Ludovic Macresy – President, DrillScan – France
Since 2001, DrillScan has delivered software, services and training to the drilling community. Learn more from the president on how their software is recognized as the most advanced for complex wells.
Could you please introduce DrillScan’s activity?
DrillScan is a privately owned French company whose aim is to deliver software, services and training to the drilling community. We historically started in 2001 and have developed our first software platform focusing on directional drilling. At the time we had established a partnership between geoscience centers from Mines ParisTech, Total and DrillScan. Our aim was to reduce the technological gap that existed between operations and research and speed up to R&D result transfer to operations.
In 2004, we unveiled our first software-drilling platform, and I must say that our 3D model was and still is unique on the market. We have focused on four main axes of research: hole (structure interaction), Fluid & Temperature (structure interaction), PDC bit (rock interaction and Mechanical integrity. We are leaders in drilling research in France. We have different sponsors like Total and Engie which fund our development research program and enable us to develop new products. We are developing different modules of the software too. We monitor our clients’ equipment and size their rigs for instance. We also simulate the operating drilling conditions of our clients according to different environments and circumstances and today we work with clients on real time drilling monitoring and rig automation.
Our main competitors include some service companies that manufacture equipment including motors, drilling bits and stabilizers, and some of our clients. As we do not provide hardware we take pride in our independency and deliver opened drilling software and robust and objective engineering services. Following the tragic Deep Horizon accident, operators realized that they were ultimately responsible for drilling and had blindly trusted service companies. Regulation was done to prevent these events and operators started to staff their engineering departments, and are looking to buy independent software solutions. This trend has constituted a significant growth driver for us. We train operators’ engineers and provide software for advanced drilling modeling and engineering. We also conduct drilling optimizing services before, during and post engineering stage. Since 2010 many customers wishing to extend their drilling knowledge have solicited us.
As you mentioned, DrillScan has developed a unique software platform, dedicated to advanced solutions for the drilling industry. How important is the role of research and development to your company’s success in delivering innovative solutions and what portion of your turnover do you directly allocate toward R&D?
Until 2006, we dedicated 80% of our budget toward R&D. In our business we are compelled to conduct significant research to develop scientifically robust solutions. Today, we allocate 20% and carry R&D and software development in France. Our first sales team was introduced 12 years after the inception of the company in 2013. What we find rewarding is that the big majors who also have R&D teams, still turn to us to seek the most advanced solutions available on the market.
You were awarded the innovation prize by Total for the conception of the BHA Management® software. What is so unique about BHA Management? Was this a culminating point in the evolution of DrillScan?
This model serves to analyze the ability to drill a given well trajectory. We simulate all steering equipment to fulfill this objective and correctly position well in the reservoir. During a one-year campaign, we were able to verify that we had good result predictions compared to field data. In addition, a few wells had problems. We managed to explain why we couldn’t achieve the goals and came out with certain proposals and solutions. Since then, our customers have had no issues in terms of directional drilling. With our software, customers only need to drill one well in order to determine the underlying potential and can improve impressively the learning curve between one well and another.
Your prestigious list of clients includes major E&P players like Total and Shell. Keeping in mind that plummeting hydrocarbon prices are severely impacting the upstream sector, how are you coping with your clients’ intensifying expectations and increasing spending cuts?
This trend is affecting the entire value chain. Every customer is seeking cost-reduction when they ask a quote from us. Our software is recognized as the most advanced one for complex wells. Unfortunately, many complex projects have been delayed. We have been resilient thanks to our American affiliate which handles activities in shale oil and gas and onshore. Our DrillScan solution applies to any well: conventional, unconventional, horizontal and so on. Right now operators are accepting to make smaller margins. Overall, the price of our solution is marginal in contrast to the savings ensued. As a result, our clients are more interested in long-term execution rather than cost saving on the engineering side. We have less complex projects but are actively solicited when it comes to optimization. Our clients have recognized that they can drill the same well more efficiently by focusing on engineering.
What was the strategy that led to the establishment of a subsidiary in Houston? Are there any future prospects for further local presence?
I have been travelling a lot to meet customers around the world. The customers I met were impressed by what we can offer and often praise our research efforts. Drilling communities need support. Big players operate worldwide, and DrillScan needs to ensure proximity in order to secure market shares.
We cannot succeed without local presence and regional support. Secondly, drilling is carried differently according to regions. We therefore need to have a thorough understanding of different regional drilling specificities. We started this process in Houston and have now inaugurated commercial offices in Rio and Moscow. Our ambition is to open 5 new affiliates across the world in the near future. Our services will progressively encompass maintenance and support in addition to our core business. Although we are more competitive in respect to high end products, we are also capable of delivering more basic solutions.
You publicly commit to guaranteeing your clients with the strictest set of HSEQ standards during the course of projects. How does this pledge translate into your everyday operations?
Every professional working for DrillScan must abide by our internal QHSE chart. Drilling operations and executions must fully respect this chart. When it comes to engineering, we strive to lower down the risk of drilling parts. There are high risks associated to drilling which needs a proper analysis, prevention and mitigation actions. Having a robust engineering drilling software solutions is a key and essential to address all risks at all stage of the drilling process. . We are very committed to mitigating risks. I really believe that QHSE has evolved tremendously across the years. It is now deeply enshrined in the values of the oil and gas community. 10 years ago, certain actors would disregard QHSE. Nowadays, this has become unthinkable. Oil and gas is a very competitive market.
How do you explain that the French public perception of oil and gas remains tarnished?
We have been drilling wells since the 1950’s and have even fractured certain wells in the 1960s. I really think that the 1999 incident off the coast of Brittany has impacted the perception of oil and gas in France. Culturally speaking there is a different perception between the people and the business world. For example there is a project, which aims at reducing emissions by re-injecting CO2 in the ground. This is still poorly perceived because we need to drill wells to do so and there is the idea this could damage the biodiversity. This initiative has fiercely been opposed by environmentalists. We must remember that Government officials control permits, therefore oversee our activities and have established strict mining regulations which reduces risks considerably compared to the United States where these activities can be conducted without such very tight constraints. I believe that we have the adequate technology to introduce a shale oil and gas activity in France.
DrillScan is still an independently owned company. Does this constitute a valuable asset in contrast to your competition? What are the disadvantages of this ownership structure?
DrillScan is independent in the sense that we are not linked to any service company or contractors and we do not manufacture or run any equipment. We want to prove to our customers that what we deliver is scientifically objective. We position ourselves on the market as third party independent player in-between the operator and the services company. We have invested significant personal funds into the company to remain independent and are now ready to welcome an external financial partner to enhance the development of the company. We need to make sure that we maintain this image. Our financial backer must be independent itself. We have also received support from the French Public Investment bank.