Despite equipment limitations in the region, India’s Jindal Drilling steps forward

“We have been drilling high drift relief wells, high angle, horizontal sidetrack wells, etc.,” said chairman D.P. Jindal in an interview withOffshore.

The company has built a network of international directional drillers with equipment and tools and has established a dedicated drilling team, he pointed out. Jindal Drilling provides services with steerable downhole mud motors, MWD, logging while drilling (gamma and resistivity), and deviation measurement service like gyro service, among others. However, Jindal noted a major issue as far as new technology is concerned.

“Unless a strong, undiluted, and dedicated push is made in this area, we can forget about the excellent business performance we have at the moment,” Jindal said.

“From our experience, we can see that only used and rejected technologies are being made available for free and open sale. We have to reduce dependence on these technologies.”

He emphasized the need to provide the maximum equipment available to operators to help reduce downtime due to downhole equipment/tool hole failure.

The company is on par with its competitors with focus on research and development relating to equipment and tools, operating procedure, operational planning, proper maintenance, and training.

Presently, Jindal Drilling’s Research & Development team is working on developing indigenous components for better product quality, especially to replace imported components.

“We have also covered aspects like developing as well as outsourcing a few effective and cheaper options for land and offshore operations,” he said.

Jindal acknowledged that technology remains a monopoly of the industry giants and those strong R&D teams have been working on product innovations for the past few decades.

“Whereas we are a service provider of proven technology and are focused on our core activity, which is better service and less downtime,” stressed Jindal.

He also noted that the giants and multi-nationals would have to protect their business interest and as such they have restricted access to their proprietary technologies.

Nevertheless, many international companies do opt to tie up with local companies that offer the competitive advantage of being domestic.

Jindal Drilling is looking for technology partners, he said, adding that the company has disciplined and committed scientific manpower with flexibility to adapt to operating and managing new technologies immediately.

Also, the Indian market is ready to pay for the high cost of top-end technologies, added Naresh Kumar, Jindal Drilling managing director.

Changes are due to globalization of the Indian economy, awards of more and more blocks, and the opening of new frontier acreages, especially deepwater prospects, Kumar said.

The increasing presence of international E&P operators has also brought about a significant change to the Indian hydrocarbon prospecting business.

The Indian market is changing structurally from the state-owned oil and gas players to the private sector, most of which are at the early stages of oil and gas exploration.

“The real picture will come into being once operators begin their commercial phase of the drilling campaign,” said Kumar.

He also pointed out that technology by default takes its upward trend irrespective of the oil price, which is a very temporary phenomenon.

“Time always demands more and technology goes with time. Technology grows faster with the increasing difficulties, limitations, restrictions, and stipulations in any sector,” Kumar told Offshore. “Technology shall also take its own course of development.”

In coming times, due to the increased geographical, geological, environmental, and economic limitation and stipulations, all E&P companies will opt for directional/deviated wells, said Kumar.

“The conventional perception that ‘directional drilling is costly’ will be subdued by much higher hydrocarbon recovery attained by directional wells,” he pointed out.

“Oil price mechanism will keep on changing due to the demand/supply situation. Human civilization’s dependency on hydrocarbon and their endeavor of extracting maximum hydrocarbon shall always drive the desire and demand for technologies.”

In 2008, Jindal Drilling and its joint venture partners have completed about $380 million in investments in two jackup rigs as part of its asset expansion plans. Jindal Drilling has operated offshore India for 20 years by chartering rigs from international operator Noble Drilling.

Asked about Jindal Drilling’s asset building targets, Jindal said, “The sky is the limit. But we want to move forward progressively, taking each stage at a time as each business opportunity comes along.”

Jindal Drilling operates five offshore rigs. The company operates in the Indian offshore sector in partnership with Noble Drilling with whom it has chartered three rigs –Noble Ed Holt, Noble Charlie Yester, and its latest three-year Oil and Natural Gas Co. (ONGC) contract for the Noble George McLeod*I.

The jackupDiscovery-1, christened at Keppel FELS in Singapore in September 2008, started its three-year drilling contract with ONGC in October. The second jackup, Virtue-1, commissioned in December, has a five-year contract with ONGC.

Both rigs will be involved in ONGC’s development drilling and well workover programs on the western coast of India, especially around the highly prolific Mumbai High basins, where a number of recent discoveries are in the development planning stage.

Kumar is confident the two fixed-term ONGC contracts will be renewed for the new high-speed rigs, Jindal Drilling’s first rig-ownership investments.

Going forward, Jindal Drilling plans to add more rigs, both jackups and deepwater drillers, as it seeks more and more exploration and mining contracts in India as well as other parts of Asia and the Middle East.

Though Jindal Drilling is enlarging rig asset acquisition based on new drilling contracts, Kumar acknowledged that it has to be a state-of-the-art rig and taken on as soon as a contract is in sight.

Elaborating on the chairman’s business strategy to take Jindal Group forward, Kumar said he believes India’s offshore sector will continue to be bullish especially for prospecting new hydrocarbon reserves in deepwater basins.

A number of new drilling contracts are being negotiated and Jindal Drilling expects to order new rigs as soon as these contracts are operational and new contracts can be executed, Kumar said.

Kumar is banking on the highly intensified exploration activities in the 94 million sq km (36 million sq mi) Indian offshore sector, some 40% of which is being lined up for oil and gas prospecting in the coming years.

“There is an immediate need to add at least four more deepwater semisubmersible rigs offshore India, which currently has about eight rigs in operation,” said Kumar, who plans a deepwater rig investment as the next addition to Jindal Drilling assets.

Kumar also disclosed that Singapore would be the Jindal Group’s Asian base, having already established two joint venture companies – Discovery Drilling Pte Ltd. and Virtue Drilling Pte Ltd. – for operating the two new rigs out of the city/state.

The two companies also expect to make separate initial public offers for listing on the Singapore Exchange at the appropriate time in order to fund future acquisitions.

Kumar said he believes Singapore is suitable for developing Jindal Group’s international businesses and offers good long-term opportunities to raise financing.

The Delhi-based Jindal Group, which is involved in rig operations and seamless pipe supplies to the Indian oil and gas sector, has projected annual revenue and profit growths of more than 50% for the financial year March 2008-2009 and 2009-2010.

The company aims to double its annual earnings to $1.25 billion by 2011 from the 2008 level, however, bearing the effects of current global economics, Kumar said.