HOUSTON—The take-two-aspirins mentality of some shale players when it comes to concocting the best prescription for releasing trapped oil from shale rock is not always the best move.
This is according to John Chisholm, president and CEO of Flotek Industries, a global supplier of drilling and production products and services that is perhaps best known for its use of orange oil, a key ingredient of its Complex nano-Fluid (CnF) technology.
“For whatever reason in this industry, there are these rules of thumb that get passed down from great-grandfather to grandfather to father that no matter what the chemical is, it’s always a gallon per 1,000,” Chisholm said. “It’s like your grandma told your mom to take two aspirins for a headache. It’s always passed down.”
Flotek says it has changed that line of thinking with some of its products that include CnF, which aims to optimize hydrocarbon flow in reservoirs by impacting pressure, solvency and droplet size, and Pressure-reducing Fluid (PrF) technologies, which works to optimize horsepower. Speaking to a group gathered Oct. 27 at Flotek’s new Global Research and Innovation Center, Chisholm explained how the company’s “brainiacs” designed PrF to use 20% less chemical but achieve the same performance in terms of friction pressure reduction.
Sometimes, less of one chemical may be prescribed and more of another than is traditional to help improve well performance, he said.
Those wanting to know why, including potential clients and other guests, get to find out by watching Flotek employees working at the company’s new 50,400-square foot (sq ft) facility, an upgrade from offices in The Woodlands, Texas, described by Chisholm as a “convoluted mess.” The facility also improves the client experience. It has 33,019 sq ft of interactive workstations and a large room, suitable for hosting guest lectures, with 11-ft tall glass walls that allow visitors to see employees as they work.
Instead of customizing a chemical solution from its 50-plus versions of CnF based on drill cuttings, cores, oil samples and water samples sent by the client, and then notifying the client of its decision, Chisholm said clients can now see the process take place at Flotek. They get to see, for example, friction flow loops carrying chemicals through aluminum piping at certain rates and pressures and how they react, mimicking the downhole environment of horizontal wells.
“It’s really about creating the awareness of the capacity to create these types of technologies,” Chisholm said.
His words were delivered as companies worldwide continue to seek cost-saving, profit-growing technologies to improve well performance. Market conditions have also driven companies to work smarter, form partnerships and consider new ways of doing business.
Flotek essentially eliminated the middleman when it opened the Flotek Store in 2015, although the company still sells to producers and service companies. The online sales platform allows E&P clients to purchase products and services directly from the company. It was not atypical for a pumping company to mark up the price by 2-to-1 or 3-to-1, he said.
The move “introduced trust and transparency into the oilfield services market,” Flotek said, noting it also compressed prices.
When prices are closer to what Flotek is charging service companies, use of the products continue to increase even when completion activity drops off, Chisholm said, noting most of Flotek’s demand is currently in the Permian Basin. “When you have a transformational technology, you have to have a direct path to end-user.”
Other companies have made similar moves in other areas: Pioneer Natural Resources Co. (NYSE: PXD) has its own sand mine.
Chisholm called it a “rewiring of the industry.”
“We’re kind of like Amazon and a lot of these service companies are kind of like department stores,” he said, later adding “There’s no doubt we’ve been a disruptive force. For years and years and years, chemistry was in the shadows. We put the focus on chemistry.”
New technology could be brewing.
- In Argentina, one of the world’s top lemon-producing countries, Flotek is working with YPF’s technology arm, Y-TEC, to figure out how to use lemons in its CnF. The purity of laminate from lemons is greater than oranges, Chisholm said.
- Flotek’s acquisition this year of International Polymerics Inc., which supplies guar to the oil and gas industry, could mean something is on the horizon in the area of polymers. Flotek has “some tricks in store” on how to evolve the long-time commodity, he said, advising everyone to stay tuned.
Word on the company’s third-quarter 2016 results is expected this week. The company also plans to give an update on a U.S. Securities and Exchange Commission (SEC) inquiry into Flotek’s proprietary software FracMax during the earnings conference call scheduled for Nov. 3.
Chisolm told Hart Energy that the SEC is on its own timeline and everything is with the federal agency.
“We’re confident of what the outcome is going to be, and we hope that it gets wrapped up by the end of the year,” he said.
Velda Addison can be reached at firstname.lastname@example.org.