Oil Industry mobilization and demobilization

Scroll through any set of accounting books addressing international or domestic petroleum operations and under the heading of “Costs” will be listed the mobilization and demobilization of oil and gas field drilling machinery, equipment, supplies, and personnel.

There is no disputing that oil is the driving engine of Alaska’s economy, a truth that can be authenticated by its frequent media coverage and witnessed by the many who fly over Cook Inlet and see the signature flame exhaling from a rig pipe.

The drilling part of the oil and gas equation lies with exploration and development drilling, and both require equipment and infrastructure to be set up and then taken down, or in industry parlance, mobilized and demobilized.

Exploration drilling refers to drilling in areas where there is some uncertainty about the formations being drilled. Generally, these geologic formations have not been routinely drilled and mapped. This is where the term “wildcat drilling” comes from. Petroleum explorers have a good idea of elements beneath the surface, but drilling has not begun. The value in these wells is in the information they provide the operators: whether or not there is oil or gas.

Exploration drilling can happen onshore and offshore in areas including Cook Inlet, the North Slope, and on the Beaufort and Chukchi Seas.

Onshore and offshore rigs are the most prevalent expense and notable equipment brought to and removed from Alaska when it comes to petroleum extraction. Whether to the shallow Beaufort Sea or the deeper Chukchi Sea or other Arctic waterways, international and local petroleum companies expend enormous amounts of time and capital to bring and remove equipment. Baker Hughes has issued its monthly global rig count and analytics since 1944 for the petroleum industry, and as its website confirms, the counts “are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing, and processing hydrocarbons.”

Nabors Alaska Drilling

Nabors Alaska Drilling has been performing Arctic exploration drilling in Alaska since the early 1960s and operates the largest land drilling rig fleet in the world with approximately five hundred rigs working in twenty-five countries. Nabor’s general manager Dave Hebert delineated that remote exploration drilling in the Arctic requires rigs that are specifically designed to operate in Alaska’s harsh winter conditions.

There are two rig designs: large wheeled, self-propelled and truck pulled rigs where each module can weigh as much as 2.8 million pounds or light-weight components style rigs that can be moved by trucks or Tundra Cats. The smaller rigs can be moved in loads as light as forty-five thousand pounds. Larger wheeled rigs require construction of ice roads for transporting across the frozen tundra. Tundra Cats are capable of moving component rigs over the tundra without the need of ice roads. Moving these monstrous units in and out of Alaska illustrates the process and challenges of mobilization and demobilization.

Exploration rigs are generally dispatched for mobilization from Nabors’s yards in Deadhorse. The mobilization process varies from days to weeks based on proximity to Deadhorse. Winter exploration work is generally between early January and late April. Insuring that rigs and people are ready and available for the short winter season is no small accomplishment. Each rig can employ as many as fifty Nabors personnel alone, and this does not include all of the operator and service provider personnel required to successfully complete each exploration project.

Land rigs like ones Nabors operate can drill exploration wells onshore from ice pads or offshore from manmade ice islands. Nabors has past experience with drilling from operator-provided ice islands in the Beaufort Sea. Ice island drilling can be accomplished in areas that are relatively shallow in depth and close to shore. Most current producing island projects have been within six miles from shore, Hebert noted. In any scenario, it takes massive personnel and planning to mobilize and demobilize operations..

Development drilling is the opposite, as in Prudhoe Bay for example, where many wells have routinely penetrated all formations. The geologists know what they will encounter before they ever put a bit into the ground. They know where to find the oil, so the well is designed for drilling at an appropriate target spot to produce oil. Even so, demobilizing and mobilizing for this type of operation as opposed to exploratory drilling requires complex timing and execution, with companies like Kuukpik, Doyon, and Nabors performing a range of rig installation and operation services.

Fairweather

However, there is a lot more being mobilized and demobilized in Alaska’s oil and gas fields than just rigs. Take, for example, remote site airports in Prudhoe Bay.

Consider inclement and brutal Arctic weather in conflict with the urgency for safe and adequate airstrips to land a plane filled with personnel, supplies, and equipment or protection from roaming polar bears and wildlife predation in concert with on-site medical services and weather forecasting at a remote summer reclamation site.

It’s what reality TV shows are made of—and a very important service provided by Fairweather LLC.

