From Rig to Recovery: H&P’s Role in Modern Hydrocarbon Extraction

Discover the revolutionary technology and safety protocols driving one company's success in hydrocarbon recovery with insights from Chay Chinsethagid, SVP of Engineering and IT at H&P.

Learn more about this topic:

• Revolutionizing the Oil and Gas Industry: Automating the Drilling Process
• How H&P Provides Performance-Driven Drilling Solutions and Sustainability by Design
• The Future of Drilling: A Conversation with Helmerich & Payne

Featured in:

• Season 6 Episode 3 of Tomorrow's World Today: Horizontal Drilling
• Long-Distance Drilling with Accuracy
• The Walking Rig

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Transcript

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(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to the Tomorrow's World Today podcast. We sit down with experts, world-changing innovators, creators, and makers to explore how they're taking action to make tomorrow's world a better place for technology, science, innovation, sustainability, the arts, and more. And now this week's episode. In this episode of the Tomorrow's World Today podcast, George Davison, who is also the host of Tomorrow's World Today on Science, interviews Chey Chinsetheged, the Senior Vice President of Engineering and IT with H&P. They discuss the company's history, innovations in hydrocarbon recovery, and the industry's commitment to safety and efficiency in drilling operations. Now here's George. Welcome. Thank you, George. Can you fill us in a little bit? How did H&P get started? Yeah, H&P was founded by two gentlemen, one by the name of Walt Helmrich II. The other one was Bill Payne. It's over a hundred-year-old company. It started with a handshake. They bought a single rig with the purposes of drilling holes in the ground. So they're drilling holes in the ground, and the purpose of those holes is to do what? It's hydrocarbon recovery for the oil and gas industry. So we have customers that come about and hire H&P to put a hole in the ground. And following that, right, we're able to recover hydrocarbons for our everyday use and the things that we use from consumer products to the energy. So for everybody to understand, could you give us an example of hydrofluorocarbons? Sure. So oil and gas, so natural gas when we heat our homes, the oils that get refined for things like lubricants, the oils in our engine are things that are pretty typical products. Gotcha. So fast forward for 103 years, how many employees do you have? So we're over 6,000 employees. The majority of those are working out on our rigs. All over the United States, as well as some internationally. So each rig has roughly 25 individuals that work on what are called rotations. They work on a crew, but they work on a rotation, usually 12 hours at a time. So there's two crews per day. And then when those crews go off of a hitch, a new crew comes on, and they work it again 12 hours, and then 12 hours to give the other guys rest, employees rest. That's a lot of work. Sounds good. So what are the revenues a year, let's say, for a company that size? Well, it depends. It can depend on what we call a day rate, or for us, we also use what are called performance contracts, where we're paid based on the way that we drill the well, and how quickly and safely we're able to achieve some of our metrics. And it's different by customer by customer, so it really varies. Again, the typical rate was a day rate type model, but H&P has moved into one where it's based on some performance. We still have the existing model, but we're moving towards more performance-based, where we're trying to drive value through the innovation that we do for our customers, and that's drilling a, not only a safe, being safe on location, but also a high-quality wellbore, and we use our technology to do that. Okay. Is it, if this company's private, and revenues are confidential, I understand, but in general, like how big are your sales per year? You know, it can be on magnitude of three to four billion dollars. Wow. That's a big company. A hundred years, grew it up to that size? Yes. With that many employees. So that means you probably are doing quite a bit of hiring here and there, right? Yes. And you know, it fluctuates. This industry is known to be fairly cyclical, but when you see an upcycle in oil and gas, just tremendous amount of hiring. We put people out there on rigs at a rapid pace. I mentioned 25 people per rig, but there's also all the staff it takes to support it. There's maintenance, there's data analysts, there's engineering, there's human resources, there's accounting. End to end, there are so many folks that make the drilling operation run, that anytime we see growth, we just have tremendous opportunities. That's great. So it's a wide range of different types of jobs that are available. In the field of STEM, science, technology, engineering, and math, is that something that's important as well in the hiring of people at your company? Absolutely. You know, I mentioned innovation. So H&P is becoming even more of a digital company. So in the last five or six years, part of our value propositions to our customers, how we drill that quality wellbore. As