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Featured Articles
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Nov 2009
| Source: Oilweek Magazine
| | | Frac for all
| | | Packers Plus opened Saskatchewan's tight oil plays - now Oilweek’s 2009 Supplier of the Year is introducing a new generation of down-hole innovations.
| | | by Paul Stastny
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| Dan Themig is one of the nicest guys in the oilpatch. He´s accessible, friendly and if you were to meet him on a ski hill or paddling a whitewater river or doing any number of the other outdoor pursuits he enjoys, you probably wouldn´t suspect his company has been instrumental in unlocking Saskatchewan´s new-found energy wealth, and has played a role in the United States shale gas boom.
That is to say, Themig isn´t a master dealmaker, manager, or strategist. His success is built on engineering and innovation-and maybe some friendly persuasion convincing producers, who haven´t always been receptive to small service company claims, to try his company´s ideas.
Founded in 2000, in partnership with Peter Krabben and Ken Paltzat, Packers Plus has developed game-changing innovations that, if offered by majors such as Halliburton or Schlumberger, would have met with instant orders. But Packers Plus had to be more patient. It would take almost four years for the industry to embrace its StackFRAC multi-stage fracturing technology.
Coupled with horizontal drilling, StackFRAC put Saskatchewan´s Bakken and Shaunavon on the map. Later, the industry would realize what works in challenging oil plays could work in tight and shale gas plays. So now Packers Plus is firmly established in northeastern British Columbia, where it is continuing to improve on its open-hole multi-stage fracing systems and delivering some astounding production results.
But Packers Plus isn´t resting on its StackFRAC laurels and is busy introducing other innovations to conquer challenging wells around the world.
Since its early days as a company of three partners, a secretary, an engineer, and one office in Calgary and one in Edmonton, Packers Plus has managed to double its staff each year, to a current 350 employees. It now has five offices in western Canada, eight in the United States sales and service locations in Scotland, North Africa, Bahrain, Dubai, Saudi Arabia, Indonesia, and China.
StackFRAC has arguably become an industry blueprint for taming the unruly horizontal well frac. The so-called Hail Mary frac, in which fluid and proppant invade a formation along a path of least resistance-often through the heel of a well or into a natural fracture along the well´s length-has now been laid to rest.
By inserting a steel liner and segmenting the well into a series of intervals that are fraced individually, StackFRAC distributes fluid and proppant more evenly throughout the formation. In tight sands and shales, where the flow of gas or oil to the well is hindered by extremely low porosity and permeability, multi-stage fracing often spells the difference between profitable and unprofitable production.
In under a decade, Packers Plus has realized its founding goal of becoming the go-to down-hole tools company in its core areas of expertise. While the financial crisis followed by flat commodity prices have slammed much of the oil and gas services sector, Packers Plus has finally caught its breath and is now able to refocus on engineering.
As it unrolls its most recent innovations, the company this time will have its order book in hand. But what is interesting is that while Packers Plus initially faced a daunting task in finding Canadian producers willing to try its multi-stage fracing technology, U.S. producers embraced it as far back as 2001.
The StackFRAC story
In 2001, Themig got a call from a consultant with a client in Houston who was drilling horizontal wells but couldn´t figure out how to effectively frac them.
"They want to meet with you guys," the consultant said.
"Well, why would they want to meet us?" was Themig´s response.
After all, Packers Plus, a small Canadian company with no U.S. locations, was only in its second year of operations. Granted, it was already gaining a reputation for shutting off water sections in horizontals using packers, but nothing really to recommend it to a large and active driller experimenting in tight and shale gas.
Nonetheless, the vice president in Houston recognized the depth of expertise in Packers Plus´ three partners, all former Dresser Industries employees. Themig, for example, had about 20 years of down-hole tools experience. He started with Halliburton after graduating from the University of Illinois with an engineering degree in 1980. Six years later, he joined Dresser´s Guiberson down-hole tools division, where he spent the next 14 years.
