Reduced Pricing on Parts and Repairs

Reduced Pricing on Parts and Repairs

Hutchison Hayes firmly believes that we have hit the bottom and experiencing renewed activity to the upside of the oil and gas market. The U.S. land drilling count has surpassed 700 active rigs from a May 2016 trough of 374 rigs. 

As equipment utilization has increased, we are realizing increased interest in repairs and parts as our customers become more positive about the future. To continue to assist our customers Hutchison Hayes has elected to further lower parts pricing and restructure our repairs to be more competitive. 

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2017 Starts with OPEC Complying to Planned Production Cuts

2017 Starts with OPEC Complying to Planned Production Cuts

Less than one month into the announced OPEC / non-OPEC production cuts we are already starting to seeing changes to the global oil & gas market.  Various oil ministers are reporting 1.5 million barrels per day have been taken out of the market place already and this will scale to the 1.8 mpd planned.

Venezuela has implemented half of their planned 95,000 bpd cuts.  Russia has reduced production by 100,000 bpd which is ahead of their previously announced plans for production cut backs. Saudi Arabia started scaling back production in Q4 of 2016 and is producing less than 10 million bpd and has announced additional cuts later this month and throughout the first quarter.

The effect of production cuts will reduce global oil inventories by close to 300 million barrels and shifting oil storage closer to the five year average by summertime.

The ripple of the OPEC production cuts will take some time to effect domestic drilling but we are already starting to see an uptick in rig counts and planned drilling programs.

The oil rig count has risen by 235, or nearly 75%, from its low at the end of May
Gas rigs have also rebounded by 61, or 75%, from their own low in late August
The new production increase is likely to be even greater because of increased efficiency
OEMs recently reported a surge in U.S. Drilling Shale producers have all indicated a big increase in their drilling budgets for 2017

In the last two weeks we have seen ExxonMobil and Noble Energy announce major acquisitions in  the Permian Basin.  ExxonMobil’s announcement of their planned purchase of Bass Family assets in the Delaware Basin for $5.6 Billion and Noble Energy’s  planned buyout of Clayton Williams Energy, Inc. for $2.7 Billion are indications that investment in domestic production is still an economic option.

The OPEC plan is to keep production levels down through the end of Q2.  It will be interesting to see if they adhere to these plans and what effect it has on domestic shale drilling programs.  Saudi Arabian production cuts are the lynch pin the OPEC deal.  All comments from Saudi Arabian Oil Minister Al-Falih indicate plans to increase production as we roll into summer.  It is unclear at this point if they plan to increase production back to 2015-2106 levels and flood the market or make increases based on global crude demands.

As we all know in the oilfield you can only control what you can control and we need to be thankful for the optimism in the industry but at the same time cautious as we move forward.  We are just over a week into the Trump administration and thus far he is staying true to his campaign promises to work towards improving the US Economy.  By the end of the first quarter we might have a clearer picture of what we can expect regulation adjustments that could affect offshore drilling programs in the GOM.

Hutchison Hayes remains optimistic with plans to support our customer base and their needs.   We have one of the largest ready to move inventories in the industry and have recently made improvements that allow us to operate more streamlined to meet growing needs of our customer base.

2016 – The Start of the Recovery

2016 – The Start of the Recovery

The year of 2016 saw what many believe to be the bottom of the downturn regarding the domestic oil and gas industry. In 2016 the industry realized recent historical lows of both the price of WTI (West Texas Intermediate) of slightly above $26/bbl. in February, and the U.S land drilling count bottoming at 374 rigs in May. This was brought on by the macro event of approximately 2 million barrels of crude produced daily worldwide above the worldwide demand resulting in a surplus that definitely had a negative impact on the price of WTI. A second macro event was the decision of OPEC not to cut production as it had historically done in an effort to shore up crude pricing. As the price of oil fell approximately 80% from the high in 2014, the rig count dropped from a level of 1,784 on January 1, 2015, to 672 on January 1, 2016.

This precipitous drop in the price of WTI resulted domestically in marked down-sizing of personnel across all phases of upstream operations with a number of E&P and oilfield service companies forced into bankruptcy. Many projects were either cancelled or delayed indefinitely and one result was billions of dollars of capital equipment was idled. A positive aspect was the industry adjustment to the market conditions by discovering and implementing efficiencies that allowed continued production in certain basins. These efficiencies coupled with at least a 30% reduction in rates charged by the service companies resulted in continued drilling, but at a much slower rate. This slowdown led to a decrease in daily domestic crude production which was one of the primary reasons that OPEC declined to cut its production.