we've done that, not only are we hiring those folks that kind of come from the computer science or computer information systems, such as developers, data scientists, and data science is a pretty broad word, right? We're drawing those from all walks of life, whether that's engineering or all, I should say, all curriculums. Even in accounting, right? Even in accounting and finance, we're looking at folks that understand how to use data. So they're learning all the new tools that exist out there. Engineering, when we think about the rig structure, we think about how we build that big piece of machinery that can punch this hole in the ground. We've got mechanical engineers. We've got people that are on the petroleum side. We've got people that are on the civil and structural side. We've got electrical engineers on the, and again, I mentioned data. We've got developers, we've got data scientists, just the sky's the limit, right? We're looking at different things such as the mud properties that go down the hole to help us drill the well. Can you talk to us a little bit about your position? What is your title and what's your role inside the organization? Yeah, my role is the, I'm the senior vice president of IT and engineering. So there are really two disparate functions, but really they work collectively together as they do with other functions. But the IT side of the house is kind of the end to end, what you would consider typical IT, which is infrastructure, it's software development, cybersecurity, application development in general. And then it also ties into OT. I mentioned digital out on our rig. So OT meaning operational technology. So that's, it's different from the IT side, which is information technology. But to make our rigs run, we have sensors, we have devices out on the rig. And the IT side is that end to end. On the engineering side of the house, that responsibility has to do with designing the rig structure, right? Our control systems that actually operate those things. So you can see the convergence there. We're talking about running a rig, but also ensure that the digital components, whether that's the computers, the servers, those pieces can help run that rig and keep it safe for our crews and do it efficiently. Yeah, it sounds like the drilling today is so much different than it used to be. Now you're going down in the ground and you can turn it into a seam. And that way, you don't have to drill so many, you don't have to put as many punches, many holes into the ground, so to speak. So there's less disruption to the ecology and, you know, the nature up on top, right? That's right. And actually, that's part of our value proposition. You know, H&P is a leader in what's called unconventional drilling. It's that drilling where we do go horizontal into that space. And when we do that, part of, again, what we're trying to do through technology is drill a high-quality wellbore. We don't want it to be curvy. We don't want to have to go in multiple times. We want to drill as smooth and as efficient as possible for multiple reasons. When we do that, we believe that we get a better hydrocarbon production for our customers. But again, also less disturbance, right, to the overall footprint. How about the field of research in your job? Does it play a role? It does. You know, we've got an incredible opportunity at H&P where we try to promote innovation from anywhere and everywhere. We do have individuals that are set aside that do research for us discreetly and directly on topics of interest that we might have. And that might be alternate ways to drill or a new way to do a new widget or something that we're trying to invent. Once it comes to fruition, but again, anybody can bring an idea, or when someone brings an idea, what's great about our culture is just because we have kind of radical transparency and communication, right, we encourage people to bring those in, right? It's very dynamic. If there's something that someone brings to the table that we think we can make a difference, whether that's in the area of safety or in delivering some value to our customer, we'll oftentimes pivot. Now, we don't do that all the time because sometimes it's finding that needle in the haystack. But when we do, gosh, we highly encourage and we find a way to work on it. So it's incredible. We have folks that are constantly researching the latest and greatest. So right now, one of those might be artificial intelligence. We're looking at how does that help us? You know, all of the emerging technologies that exist right now, we've got people that are just passionate. We talk about curiosity. So of their own accord, we have so many passionate people that read up on all these different emerging technologies, and then they're not afraid to come talk about it. Hey, what if we did this with this? That's great. It's fantastic. Yeah, it sounds like a really good culture at your operation. Wow. Okay. So in a company or on a team, we're kind of touching on a subject already, but people often have many ideas for ways to improve something or to solve a problem. How do you or how does the company select and prioritize its ideas to know which ones they should pursue? So a couple