When Dresser and Halliburton merged in 1998, Themig came full circle, returning to Halliburton. But now he felt it was time to venture out on his own.
The years of experience with the service majors gave Themig insight into their strengths and weaknesses. He saw the intense internal competition for engineering resources. Typically, this meant the big-money plays-the North Sea, the Gulf of Mexico, the coast of Africa-became the focus, while few resources were available for the mature, low-cost North American plays. So if a major didn´t already have the right tool for a client in western Canada, it was difficult to entice it to develop one.
Packers Plus also ran countercurrent to the trend of one-stop shopping, where service companies tried to offer as many services as they could. It specialized in just down-hole tools. And with about 40 constellations within the down-hole tools galaxy, it decided to explore just four, including horizontal well stimulation, deep, hot, and high-pressure wells.
So when he flew to the Houston meeting, he pitched seven concepts he thought might work. That was the beginning of StackFRAC.
"They didn´t believe a lot of the things I told them," Themig recalls. "The industry didn´t believe it was possible to isolate with high enough pressure rating to be able to frac the rock. They thought I would just frac around the packers."
At the time, the industry was using 20-foot long inflatable packers to get a high-pressure isolation. It was expensive and almost impossible to get 8 or 10 of those into the ground-which is what the industry believed was required.
Within three months of Themig´s Houston meeting, Packers Plus had a design-ready multi-stage fracing system. This was just as producers started dabbling in the Barnett shales, producing a few successes, a lot of dogs, and nothing that resembled a successful, repeatable method.
"We installed our first system in west Texas in 2001," Themig says. "A month later, we put in our second system in the Bakken in Montana."
From there, things took off, but very slowly.
Ironically, that Themig is American by birth didn´t help his U.S. sales. He was the unaccepted prophet in his own city. If anything, Canada´s reputation for oil and gas technology opened some doors. The United States also tends to be more open to new ideas.
Individual U.S. companies soon saw that StackFRAC worked. The system found its way into the Barnett shale, west Texas, south Texas, the Texas Panhandle, Oklahoma, the Appellation, and in shale plays in Kentucky and West Virginia.
By 2004, 70 per cent of Packers Plus´ business was south of the border in everything from tight gas and oil to carbonates and shales. In the Texas Panhandle, for example, one company has used StackFRAC on over 260 wells. In the Appalachian area, another company has done over 350 shale wells with StackFRAC.
The Canadian market, on the other hand, was still wary. As recently as a couple of years ago, Themig says there were service companies still claiming that StackFRAC didn´t work, that it was just smoke and mirrors.
"I remember going to see a company that was doing a lot of drilling in the [Saskatchewan] Bakken," Themig says. "I offered to give them a StackFRAC system so they could run it and prove that it would outperform what they were currently running. They said, ‘No thanks, we´ve got it figured out.´"
Eventually Wave Energy, in the Shaunavon, and Petrobank, in the Bakken, gave Packers Plus a chance on a series of wells in 2007. Six months later, when the results of those wells became public, the phones at Packers Plus started ringing.
"Unlike in the U.S., where there´s offices throughout the country, Calgary has a centralized oil and gas community, so word spreads quickly," Themig says.
Shortly after, Crescent Point Energy started running StackFRAC and other producers followed suit. The Bakken and Shaunavon became Packers Plus´ number one and number two plays.
After Bakken
The history of Packers Plus can be conveniently divided into "Before Bakken" (B.B.) and "After Bakken" (A.B.), and the A.B. era has been particularly good to Packers Plus. Despite the inconvenience of a global economic meltdown, the company is forging ahead not just in North America but around the world.
North American benchmark oil prices have fallen dramatically from peaks near US$150 a barrel in July 2008, and indeed dipped briefly below US$40 a barrel earlier this year. Then again, the Bakken took off when oil was just $43 a barrel. Packers Plus is now in over 26 formations just in western Canada.
