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Interview

with Even Gjesdal, CEO, CUBILITY AS

08.04.2013 / Energyboardroom

What is the status of Cubility after commercializing the company five years ago and would you start by introducing this technology to our readers?

The Mudcube acts as a solids control system provider, replacing the widely used shale shaker. Unlike the Mudcube, the shale shaker has barely seen any improvements compared to its first versions seventy years ago. The shale shaker processes drilling material through heavy vibration to separate the fluids. By contrast, the way the Mudcube works is unique, separating the cuttings from the drilling fluids or “mud”, and eliminating all the exposure of oil midst, vapors, and vibrations. The Mudcube uses a rotating filter belt, with a pressurized system underneath that acts in a similar way to a vacuum cleaner.

The Mudcube is patented and is operational on any platform. It significantly reduces noise levels and outperforms on all HSE requirements compared to any other system. The Mudcube adds real value to operators, although it has taken us seven years, between 2005 and 2012, to achieve the commercialization breakthrough. Maersk Drilling supported by Dong Energy and Talisman Energy have been the first to equip their platforms with our Mudcube and have seen even better results than they expected.

After the first commercial well, we were able to document a significant reduction of mud consumption, waste levels generated, reduction of chemicals needed to recondition the mud properties, and need of other equipment on board. In the end the separation phase of drilling fluids from cuttings obtained with the Mudcube is significantly better than any other solution.

The real issue at hand with other equipment in the market, is their intolerance for other instrumentation, control and monitoring systems. For instance, the vibration is so strong that one cannot use integrated cameras to observe what type of material that is being processed. Whereas with the mudcube, the vibration is so low that even a coin placed on top would not fall. Therefore, cameras can be added, and for the first time in history the driller can sit in his cabin and see what he is drilling. In addition, the personnel operating the MudCube may do so remotely, and people onshore can monitor the progress at all times. This is a significant improvement for the whole industry.

The Mudcube technology is in the critical drilling line of equipment. Without a functioning solids control system on board, the whole operation stops. This partially explains the current skepticism to implement new solutions and technologies on board.

The topdrive systems used for drilling at a stage where the whole industry did not believe in this technology, are today spread widely around the world. We believe the Mudcube will enjoy the same outcome as its value for the customer makes it more competitive on commercial levels and HSE standards as compared to any other solution. HSE in Norway is extremely important.. We believe that Mudcube’s great performance in harsh environments combined with its financially sustainable value case will forever convince the customer.

How has this technology been successful in replacing the existing shakers?

The Mudcube is not a shale shaker replacement in the sense that it also pursues additional parts of the value chain: – Mud supply, shaker suppliers, and waste market. The Mudcube is more of a system, than a replacement for a piece of equipment.

What has been the impact of this technology on the operations of Maersk Drilling, Talisman and Dong Energy? How has this changed the way they operate?

These companies have a common technology gene and the same commitment to bring the industry forward. Statoil also plays an important role towards the industry’s acceptance of new technologies. We are now field proven by Statoil, which is their highest qualification level.
Even though the validation process of a new technology entering a market is long, we feel that the recognition of our technology from the leaders of the NCS will give us the support to continue our quest in other waters. Statoil is crucial to our technology and we are aware that other companies outside of Norway trust Statoil’s choices for newly implemented technologies.

What have been the barriers in taking this technology to a higher market share?

This challenge is related to the criticality of the equipment. We are replacing a long-established technology in the form of the conventional shaker; many companies are not willing to let go so easily. In a sense I can understand their inherent resistance, as they are incentivized to have as much uptime on the rig as they can. Thus, you need to be patient to penetrate new technology in this market. But the MudCube is one of these few disruptive, game changing technologies where the uptake will go faster.

Over the years we have gone through a series of tests to qualify our technology with Chevron, ConocoPhilips, and Statoil among others. Historically, the NCS in particular had played a different role to all geographies. Despite other regions having a strict financial target to retrieve oil rapidly and move to the next field, this strategy has not been allowed on the NCS. In Norway there has been a constant focus on developing new technology in order to increase oil recovery rates.

We believe Norway to be the best place to start our technology on its international road to success. Of course, given the potential in other markets, we are planning to commercialize our technology in other countries in the years ahead.

Snøvit and Skrugard are far away from the logisitical bases. How do you see this developing the need for your type of solution?

All the major operators and service companies focus on remote and integrated operations. This initiative fundamentally supports our MudCube technology which is the only system which can be remotely controlled. The whole industry is being pushed to adapt more integrated operations and we are bound to see many developments in that area in the coming years.

Given your background as CFO, how do you support this growth financially?

We have invested a significant amount to develop the MudCube technology and to support the company’s financial structure. We feel that Stavanger is a special place to start new technology projects and not every company can survive for the first seven years without commercialization. Venture capitalists as well as state funding have been supporting us over the years. Without them we would not be here today. Innovation Norway has played a critical role in the development of our technology, and we are currently planning a new project with them for a new technology.

Compared to your previous roles at Roxar or Viking Moorings how do you compare the access to capital?

We are perceived as a company which develops disruptive technology, and our positioning has secured a constant flow of capital access. Our struggle has mainly been to convince the industry of the benefits of our technology, not to gain access to capital.

As your system has now proven its qualities to Norwegian operators, you are moving to international players. How do you see your internationalization strategy in the next two to three years?

We have now opened two new offices, one in Houston and the other in Aberdeen. We are about to start similar testing processes as with Statoil with some of the super majors present in other geographies. Soon our market penetration in Norway will allow us to focus more on other international markets. Therefore we are making the necessary preparations and adjustments to tackle the foreign markets with determination and the best value proposition for the customer.

Before we were only testing our technology. Today, our equipment is on the platform and performing every day. We are forecasting a significant growth in the years to come as the market is enormous and the MudCube technology can solve the some of the challenges the industry faces within HSE, reducing waste levels and mud consumption alongside with an improved drilling performance.

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