The ROGTEC Interview: Evgeny Boldyrev, Executive Vice President, NewTech Services

Russian energy sector has been under pressure from low crude oil prices over the last few years pushing operators to be more cautious about contractors as well as pushing contractors to increase their local content. NewTech Services is one of the leaders who continuously expands their local manufacturing. Evgeny Boldyrev, NewTech Services Executive Vice President, discusses prospects and competitive advantages of localizing equipment manufacturing in Russia.

NewTech Services Holding Limited is accelerating the development of the in-house technical services in Russia. The group has developed production at its three plants in Russia: still-body and matrix PDC drill bits in Kurgan, downhole tools and well completion systems in Perm. Why do you believe it is worth localizing?

Localization is an effective import-replacement approach. It is an efficient approach for technology development, creation of high value added workplaces, competency development programs for local professionals and deployment of standardization programs as well as supplier development. North America, Europe and China are recognized leaders in product development and manufacturing, whereas Asia, Middle East and Latin America significantly lag behind. However, Russia possesses all product development capabilities combining both low cost and high technology capabilities. The local content of such manufacturing will amount to 90-100% depending on the technology and preserving the quality equivalent to the US and EU manufacturing. Hence, Russia has excellent opportunities for localization of high technology at low cost. Our ultimate goal is to develop and adapt high technology to make innovative products available in Russia.

Biggest oil services companies and Russian companies develop their production facilities on the Russian market.

That is true. Many Russian companies develop their in-house manufacturing; however, the quality in many cases is still doubtful. Localization among the biggest oil services companies is quite limited. Only one big player truly aims to localize technology development and manufacturing. Others do not prioritize it due to different reasons. NewTech Services is a new symbiosis between Russian and Western technologies positively affecting local.

Do you think Russian technology products are competitive in quality and cost?

Very competitive, the quality is equivalent to the western manufacturing and the cost is less subject to currency exchange fluctuations. Producers often face a dilemma: the “big four” expensive first-class quality products or the Chinese cheap poor-quality products. Our local manufacturing is the golden mean between two extremes.

When we speak about the competitive advantages, do we speak about the competitive advantages on the Russian market only?

Not only. When we speak about the competitive advantages, we mean the oilfield services market in general, not only in Russia. All our plants implemented Quality Management System. All our products manufactured in Russia are API certified. We see CIS, Europe, Middle East, Latin America and Africa in the nearest future as the prospective markets.

You mentioned the symbiosis between Russian and Western technologies within the group. What did you mean?

There are two ways for such a symbiosis. First, we transfer western technology and western machines to manufacture these technologies locally. Second, we produce local technology on best-in-class machinery in-house.

Our PDC plant in Kurgan is an example of a complete transfer of western technologies and machinery. It is a full production cycle manufacturing facility equipped with the state-of-the-art machinery to produce first-class quality matrix and steel-body polycrystalline diamond compact (PDC) drill bits. However, our Russian in-house engineering team pushes the boundaries to design, adapt and improve western technologies. We pioneered PDC drill bit manufacturing in Russia in 2012 and still claim to be the one on the market.

Another example is our well completion manufacturing facility in Perm. Frontier RU, a branch of Frontier Oil Tools (USA), opened its doors in March 2020 and deployed best manufacturing practices for swellable packers, liner hanger packers, multi-stage fracturing systems and other completion equipment. And again, we have pioneered the highest packer V1/V0 design-validation grades meeting the strictest requirements of test-acceptance criteria (zero leakage gas test and bubble tight gas seal).

Hydrobur-service is an example of Russian native technologies manufactured at Western best-in-class machinery. The plant in Perm is equipped with DESMA stator injector moulding machine, two-station spray rig (which is unique for Russia) and Weingartner high-precision machine to produce single- and multi-lobe rotors and stator cores for first-class quality positive displacement mud motors (PDMs). We also produce double-acting hydraulic drilling jars, hydraulic fishing jars, circulation subs, weight-on-bit tools and other drilling tools. All products are engineered in-house patented by Hydrobur-service.

Our goal is to make a localization manufacturing project a better technology development or adaption supported by our continuous focus on research and development (R&D).

Please specify the technology products engineered by Hydrobur-service.

