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KCA Deutag Drilling Ltd is the UK’s largest drilling contractor employing some 3500 staff worldwide and is a wholly owned subsidiary of Abbot Group plc, one of the largest and most successful UK oilfield services groups. The company’s primary role is as a drilling contractor. It also offers a range of services including world-class, in-house conceptual design, drilling facility engineering, drilling engineering and well services. This sets the company apart, enabling it to provide its clients with innovative and cost effective solutions.
Peter Milne, the financial director for KCA Deutag, states: “Basically we are an oil drilling and engineering company. We provide respective offshore drilling, and we also provide production platform drilling services where we supply the drilling crews and management of the drilling on the fixed production platforms which are owned by the oil companies.”
KCA Deutag was the first contractor to carry out platform drilling operations in the UK sector of the North Sea in 1973 following the award of a contract by BP for the development of its Forties Field. Today, the company is the largest platform-drilling contractor in the North Sea with more than 19 platform contracts employing about 750 personnel offshore. Its clients include BP, Britannia Operators, ExxonMobil, TotalFinaElf, CNR, Nexen and Venture.
In conjunction with the drilling operations the facilities engineering department has developed a major capability in the engineering design, construction and installation of major rig upgrade projects. These include upgrades to carry out extended reach drilling programmes, the installation of cuttings re-injection systems and rig improvements to make drilling operations less hazardous and more efficient.
KCA Deutag’s business development strategy includes investing in viable drilling rig assets to address its clients’ requirements. It is committed to its corporate objective which is to “be the preferred drilling contractor through measurable performance improvement” by managing operations to ensure minimum harm to people and delivering continuous drilling performance improvements.
KCA Deutag’s land drilling services are managed from Bad Bentheim in Germany, which was formerly the headquarters for Deutag before its acquisition by the Abbot Group in 2001. Founded in 1888 in Aschersleben, Germany, the land drilling facility brings more than 110 years’ experience to the development of drilling and workover solutions. The breadth and depth of experience the company has gained over this period covers every type of contract under a variety of geographical, political and economic conditions. The services performed by KCA Deutag include exploratory drilling, complete field developments and workover contracts for all types of drilling.
In addition to its substantial North Sea platform drilling operations, KCA Deutag has undertaken international projects in some of the most demanding environments of Central Asia, The Middle East and North Africa and this has proved extremely beneficial in some of its new operating areas such as Azerbaijan, Iran, Siberia and Sakhalin Island. The company is currently working on a contract with BP in the Caspian Sea. Peter explains: “It’s a major five year contract to provide the drilling services on five production platforms. They’re all new platforms that are being built and we’ve carried out engineering services in respect of the design of the drilling facilities on those platforms. The first platform went to work in December 2004. There’ll be two more platforms that we’ll start in 2006, one in 2007 and one in 2008 so it’s quite a long process essentially. We won that contract based on our expertise from the North Sea and also we were competitively priced.”
Peter continues: “The Caspian Sea is a market we would like to move into more. It has got potential, and not only for Azerbaijan which is where the BP contract is. We also work offshore near Kazahstan and in the Caspian Sea for Agip KCO. We’d like to further expand activities in the Caspian Sea, and also in a number of countries around that area but the North Sea is still a very important area. It’s not a growing area, activity has declined over the last two to three years, but it’s still a very important area of activity for us.”
Oil prices are very high at the moment, improving opportunities in the drilling industry. Peter comments: “At the moment the outlook is very promising for the drilling industry. We believe the oil price will stay high in the short and medium term which increases the number of opportunities that there are for drilling whether it’s offshore or onshore. A higher oil price makes the field development and field production more viable.
“To maximise the opportunities in the market we have identified certain core markets that we are concentrating on and those core markets are North Africa, the Middle East, the Caspian area and Russia. They are the markets where there will be the greatest growth. We also carry out our onshore drilling or land drilling where we own all the assets. We supply the land rigs along with the crews which is different from offshore where we don’t own the hardware, the drilling facilities on the production platforms are owned by the oil companies. For land drilling the market opportunities are greater and we are investing in new assets, upgrading existing assets and investing in new land rigs to address those opportunities.”
KCA Deutag firmly believes that an incident and accident free environment is possible. It is committed to providing a safe and healthy place of work. In order to achieve this the company requires all employees and contractors, be they managers, supervisors or members of the workforce, to commit to ensuring that they take all practicable steps to provide an incident and injury free environment. Peter says: “The workforce is the most important thing for any business. For a drilling contractor our health and safety record and the competence of the other drilling crews that we put out on a contract are critical, and the workforce is absolutely key to that. We supply the hardware but if you haven’t got good competent drilling crews then you’ll soon lose your business. We carry out a high level of training particularly as we expand overseas. For instance we’ve expanded rapidly in the Caspian area and Azerbaijan over the last couple of years and we’ve got a very intensive training programme for local staff. It’s our philosophy that in any country we work in we should employ the highest number of local staff as we can, whether that’s Azerbaijan or Russia or West Africa.
I think it’s right that in any country we go to the local people should enjoy the benefits of employment with an international company and it makes good business sense. Often the terms and conditions that we can offer are above the average in the countries concerned. We have a very comprehensive training programme both for local staff on a worldwide basis and for our own European crews as well.”
KCA Deutag is committed to ensuring the high quality of the services it provides to its clients and to ensuring this high quality continually improves. Peter comments: “The contracts that we have are all multi million dollar contracts because they are all fairly long term. Our contract can be from a matter of a few months right through to five or seven years so we have very good contact with our customer all the time. We’re working on the customer’s site whether it’s an offshore platform or a land site. Through that day to day contact with the client we try and ensure that we are meeting their needs. Normally there’s a mechanism for contract reviews with the various clients on a very regular basis so if the client does have issues then they can be addressed with us very quickly and can therefore resolved.”
Peter discusses the company’s plans for the future: “We’re continuing to invest in assets. Sometimes we can see any number of very good opportunities in a certain market and to address those opportunities we have to either move assets into that market, build new assets or refurbish assets so we’re going to concentrate on those core markets and trying to expand our share of the market there.”
Peter concludes: “The secret of the company’s success is being proactive to our client’s requirements as well as being reactive. In drilling terms in a worldwide basis we are quite decentralised so that people can make decisions very quickly rather than having to go through a great hierarchy before decisions can be made so we can be quite flexible and proactive to our clients’ needs.”
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