A Crude Awakening - Clariant Oil Services Goes the Extra Mile

In North America, Clariant Oil Services is growing at 25%. No secret formula here. Just go the extra mile to win the business and out-perform the competition.

Pain and pleasure. You feel the latter when you take your sports car through the gears on a twisting, back-country road. But the pleasure abruptly succumbs to pain as you pull into the station to fill up and contemplate the price of a liter or gallon of gasoline. And no wonder, crude oil prices have soared to 9-10 times above their height a decade ago. But your dependency on transportation, and your thirst for devouring the most sumptuous twists and turns, keeps you coming back for more. In order to meet that hungry demand, energy companies are re-opening old oil wells that used to be considered economically unfeasible in the days of lower prices. And with oil hovering at around 120 dollars a barrel, the world’s producers are well positioned to go through the necessary effort. But finding the expertise to treat the untreatable is more than a matter of money. In its established markets of Europe and South America, opportunities for Clariant Oil Services are doubly good. One, demand for oilfield chemicals – additives that help crude oil flow faster, longer and more efficiently – is rising sharply. Two, energy producers are more reluctant than ever to switch

away from a high-quality, proven supplier such as Clariant, since a supplier-made mistake could cost the producer millions of dollars in lost revenues. In North America, however, doubly-good mutates into double-edged. For a massive exploration region that Clariant Oil Services entered only in the late 1990s, the question was, and still is: how to convince producers to give their business to a relative newcomer? Successes in California and Canada tell the answer. California dreaming…becomes reality In the Central Valley around Bakersfield, the arid earth does not surrender its oil easily. Even the tirelessly pumping ‘nodding donkeys’ are not enough; steam must be injected into the formations to soften the viscous and sludgy crude and push it to the surface. What comes out of the ground at 65-150o C (150-300o F) still “looks almost like asphalt,” explains Corporate Accounts Manager, Dave Fell. The hot, gooey mess is also laden with salts, sulfides and emulsions – hardly an ideal mix, but just about perfect to plug pipes, corrode equipment and foul up processing machinery. Highly engineered oilfield chemicals prevent these costly side effects. The chemicals are usually introduced weekly, sometimes monthly, into the well via a ‘shot truck’, a heavy-duty vehicle that carries and injects chemicals from well to well. But in 2002, a major Bakersfield producer realized that despite shot-truck injections, many of its new wells were utterly corroded in as little as two to three months. And when the pipes are gone, further prevention is futile. “Steel must be pulled out of the ground and replaced,” says Fell, “at an enormous cost of capital and lost production.” The producer was stumped, and the leading oilfield-chemical competitors also admitted defeat, seeing no way to improve the situation. Clariant Oil Services, with a bit of ingenuity and determination, looked beyond the problem to see an opportunity. We came forward with a radical yet simple solution: insert a tank of chemicals and a pump next to each of the more troublesome wells.

Skeptics at the producer company (and, of course, at the competitors) said the idea would not justify its investment. But with his back to the well, so to speak, the producer agreed to pilot the concept. “The test wells did not fail in 30 days, 60 days or even 90 days,” Fell remembers. “Some of them kept on pumping for as much as two years.” Duly convinced of our competence, the producer began to transfer more and more work to Clariant. The Oil Services business now directly supplies some 3,000 wells, plus it handles most of the producer’s other chemical needs – totaling a significant volume per year. And the beat goes on. Recently the producer asked Clariant to tackle another technical challenge: the treatment and safe disposal of millions of barrels a day of production wastewater. “Our approach is to win one contract and then build on it,” says Clariant Oil Services Global Marketing Director Brian Lambert. “We get closer and closer to the customer and grow alongside him.”

Pearl in the mud More proof of Clariant’s determination can be found 3,000 km north of Bakersfield, in the wilderness of Alberta, Canada. Again, Clariant entered the market by buying an existing distributor. But this time the big growth opportunity presented itself over bacon and eggs, not in the oilfield. Here’s what happened: In a nearby restaurant, a foreman from a local producer complained about his chemicals supplier over breakfast. “Untreatable!” declared the competitor’s salesman to the foreman. And, to be fair, he had a point. Clearly, the sludge-like, water-laden crude that Pearl Energy was pumping from its Mooney Field at outside temperatures as low as -70o C (-94o F) was no walk in the park. It was more like a 20 kilometer hike in the Canadian Rockies. A Clariant salesman, who happened to be eating nearby, recognized an opportunity when he saw one. He introduced himself and asked the foreman for a chance to take up the challenge. After passing up several proposals for tackling its worst-performing well, Pearl relented, agreeing to a trial. After 24 hours, the Business Manager reported that the “untreatable” oil was meeting specifications, and within another two weeks Clariant became the site’s official supplier of chemicals. Fresh from the success of defeating the technical challenge, Clariant then turned to the logistical problem. Pearl’s site is so remote and muddy that during the waterlogged springtime, ordinary trucks cannot reach it and deliveries are made by special ‘quad’ vehicles. Bears and insects abound, and roads are rudimentary. Nevertheless, Clariant Oil Services salesman Kent Romanko delivered 24/7 service on good days and bad, making a point of getting to the site every morning before the arrival of Pearl’s own operators. Romanko held up far better than his truck. In due course, riding the rough roads knocked out tires, shock absorbers, brake lines, a drive shaft, a fuel pump and even two doors. But the eventual outcome was worth all the bruises: an account that started small, yet now is creeping rapidly towards $2 million per year. In the winner-takes-all business world, going the extra mile can make the vital difference between the gold medal winner and those who merely finish.