Hydrobur-service invests into research and development of its own positive displacement mud motors (PDMs) and a new generation power sections for extreme drilling environments. HMR (“hard-as-metal-rubber”) composite power sections allow for higher torque and more revolutions per minute with its length being 1.5-2 times shorter than a standard power section. We have been in field trials in more than 30 wells in Volga-Urals and West Siberia in 2019 and early 2020. We are now ready for a mass production of these HMR composite power sections. We are also a recognized producer of PDMs for standard operating environments with standard or even wall power sections and fixed or adjustable bent housing.

Process optimization while manufacturing is another priority of Hydrobur-service alongside R&D. For example, our double-acting hydraulic drilling jars and hydraulic fishing jars have a set of featured standardized assembly components that allow for the assembly of either of the models while manufacturing without changing the assembly line. Our customers also benefit from such a design. They do not have to worry about different spare parts and may cover all the drilling and fishing jarring needs with one set of spares as well as they may re-assemble either of the models at their service bases which would not be possible with a completely different jar design.

Our wide range of drilling tools covers all customer needs for optimized performance and maximum efficiency of the drilling BHA. In addition to PDM and hydraulic drilling and fishing jars, we manufacture multiple activation bypass systems, oscillators, drilling shock tools, different valves and filters. Our patented Weight-on-Bit Tool stands alone in this range. It is designed to ensure even axial load, to prevent shock and vibration. It does not create any differential pressure, thus, causing no overpressure
to mud pumps.

All Hydrobur-service products are patented.

You also mentioned the V1/V0 design-validation grades for well completion equipment.

In early 2020 Frontier Oil Tools (USA) successfully completed the API 19LH V1/V0 testing of its proprietary Liner Hanger Packer showing a zero gas leakage. F1 Liner Hanger Packer is now qualified for use in the API 19LH Grade V1/V0. The packer passed a temperature cycle test of 150˚C and proved tight-gas seal at 10 000 psi. And, in July 2020, Frontier RU manufactured its first V1/V0 Liner Hanger Packer as a result of a full production cycle localization project for well completion systems in Russia launched in March 2020. Frontier RU (Perm, Russia) is a branch of Frontier Oil Tools (Houston TX, USA), both being the subsidiaries of NewTech Services Holding Limited. However, our well completion manufacturing in Russia started much earlier than 2020. In 2018 in Hydrobur-service, we launched manufacturing of swellable packers; later in 2019, we expanded our capacities to multi-stage fracturing plugs, stingers and other equipment. Now in 2020 we maximized our localization for well completion systems in Russia. All completion products manufactured at Frontier RU use Frontier’s CNC machines and technical specifications, which allow for no additional validation. As of today, Frontier RU is the first and only manufacturer of Grade V1/V0 completion systems in Russia. Grade V1/V0 manufacturing puts the company’s completions equipment at the upper end of the technology on the market for maximized oil recovery at optimized cost.

We discussed NewTech Services’ localization projects. However, you have a broad range of research, development and manufacturing facilities outside Russia. What’s next to localize?

Yes, our research, development and manufacturing facilities are wide-spread abroad, but not only. Our TechGeoBur engineering team in Samara develops electromagnetic MWD systems and we may add this R&D facility in Russia to the list. However, most of our research, development and manufacturing centers are located outside Russia and comprise of Frontier Oil Tools (completion systems); Wolverine Oilfield Technologies, Frontier MWD Systems, SMS Precision Tech (RSS/LWD/MWD systems) and Frontier International (MPD) in the U.S.; and Remote Measurement Systems Limited (LWD/MWD systems) in Great Britain. We do plan to expand our localization projects and see managed pressure drilling equipment (MPD) as the most potential candidate for our next project. We may start with assembly and servicing of MPD systems at Frontier RU and see a potential for a full production cycle MPD facility in Russia. We will definitely continue to review other businesses for localization in Russia.

About NewTech Services Holding Limited

NewTech Services (NewTech Services Holding Limited) is an international oilfield services company founded in 2009. NewTech Services Holding Limited supplies technology products and services to the oil and gas exploration and production industry in Russia and CIS countries, Europe, North and South America, Middle East.

NewTech Services develops technology and expertise within 4 Business Divisions: Drilling Services, Completion Systems, Integrated Project Management, Captial Equipment Sales.

The company has offices in Russia, Belarus, Kazakhstan, Uzbekistan, Azerbaijan, Ukraine, Venezuela, Argentina, Serbia, Saudi Arabia, Oman, the USA and the UK with the headquarters in Moscow, Russia and Houston, USA.

The ROGTEC Interview