth in a stable and sustainable manner.

The large oil majors call us when they have a complex problem that requires a complex well intervention solution. If they have simple operation, we are not always called, and, if they are calling us, it’s safe to say that they’ve exhausted all their lifelines. From the moment we receive a call, we start engineering and working together with a client to find a suitable solution, whether it’s with our equipment or other equipment. We always have challenges looming in the horizon that fuel our forward momentum—we’re like a fire department for the oil industry. If there is no fire, then our services are not needed. Challenge is to be a stable partner for delivering the quality for a fare rate for complex and less complex operations,

Positioned as Europe’s energy hub with a longstanding history in oil and gas, the Netherlands boasts a multitude of capabilities that collectively embody the Dutch innovative spirit. How has the country helped get BPC to where it stands today?

The availability of well-trained professionals that possess both the technical capabilities and level of professionalism required to transcend cultural boundaries and conduct business in an increasingly globalized environment is fairly abundant across the Netherlands. Additionally, comprehensive support structures, incentive schemes, and research subsidies have created a rather favourable business landscape, stimulating prosperous growth and business development opportunities for companies like BPC. Currently, approximately 25 to 30 percent of our customer base is attributed to clients in the Netherlands, with the remaining portion of our portfolio is dedicated overseas.

How would you evaluate the continued vitality of the Dutch continental shelf for E&P companies, given the oil and gas fields’ level of maturity, and the corresponding implications on BPC’s business development?

We have a huge challenge in plug and abandonment (P&A) related work. The costs are rising across all of our abandonment projects, especially given the recent rise in volume. With newer and increasingly stringent government regulations on proper work over and abandonment procedures, companies are continuously challenged with implementing proper execution techniques and controlling the associated costs. In light of the shifting landscape, more and more players will be entering the market to capitalize on the transitional focus from high-end certification and qualification to lower grade abandonment projects as a cost-cutting measure. Although we see some market opportunities for us as well, the main hurdle will center on evaluating our entire portfolio to create a comprehensive solution specifically tailored to the type and amount of work needed to effectively support our clients—primarily in the early stages because we have proven to be innovative on plug and abandonments by taking on a bigger role than only delivering our services. I believe that’s where our clients can truly stand to benefit from.

On a global scale, P&A will continue serving as a key component of the well intervention market, but at a declining rate given the limited lifetime of these wells. We are looking at using more system-bundled approaches—essentially carving out the engineering work undertaken by our customers and integrating it as a part of our total-packaged solution. We’re seeing more and more companies coming in with an integrated engineering approach, but BPC’s unique selling point lies with our hands-on mentality, technical experience, highly-advanced equipment, and workforce to adequately and competently operate such equipment. Our customer focus will also begin to change from E&P companies to the large service companies with integrated services, with BPC acting as a subcontractor in delivering a portion of those services. It’s a natural part of the company’s growth, as we are still investing in some equipment for oil abandonment. We’re also seeing a growing prevalence of ‘re-abandonment,’ where initially abandoned wells were not properly closed—lacking the proper barriers resulting in integrity problems such as leakages. Expensive measures are then undertaken to open up the well again. We have undertaken various projects in the last couple of years using type of services, and we see this growth also going outside the North Sea. And of course, the governments are playing a leading role in abandonments. They dictate the regulations on how to abandon a well. That’s why a lot of abandonment projects are pushed forward due to the pressure from the governments in terms of reducing not active or temporarily abandoned wells.

Having the backing of such a globally diversified conglomerate such as Superior Energy Services must create its own set of competitive advantages. How do you plan on further integrating Superior Energy Services and BPC to generate greater synergies moving forward?

Actually, I just recently took on the role of Managing Director of the Eastern Hemisphere at Superior Energy Services to basically put our services in other regions and also further integrate our product lines with Superior Energy’s multiple product lines. We effectively work close together with other product lines. In some product lines, we have redundancies in services and resources. As one example, Superior Energy has a department Superior well services they do rigless abandonments, while BPC operates within this service line to some degree. Aside from the overlap in equipment and services, there are also plenty of opportunities to more effectively delegate the two companies’ staff and corresponding expertise in various service streams. We position BPC for more the high-end of well services. When the well is in tact we get the well to a secure status where they have to be monitored and the rigless department will then come in and remove everything. That’s an example of an area in which Superior Energy and BPC can combine individual competencies to create synergies and ultimately create a newfound level of value for our clients. Looking at the wider service market, there very few integrated service suppliers. This is where Superior Energy Services can make a material difference. The collective organization performs a lot of different services—not just from the engineering and coordination standpoint, but all types of comprehensive well services spanning the day a well is drilled to the day it’s abandoned. The challenge is now in teaming up the collective capabilities of both companies and bringing it all together in a collective and streamlined fashion.

The global well intervention market is valued around 12 billion USD, and set to steadily grow at a CAGR of 4.1 percent over the next four years. What factors do you attribute the staggering size of this market to? What’s driving demand?

The demand driver centers on the increasing level of standards in the industry. Governments dictating more the requirements on status of wells. And forcing for earlier intervention.

We see a lot of ‘copy-paste’ solutions. In some cases effective. But more custom-tailored engineering services upfront can pay off at the live time of the well. With the current structures in companies if is difficult and a challenge to divert from existing way of doing.