ways. One, you know, I mentioned that we encourage just kind of that open communication, and we want people to bring forth ideas. But obviously, no company can do everything, right? We have to focus and prioritize our resources and our talents. We have some governance kind of processes that are set up within the company that help us figure out what is most important now. Some of that is quantitative. We'll try to see if something's a little bit more of a sure thing. How do we look at it and put together what we call a business case, right? How do we look at that and analyze it and say, how big or what kind of opportunities for the company? And then how hard is it realistically? So we've got those processes that exist. Then there's also stuff that's a little bit further out there. It's like, well, we don't know yet, but let's put a little bit of, I say a little bit, let's put some resources towards that and let's tiptoe into it. So we've got what's called a stage process that allows us to look at these things at different points in time from uncertain to production. And so at each point in that stage gate process, we'll kind of determine, should we keep going or not? Now before it enters design and ideation, we try to sit there and make decisions based on that qualitative and quantitative value because we don't always know, right? Sometimes it's a bunch of people sitting around in a room being very open about what's the opportunity here and should we invest in this? And when I say invest, again, I'm not talking about just dollars, I'm talking about people. So again, it starts with the teamwork, the open communication, and again, people sitting around a room. And then I think coupled to that and enabling that are some of these other processes. It makes a lot of sense. So you're going in pieces referred to as stage gates. So you go through one gate, you get to a certain area, you kind of evaluate it, right? And you either go back or you say, it's not going to proceed, we're not thinking it's going to be good. Or, hey, wait a minute, it's looking like this one might work out, let's move a little further forward, right? And that's kind of how you move forward in the process at your operation. Absolutely. And you talked about failure early and I gave you kind of an example of a personal project. But even as a company, when we undergo some of these endeavors and maybe it doesn't work out, we learn so much, right? There are different things that we learn about a component of a project or a component of something we might be working on. And we find many times that there's things that can be applied to something else. So it's not all for naught. It's not a waste of time. Actually, we find that that's what allows us to go on this journey of continuous improvement and figuring out how we innovate and, again, provide the best value we can really for those guys on the rig, those guys and gals on the rig or, again, our customers. So it sounds like you work as a team. I mean, how important is teamwork inside your operation toward innovation and making progress? I think it's pivotal. So now more than ever, we're not just, as you talked about earlier, we're not just a drilling rig where in the old school days, it was very mechanical. Well, nowadays, it's digital and it's mechanical. So it's integrated. It's integrated. So, you know, the software developers that I mentioned working with the mechanical engineers, if you will, working with those folks that are over here analyzing data, you know, and the output and looking at that and saying, how can we do it differently and better? How can we optimize our overall operation? So we're talking with the finance and accounting folks. We're talking with our legal folks, right? As we put something on this screen, right, how does that make sense? As we make any decision, it's very, very collaborative. Often when we're going into an endeavor, we ask who needs to be at the table and we find that most times it's everybody because everybody plays such a critical part, even human resources in the terms of change management, organizational development, and how's it going to impact people and how do we take those things and, again, move them forward and make people comfortable At the end of the day, that is our greatest value. And so all of these roles play into helping us, again, drill a highly effective, repeatable, consistent well and do it safely. You know, again, logic is kicking in, right? The soft skills of communication and learning how to work with other people to create, you know, a one plus one plus one is now 10 because you're able to put people together with other skills and communicate, work on problems together. We really like, we like doing that ourselves. What about moments of dysfunctionality? You know, when the team's not getting along so well, what do you guys do? Yeah. So I love that you said that. So one, it goes back to our core values. So one of H&P's core values is we actively care about one another. Teamwork is another core value. Service attitude is another core value. So we all recognize those things and we recognize that it isn't always perfect and we're going to have some dysfunction, we're going to have some disagreement, but