Fairweather provides support services to Alaska’s natural resource industry. The company offers a spectrum of remote services such as medical support, meteorological and oceanographic forecasting, and aviation and airstrip support.

Mobilizing a remote site airstrip is no small task. The process is typically started in the winter and requires several semi-trucks filled with lighting, cords, and other equipment to be driven from Anchorage north to the Haul Road and then on ice roads to Prudhoe Bay and adjacent sites. A crew of four or more builds lighting and navigational systems amidst an often temperamental weather environment.

“Fairweather has been providing airport support for natural resource development in Alaska for over thirty years and we are most proud of our efficiency and safety record. Our team of professionals works in very harsh environments and does so with the utmost attention to safety and wellbeing of the entire operation, and our safety record attests to it,” says Dave Marinucci, the company’s operations manager for Alaska who has lived in Alaska for thirty-eight years and has been with Fairweather for more than twenty-one years.

In April, Fairweather mobilized equipment at a 5,300-foot gravel strip on a frozen lake at Umiat on the Colville River 130 miles south of Prudhoe Bay for Linc Energy. In December, 2012, lighting was required for Apache Drilling across Cook Inlet from Anchorage near Tyonek.

Most recently Marinucci mobilized equipment for a 5,000 feet long by about 150 feet wide airstrip, including setting upapproach lights, threshold lights, and a temporary building to house a National Weather Service certified observer. Severe weather adds to the mix and necessitates loaders with forks and buckets, snowblowers, and a crew to clean off the strip for a plane to land with personnel and supplies.

From conex boxes to transportable structures to dual-generator units, the set-up and take-down process is cumbersome and time consuming. Fairweather has fine-tuned the process so little time is wasted. Speed and efficiency are the goals for logistical services of this nature, with no human or petroleum footprint left upon departure. The process takes approximately seven days and as many as eighteen hours per day with an electrician leading the project. Lighting of a remote Arctic airstrip includes as much as forty thousand feet of cable with scattered runway and Pulsed Light Approach Slope Indicator arrays. Demobilization is more grueling and time consuming and is a process that requires an equal amount of effort to properly execute.

“When it comes to the mobilization and demobilization process of oil and gas exploration and services, Fairweather and its collection of companies provide the support necessary for companies to explore on the North Slope without having to acquire all the necessary assets,” says Lori Davey, director of business development at Fairweather. “We are particularly proud of the fact Fairweather operates the Deadhorse Aviation Center, which includes two hangars, office space, a medical clinic, airport terminal, and more than twenty acres of lay down yard. This allows new oil and gas companies to come to Alaska where they can have the confidence the support will be here for them.”Fairweather also has a tool services contract with BP. The company provides a mobilization labor pool of fourteen personnel that support BP’s exploration in-field at Prudhoe Bay. Rig componentry can also be brought to Prudhoe by truck and Hercules aircraft.

The Fairweather crew logistics includes meeting drilling rigs from drill site to drill site with rig mats and plywood to support haul roads that are frozen in the winter and soft in summer.

Rig matting is typically nine by thirty feet in size and is laid across transport roads so half-million-ton-drill rigs don’t sink while in motion on the trucks. The process involves fork loaders distributing mat after mat along the corridors while other loaders retrieve the mat farthest back to then re-deploy in the front of the line. Slow but methodical, the result is large drilling infrastructure being moved without harm to environment or damaging rig equipment.

Sometimes when crews are working over the summer, mobilization and demobilization or airstrips and haul roads and weather equipment are not the only aspects of the job to worry about. How about a polar bear added to the mix?

Fairweather’s medical staff and paramedics often do double-duty mid-summer to October as polar bear spotters and guards. Trained Fairweather paramedics assist with weather monitoring and polar bears, courtesy of a 12 gauge shotgun with slugs. To date no bears have been injured or killed. Caution and proactive engagement to dissuade a curious Ursus maritimus from entering work sites have been successful.

“Fairweather’s medics are cross trained to provide additional support to their field operations so they can fill an additional role when not tending to sick or injured workers. From bear guards to aviation weather support to HSE [Health, Safety, and Environmental] support, we’ve essentially fine-tuned our mobilization-demobilization services for greater operational efficiency while affording our medics a chance to mitigate risks and ensure a safe working environment,” Davey says.

