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Integra brochure
(pdf - 1.6 mb)


August 03, 2007

Integra Group: drilling facility restructuring in full swing


Integra Group is amid profound reforms. The momentous event of the past few months is the formation of Integra-Bureniye on the basis of the First National Drilling Company (Pervaya Natsionalnaya Burovaya Kompaniya), Sever and Argillit driller companies and Integra-KRS business unit. By early next year Alliance will join the company; Prikaspiyburneft production operations will also be integrated with Integra-Bureniye. Thus, the company will manage all drilling operations of the Integra Group. Alongside active restructuring, Integra-Bureniye also continues to upgrade its rig fleet.
In 2006 the First National Drilling Company (PNBK) head-quartered in Izhevsk was renamed Integra-Bureniye LLC, next year joined by a number of drilling and workover companies such as Nyagan-based Sever and Nizhnevartovsk-based Argillit drilling companies and Integra-KRS also based in Nyagan. Alliance drilling company is expected to join Integra-Bureniye by early 2008. Production operations of Prikaspiyburneft (PBN-Group) with all its subdivisions will also join Integra-Bureniye. Reorganization is expected to complete by early next year.

Drilling, workover and project management as a line of business is very diverse. Integra-Bureniye renders services along two basic lines of business – drilling and workover. Key services of the company include operating and pioneer well drilling up to 6000 m deep, including autonomous, elimination of complicated accidents on oil and gas wells, ratholing and lateral hole drilling, drilling associated operations (rigging-up, cementing, etc.). Integra-Bureniye also performs well maintenance and workover. In addition, Smith Production Technology, a part of Integra Group, offers its customers integrated project management, a service that includes field development, planning and preparation works along with management of drilling operations and drilling process optimization.

The key policy of Integra-Bureniye includes upgrading and build-up of rig stock and development along three lines – build-up of drilling operations in mature (ready) regions, development of the Eastern Siberia as a new and perspective region and development of branching-based (side-tracking based) workover.

Primary regions of operation include the Volga-Ural, Eastern and Western Siberia, where the company works with such companies as Gazpromneft, TNK-BP, Rosneft and other. Integra-Bureniye operates around 80 rigs, 50 of which are on the go. Some rigs are under repair, but there are also rigs beyond repair. Handling the task of rig stock re-equipment and build-up the company is actively engaged in restoration and upgrading of idle stock. In the next couple of years Integra plans to purchase around 10 mobile and 5 heavy-duty rigs. In view of the Eastern Siberia development, in the long term the company might transfer to the region (that already has 7 heavy-duty rigs) a few more rigs from the Western Siberia and the Volga region. The bulk of the rigs will be top-driven.

Alongside active upgrading of rig stock, Integra-Bureniye continues its dynamic reorganization. Let’s try and understand what the drilling block reorganization is all about and what the goal is.

What is a drilling company in Russia today? A conglomerate incorporating various lines of business with up to 40% comprising auxiliary production such as cementing, directional drilling, rigging-up operations, transport, drill and injection fluid service, etc. Business organization with core operations joined with auxiliary production proved inefficient, non-transparent and difficult to control. To improve the company’s performance, the first thing is to introduce the “internal customer” system represented by Smith Production Technology, and second – core operations should be separated from the auxiliary services.

Transport units, warehousing operations and other services associated with drilling will be taken out of the company. At the first stage the motor-vehicle transport is being taken out of the drilling units. Particularly, the process is underway and actively proceeds in Nyagan; later it will involve Izhevsk and Usinsk.

Technical personnel are being transferred from Integra-Bureniye to the “internal customer” team. The next step will be separation of technological services such as cementing, rigging-up, slant drilling, etc., from the drilling companies. The new dedicated enterprises shall render services on a competitive basis not only to the project management team but to other customers too. This way Integra Group plans to at least minimize auxiliary production related costs and maximize its effectiveness and efficiency.