we can go back to those core values. One of those being service attitude, right? And that is serving, again, at the end of the day, you've heard me talk several times about keeping the individuals on the rig safe. So we all keep that in mind. Our job at the end of the day is to keep someone on the rig safe. We want them to go home to their families, to their children, to their wives, again, and live their lives. They do a fantastic bit of work for us out there on the rigs. The other one there that I mentioned is actively care. For us, that stands for controlling and removing exposures, right? So we're all centered around how can we remove the exposures from the folks on the rig, again, so that we can get them home safe. So I think when we're locked in with a common purpose, again, for the folks on the rigs, I think it really helps us. So even though we might get a little bit frustrated, which is normal, we have the ability to kind of circle back and say, what's most important? It's a great culture. You must have good leadership at your place. Fantastic. Our CEO really set out several years ago to align us kind of around not only just those values, but also just having this radical amount of communication and openness with one another. And I think that's where our teamwork has just really gelled. You mentioned that one plus one equals two equals three, et cetera. And there's so many folks that are engaged in everything that we do. And that started with the CEO several years ago. He was really pushing for us to, I mean, he saw the writing on the wall, the convergence between digital and the hardware itself. And he just really encouraged just open communication. We practiced it. We didn't just say it, but we practiced it. We got uncomfortable in conversations and dysfunction and said, look, if we can't have uncomfortable conversations, we're never going to be able to deliver the best results. And we want to deliver the best results. We're high performers. That's great. It's great. Once that trust is established, you can make magic happen. Absolutely. All right. Let's talk about visual communication for a minute. The ability to communicate an idea with a sketch or illustration. Like how do you, a lot of, some people struggle with the idea of getting their ideas out. And you know, you can talk about them, but being able to sketch them up, draw it out so you can have a more thorough, let's say, idea transfer from one person to another. Do you do that at your operation? We do. You know, I'll tell you, I've never been one that's great at sketching on a piece of paper or a whiteboard, but there's so many tools nowadays that enable us to do that. You know, when you think about the rig itself, there's what's called CAD software, computer-aided design software. They've got 3D modeling nowadays. So historically, you know, when I started my career, 2D was more prevalent. So you're looking at it kind of on a flat plane. Nowadays, there's so much 3D software available. And with the computing power and with everything that's become available, you can produce those types of visuals. And you hear it, a picture's worth a thousand words, and I completely agree. And again, it kind of fits into the vein that so many people make it happen. The guys that are designing those computers, the guys and gals that are designing that hardware, the software, et cetera. I remember when 3D first came out, it would take you forever to produce a model because it just took so long to generate it. Now it happens so quickly. So we do that and we use it all the time. And I think it really helps us convince, actually just have the conversation with other stakeholders, with team members on, is this a good idea? What would we do differently? And we use that regularly in design review. I was looking at your company's website and right there on the front, there's like a three-dimensionally, we refer to it in engineering as an exploded view of a rig. And it really does. It helps to tell the story of how this thing comes to be or how, you know, not so much how it works. I'm not seeing liquid and whatnot flow, but in general, it's just a powerful tool to explain the story of what your company's doing. So we talk a lot about idea generation and communication because it's hard. When it's something brand new and it's not in other people's minds, sometimes it's a little challenging. So we really try to get folks to think about how to communicate to other people and either better speech or selection of words in the speech that you're going to make happen around your idea or can you sketch it, maybe go into 3D, you know, into the CAD programs. But yeah, very, very important. On that vein, you know, we produced actually, you know, for a customer at one point, we used this at an oil show, an augmented reality rig. You talked about our website, but you were able to walk around this, right, and see it. If you've never seen a rig before, if you've never seen our rig before, which we call the Flex Rig, but they were able to see that in an augmented reality state, just like it was sitting on this table and through glasses and through their phone, see it in 3D space. So it's really neat. Fits into that vein. Yes, it