With a higher oil price, companies started hiring rigs and putting these rigs on contracts to build new wells. These rigs are also used to do well intervention work, for various reasons. Well intervention work what could be done with different equipment and service. This requires some engineering work. But at the bottom-line it proved to be very cost effective. Lack of engineering capabilities and keeping the rig busy is what we hear often.

With a lower price, many companies take a close look at their cost, they reduce their engineering teams and within this scenario, we step in and deliver the alternative solution. More innovative, platform-based, and cost-effective solutions. For example, in the North Sea, the cost of putting a jack-up rig next to a platform, and get it operational. For that same value, we can, in some cases, complete the entire job. Our customers are now forced to look closer at their operations and adopt a more vigilant approach towards cost-savings.

Part of our strategy in keeping up with growing industry demand is in our engineering capabilities. We start by hiring the best and brightest engineers, followed by equipping them with hands-on field training that drills the core level of technical capabilities in which BPC has become known for within each engineer. It is at this stage that I can confidently leave any one of my staff members in a customer’s offices and a take comfort in knowing that he or she will be able portray an accurate depiction of exactly how BPC operates—what we can or cannot do, etc. We’ve heavily invested in our engineers, and we’re starting to see that pay off judging from the favourable response of our customers.

BPC has been rapidly expanding away from primarily European operators to other regions around the globe such as Australia, Asia, and Africa. What strategic objectives are fuelling such international expansion?

Targeting these areas has to do with exposing the company’s business to a more diversified set of regions aside from Europe. Entering any new country within Europe entails an extensive amount of work regarding certifications, permits, and various other rules and regulations per country. It’s fairly frustrating. Market entry in other regions works a little bit quicker and efficient and there are longer-term contracts. Like I said, we are a fire brigade for Europe. Immediate response calls to customers’ short-term operational dilemmas have been primarily driving our business so far, and having the flexibility to abruptly develop effective solutions for sporadic client demands will certainly serve as a competitive advantage as we grow further, but such an environment puts more stress on finding a constant and stable stream of work. As such, expanding into regions such as Africa and Asia helps diversify our portfolio with more long-term contracts and eliminate any gaps in our order books attributed to geo-economic factors.

Through joint-venture operations, we’re currently working on several long-term contracts in Africa and the Middle East. We’re already established ourselves in Thailand within the past two years, but now we’re looking to further expand our presence in Asia with a regional office in Kuala Lumpur. Once we have a small basis to start, we will begin cementing our long-term operations through the establishment of local offices, which will deliver the same quality of services that our reputation in Europe has garnered.

With aging assets and the global demand for oil, operators have shifted towards more innovative production techniques, now targeting the development of “tough resources” in shallow and deep waters. What sort of R&D initiatives does BPC have in its developmental pipeline today to capitalize on growing trends and maintain its competitive positioning in the market?

We’re working on several R&D projects regarding optimization and increased transparency of our processes – areas that we’ve seeing a growing area of interest by our customers.

They would like to see all the data, what’s happening in the well, and on our units in their offices. These DATA collection system we develop in house but is also actively involved in the process. Instead of being only registration off the handlings on our units it also actively warns and prevents actions what is outside the pre-set boundaries’ for that specific operation. We perform all research and development in-house to preserve the integrity of our technology. We’re very protective of our intellectual assets. So if we see an opportunity, we set up our own department, with our own specialists, and our own engineers. And they will be working here doing the R&D, the building, the implementation, and the maintenance afterwards. Ultimately, integrating all R&D operations in-house allows us to change and adapt more quickly to various situations that require promptness. Specifically, we’ve make significant strides in remote automation. We built a unit, called the CSU160 that is completely remote-controlled and integrated in one of the cyber rigs. It’s the first one ever built and has been a great success so far.

Another area were we see more interest is work over units build for a specific task. Multiple well operations with similar work scope a tailored build unit could be economical. We have various models developed for multi well operation.

“The right way, the safe way, 24 hours-a-day around the globe.” Can you please highlight one or two projects that have truly embodied that slogan and evoked a sense of pride?

When a client suffers a well control or blowout issue, we set the BPC processes in motion immediately, and suddenly we switch to 24-hour mode. In one particular case, we prepared a full solution for the customer in five days and had presented our action plan. Within seven days we had five planes of equipment loaded from different parts of the world flying into the country and offloading them. We then flawlessly executed the engineering using our own equipment; we also rigged the job and all the support functions locally. They could not have even moved a in country rig to drill a relief well in the time it took us to complete the job.

What would you like to do with the company in the period of the next five years?

The goal in five years is basically to have some key points around a world where we can deliver the same types of quality service that we deliver here in Europe—adopting the same added-value mentality and principles. In terms of revenues, I’m striving to double earnings in five years time. Of course, I’m part of a corporate organization with a degree of hierarchy, but you need to be ambitious, otherwise forward momentum will be inhibited even before starting. Also, given my technical background, I’m selling a product that I know very well. As one of the founders of BPC, I’m well-versed on the technical capabilities of all the products that we offer. In that sense, I make a rather unique manager—possessing the ability to shift from the high-level down to the practical, and with that versatility I’m able to go fairly direct to the customer. Moving forward, my personal motivation within these next few years will simply be fueled by the opportunity of leading a good team of people for a good company that continues delivering quality services time and time again.

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