The main point here is that the company’s management plans to isolate fixed assets management and production management. The company will comprise two segments – the departments where the fixed assets are concentrated and the departments operating fixed assets. It can be explained the following way: let’s assume you need a rig to perform a specific task. Your engineers determine what kind of rig you need, while the equipment configuration experts provide you with a fully complete rig. However, once you have completed your task, you will need to return the rig in its original state. This approach might be useful in teaching a drilling company to handle expensive equipment with care and professionalism.

Running reorganization, Integra wants its every subsidiary to handle a specific service. Its ultimate goal is to create a system of independent first-class service companies, including, rig, management, cementing, slant drilling company and others meeting all the requirements and effectively and efficiently performing an integrated contract for any customer.

In other words, a drilling company would be divided into several components: the so called “rig” company having fixed assts (rig stock) and personnel will be at its heart. The center of this company will be located in Moscow with branches in Izhevsk, Nyagan, Usinsk, Urengoy, Irkutsk and Kazakhstan. Integra-Bureniye will be just a rig company operating only its own equipment and focused on its specialty. Being focused on using only its own equipment will help the company increase the equipment use and reduce repairs and accidents.

A separate business unit on the basis of Smith Production Technology company will deal with engineering support (tracking) of the drilling process. Today in the Russian market this company implements (handles) with general (master) contract projects, integrated project management and supervision. It will Smith Production Technology that will act as the “internal customer” for Integra-Bureniye, a company that manages drilling assets of the Integra Group, and for enterprises forming parts of technological service business. For any complex “turn-key” contract the “internal customer” team will engage Integra-Bureniye as a rig company to act as a contract drilling company on a daywork basis.

Such organization of operations is a new thing to Russia, though certain Russian companies with foreign equity (participation) use this very pattern; in the West operating along the above mentioned guidelines is a natural thing. Particularly, this concerns division of the company management functions into two parts – administrative and business-focused, and this is also scheduled for implementation in Integra-Bureniye.

Felix Lubashevsky, President, Integra Group of Companies:

“Having launched reorganization of the drilling block, we had several goals in mind: first – streamline the existing structure; second – attain a better and optimal utilization of the company’s production capacities; third – pool (combine) and generalize the operational experience of our experts. I am confident that this reorganization will improve the control over our business significantly.”

The company’s management also plans to change the driller labor compensation scheme. The West and many CIS countries have already introduced the international remuneration system which contemplates that the drilling companies operate at a daywork rate. The system means that the drillers are responsible only for their own drills and the crew, while the key parameter is the productive time. For “turn-key” drilling the drilling companies are responsible for the entire well construction process. In case of a serious accident at the last drilled meter or in the course of final works the crew loses everything earned before since it is responsible for the final (ultimate) product, the well in general.

Work and industrial safety and environmental protection service will also undergo review and reorganization. This has already brought its results: for example, two well-workover crews have been cited by the customer – Salym Petroleum Development, a Shell subsidiary, – for incident-free work during the year. Both crews were rewarded. Soon the company will introduce a staff motivation regulation to encourage incident-free work, “working to rule.”

Everything mentioned above will be possible only if the companies comprising the Integra Group are duly staffed with professionals. Currently we have a deficit of such professionals. This is why the company closely monitors the graduates of the country’s six leading petroleum higher educational institutions and actively works with young experts. There will be a training center for Integra-Bureniye staff training and career development.

Management of the Integra Group has elaborated the business reorganization scheme with due regard to the company’s rather aggressive growth, applicable Russian regulations and with the goal of enhancing business performance. Yet Integra-Bureniye still has a long and hard way ahead. However, at Integra they are confident that this is the only way to become effective, transparent and leading oil related service company in Russia.

Reference:

Integra Group of Companies is one of the largest Russian providers of drilling, workover and geophysical survey services to O&G sector, along with offering integrated project management in all principal O&G regions of Russia and many CIS countries.

Enterprises comprising the Integra Group are also engaged in O&G equipment manufacturing (production). At this stage Integra has consolidated more than 40 oil related service and engineering enterprises rendering services to the Russian O&G sector. The Group currently employs around 19 thousand people.