does. That'll help tell the story. How important is marketing to your business? In what ways do you tell others about your services? I think it's critical. We actually have a fantastic marketing department. I mentioned this model, this augmented reality model, and the teamwork we talked about earlier. So that was actually a project that was led by marketing. Engineering supported them. We found developers that could help us with the augmented reality, but it's huge, right? Again, picture being worth a thousand words, the words we say, our core values, our website, you mentioned that, but it tells the story of who we are at H&P and what we're trying to achieve, again, for our customers and for the world. It's funny you say that. I even have a pair of socks on that are H&P branded, right? So for us, it's kind of H&P, right, and what we do. It's got a drilling rig on it, so it explains, here's the company, here's what we do, and we provide that service to the world. So it's huge. It is big. I enjoy studying business history, and I was reading up about H&P, and your brand colors are blue and white. That's why I wear that tie today. I like it. Thanks. Yeah, you guys have a nice looking brand. It's been a hundred years, so you've got a nice shape to your brand, good colors, website's looking good, so I can see marketing's a priority on the list of things that we need to get done, right? Absolutely. All right, so how about this question? In any business, there are often many jobs being done all at the same time to reach a common goal. How do you or the company manage multiple operations and keep people working toward the same objective? So I mentioned earlier our governance processes. So we have the governance processes, and we actually have a group at our organization called an EPMO. So EPMO stands for Enterprise Program Management Organization. So all of these things that we've prioritized, again, by looking at overall value, and there's a bunch of ways we do that. We mentioned financial, we mentioned effort earlier, but all of those things come in, and again, when we pick something to do, the EPMO says, hey, we're going to go create a widget, we're going to start this project, but let's coordinate all the resources that are necessary. They'll take a step back, and they'll look at, and it might be engineering as an example, they'll look at engineering and say, but engineering's got five things on their plate, but how does this rise to the risk of high enough value that we should pull some resources to the top? I think the other thing we do there is we look for whether or not we need outside help. There's times we might need to flex up because the job's getting big, and we'll go look for mechanical engineers or software developers or accounting and finance, but we'll look for some help on the outside to just supplement our workload. But again, it goes back to just strong communication, trying to forecast that demand, and again, having strong and robust processes. All right. Can we talk a little bit about what the next big innovation in your industry is going to be? Project out into the future. What do you think we'll see? The big thing that we hear, and we want to meet the needs of our customers, number one, but the big thing we hear, right, is how do we keep people safe on the rig floor? It's a dangerous job out there, a lot of moving parts, things continue to move faster and faster in terms of drilling the well, so everything that's happening on the rig surface is happening at a faster and faster level. So how do we remove people, control and remove exposures, but how do we remove people from where those heavy pieces of equipment are moving around and allow them to step back and do something of higher value? Maybe monitoring the data, maybe analyzing the data, maybe looking at what's happening and how we can optimize it, rather than having to put their hands on something. So I believe that we'll continue to see innovation around mechanization and automation on the floor. Automation, robotics. Yeah. So maybe looking into the future, you're seeing people being pulled out of the zone where challenges could occur. If a safety issue could happen, you want people as far away as possible, right? Absolutely. So that transfer of risk, there's a lot of innovation in that space? Absolutely. Interesting. Yeah, that would be fun. That would be fun to figure out some of those problems. It's exciting, and again, there's so many technologies that have to work right to make that happen. When we think about that in our everyday life, there's cameras, there's sensors, there's hydraulics, there's electrical, there's mechanical. So it's all of these different fields that are required to make something like that possible. Well, Che, thank you so much for sharing some of your experiences with us. Everybody, thanks for tuning in for another episode. Have a great day. Thanks for listening to this episode of the Tomorrow's World Today podcast. Join us next time as we continue to explore the worlds of inspiration, creation, innovation, and production. Discover more at tomorrowsworldtoday.com and connect with us on social media at TWTExplore. And find us wherever podcasts are available.