PRL Logistics

PRL Logistics provides logistics management, transportation, and support to oil and gas exploration and drilling companies. From the tip of the Aleutians to the Alaska Interior, along the Yukon River, and in development projects across the Arctic, collectively the company has successfully provided services to several hundred sites.

Ron Hyde started PRL in 2002 and made it a nimble and flexible company that could move quickly in response to projects. “If you’re going to beat a weather, seasonal, or infrastructural window, you have to be flexible and adaptable in this business,” Hyde says.

Hyde grew up in Western Alaska’s Goodnews Bay and in Norton Sound and communities along the Bering Sea coast. His father was a bush pilot and guide, and his family was on the receiving end of the logistical services he now offers rural Alaskan development. He recalls that as a youth in rural Alaska, only one or two barges came a year. Absent roads or a substantive landing strip for air cargo, large items were unavailable. “This business is personal for me, and I was inspired by my youth in remote Alaska,” adds Hyde.

While living in the bush had constraints and dependencies on logistics, Hyde’s career evolved as he worked with construction management firms headquartered outside Alaska needing help with planning support and mobilizing large capital projects such as transport, housing, seasonal equipment mobilization, and adapting equipment to Alaska terrain. Hyde advised on design size to fit the Arctic and rural theaters of operation, including barges and plane logistics, which became a benefit to local and national companies attempting to mobilize and demobilize equipment and supplies.

PRL Logistics manages transportation activities and logistics. Hyde’s team helps with planning, procurement, and logistics modeling and analysis of projects at the front end for feasibility. He explains that mobilization or demobilization of staffing, transportation, and equipment is as critical as any other part of an oil and gas exploration or development project. Safety and environmental impact analysis and feasibility studies are also weaved into the logistical assessment and coordination, particularly before a project begins.

Hyde started his company with Vicki Smith and it grew to having 150 employees in ten years.

Chances are that anyone working in the field or in the Arctic or at another resource development site was booked and had reservations and travel logistics handled by PRL. Some sites have as many as seven hundred personnel whose transportation must be coordinated from and to Anchorage and then to Deadhorse and Point Thomson via helicopters and fixed wing charters. Baggage handling, heli-deck attendants, freight management for Exxon Mobil at Point Thomson in-state and out, supplies, parts, groceries, truckable modules, equipment, web-based tracking, ice road and environmental inspections—in total it’s a huge collection of logistical synapses that make mobilization and demobilization cohesive.

And like Fairweather and Nabors, PRL emphasizes local hire and subcontracting. “Exxon has adopted a vision which stresses local hire and engaging with local businesses. PRL follows the same paradigm. When you can employ rural Alaskans and utilize their local knowledge, it increases project certainty and reduces risk,” Hyde says.

PRL has more than one hundred vendors and subcontractors, and one PRL motto is, “There and back safely.” Another is, “Plan, plan, plan,” and Hyde reinforces the fact that safety matters. “Any transportation used for mobe/demobe is enveloped by our monitoring program, which is extremely regimented, so there are no leaks or failures that affect the environment—and if that did happen, mobilization would be halted,” Hyde says.

PRL also manages movement of truckable modules and barging to and from Point Thompson from Deadhorse and unloading of ships with steel and other infrastructure, as well as via aircraft, truck, barge, and rail. Services also include logistical planning and support in Eastern Russia and Canada. PRL Logistics recently opened an office in Kenai to handle support for Cook Inlet projects.

Part of the Exploration Equation

The bottom line of any petroleum operation in Alaska will inevitably include mobilization and demobilization of infrastructure, supplies, and personnel.

Planning and logistics really matter. They are inextricably linked to all development phases including research, exploration, and the ultimate effort of development and production. Eliminate safety personnel or planning and the environment becomes vulnerable; subtract ice roads, air fields, and weather reporting and planes can’t land with equipment and workers; delay the marine access and transportation of large-scale equipment by ocean and drilling ceases.

Peel away the financial and staffing costs of petroleum development in Alaska and mobilization and demobilization efforts are at the root of the equation.

TOM ANDERSON FREELANCES FROM ALASKA.
This first appeared in the January 2014 print edition of Alaska Business Monthly magazine.