The Bakken is still its top play, and the Shaunavon in southwestern Saskatchewan has been a big surprise to everyone, but it´s now been ousted by B.C.´s Montney as Packers Plus´ number two play.
"We´ve been extremely successful in the Montney," Themig says. "We´re making some very prolific gas wells, in excess of 10 million cubic feet a day there." In this hybrid tight gas/shale gas play, Themig counts over 30 companies now using StackFRAC.
Further north in the Muskwa shales of the Horn River basin, Packers Plus may have just set a new record for the largest job ever pumped.
"It´s one of our highest producing wells," Themig says. "It´s a higher producer by almost 70 per cent over any other well that I´ve read about." He can´t reveal the name of the company or the production numbers, but he can say the frac pumped almost 5.2 million pounds of proppant.
"And the results are astounding," he says. "The frac company that did the job said that, on average, they see about 1 million cubic feet [of gas production] per stage pumped. We´re getting 1.7 [million], 1.8 million per stage. I can´t say how many stages we had because then I´d be telling you the final production."
To date, many wells have been running 10 or even 11 stages, but here´s the thing: Packers Plus has just rolled out StackFRAC HD, a high-definition fracturing system with up to 22 stimulation stages.
"Our industry determined that more fracs is better," Themig says. "Within weeks of releasing our HD system, we had people running as many as 20 stages, double the number of stages as previously over a thousand-metre lateral."
In a world where producing oil and gas from source rock becomes ever more challenging, where enhanced recovery projects will play an increasingly important role, Packers Plus understands that new technologies will be key. So during this drilling downturn, it has refocused on engineering and projects that have been sidelined by the company´s tremendous growth.
StackFRAC HD is one of those projects. And it´s still in evolution as the company´s engineers work out how to accommodate up to 32 stimulation stages.
Another product Packers Plus introduced this summer is StackFRAC Titanium XV, an open-hole fracturing system for differential pressures up to 15,000 pounds per square inch (psi) and bottom-hole temperatures up to 400 degrees Fahrenheit (205 degrees Celsius)-significantly higher than StackFRAC´s typical 6,000 to 10,000 psi rating.
"Industry has said we have to go deeper and be able to work in higher pressure applications," Themig says. "They also determined the deeper you go, the more beneficial StackFRAC technology is. We´ve already been approached about developing equipment for deep water Gulf of Mexico and some other very challenging areas where they may even need in excess of 15,000 psi pressure ratings."
Deeper, hotter, more challenging down hole environments-this is what Packers Plus was formed to take on, and Themig and his partners love the challenge. Ken Paltzat is operations manager for Canada and Peter Krabben is technical support for international. Packers Plus has just opened a new technology center in Edmonton. Two years ago, it opened a technology centre and a separate research and development centre in Houston.
The refocus on engineering at Packers Plus is a welcome shift for Themig. who, for his entire career at Halliburton and Dresser, successfully avoided being put into management. Only with Packers Plus did he take on the role, but the drafting table in his office betrays where his heart is. As do his business cards, which have no title.
"That´s by design," Themig says. "I´m president and CEO, but we´re a very flat organization. I´m often called in as a technical expert or to go on sales trips."
Themig still leads the engineering group and is involved in concept development. While he freely admits that management doesn´t come naturally to him, he also seems to have given his role of company president due consideration and has engineered a solution that works for himself and the company.
"Along the way, I got to see how people managed their companies, so I picked what I liked and adopted it," he says. "Our managers aren´t set up to control things. What they´re set up for is to do things and make things happen. It´s a different philosophy."
Selecting the right people and establishing a distinct Packers Plus culture have played a role in building this dynamic company. "If you have the right people, they´re easy to manage," Themig says.
It probably helps that Themig´s a nice guy who´s grateful for the hard work of his employees as well as for the support of his customers.
"We´d especially like to thank our customers for being willing to experiment and try the new systems we´ve come up," he says, "and being very innovative in how they apply them."
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