In the 4th quarter, OPEC elected to change its policy and decided to cut production by 1.2 million bbls./day commencing in January 2017. Further, certain non-OPEC exporters agreed to join OPEC and cut production an additional 600,000 bbls./day. This news had an immediate positive impact on the price of WTI pushing it above the $50/bbl. level. This further resulted in an increase of domestic land drilling rigs which ended 2016 at 634, just 38 rigs below its 2016 starting level.

As we enter 2017, Hutchison Hayes believes that the recovery will continue in a positive direction as the domestic industry is stronger in many ways and certainly leaner. The continued recovery will face challenges in 2017, such as, U.S. production increase due to higher WTI prices offsetting the OPEC and non-OPEC cuts, and the reality that the flight of expertise from the industry in 2015 and 2016 will be an issue.   

OPEC Initiates Production Cuts

Less than one month into the announced OPEC / non-OPEC production cuts we are already starting to seeing changes to the global oil & gas market.  Various oil ministers are reporting 1.5 million barrels per day have been taken out of the market place already and this will scale to the 1.8 mpd planned.

Venezuela has implemented half of their planned 95,000 bpd cuts.  Russia has reduced production by 100,000 bpd which is ahead of their previously announced plans for production cut backs.   Saudi Arabia started scaling back production in Q4 of 2016 and is producing less than 10 million bpd and has announced additional cuts later this month and throughout the first quarter.

The effect of production cuts will reduce global oil inventories by close to 300 million barrels and shifting oil storage closer to the five year average by summertime.  

The ripple of the OPEC production cuts will take some time to effect domestic drilling but we are already starting to see an uptick in rig counts and planned drilling programs.

The oil rig count has risen by 235, or nearly 75%, from its low at the end of May
Gas rigs have also rebounded by 61, or 75%, from their own low in late August
The new production increase is likely to be even greater because of increased efficiency
OEMs recently reported a surge in U.S. Drilling
Shale producers have all indicated a big increase in their drilling budgets for 2017

In the last two weeks we have seen ExxonMobil and Noble Energy announce major acquisitions in  the Permian Basin.  ExxonMobil’s announcement of their planned purchase of Bass Family assets in the Delaware Basin for $5.6 Billion and Noble Energy’s  planned buyout of Clayton Williams Energy, Inc. for $2.7 Billion are indications that investment in domestic production is still an economic option.

The OPEC plan is to keep production levels down through the end of Q2.  It will be interesting to see if they adhere to these plans and what effect it has on domestic shale drilling programs.  Saudi Arabian production cuts are the lynch pin the OPEC deal.  All comments from Saudi Arabian Oil Minister Al-Falih indicate plans to increase production as we roll into summer.  It is unclear at this point if they plan to increase production back to 2015-2106 levels and flood the market or make increases based on global crude demands.

As we all know in the oilfield you can only control what you can control and we need to be thankful for the optimism in the industry but at the same time cautious as we move forward.  We are just over a week into the Trump administration and thus far he is staying true to his campaign promises to work towards improving the US Economy.  By the end of the first quarter we might have a clearer picture of what we can expect regulation adjustments that could affect offshore drilling programs in the gulf.

Hutchison Hayes remains optimistic with plans to support our customer base and their needs.   We have one of the largest ready to move inventories in the industry and have recently made improvements that allow us to operate more streamlined to meet growing needs of our customer base.

Updating Centrifuge Technology - Improving Performance of Established Equipment | Centrifuge Equipment Upgrade

Updating Centrifuge Technology - Improving Performance of Established Equipment | Centrifuge Equipment Upgrade

Each month Hutchison Hayes Separation will focus on highlighting a case study from working with one of our customers.  Case Studies will range across multiple industries as is the nature of our clients and will cover elements of centrifuge implementation, mechanical and electrical repair.   Each case study will outline the objective of the project and the arrived upon solution derived from working with our customers.  

With over 85 years of history in the centrifuge industry we hope to share what we have learned from our customers and keep them abreast of existing technology.  We may not have invented the centrifuge, but we have been working on them a heck of a long time.

Often times today, operators find that the mechanical aspect of their centrifuge system is in good shape, but the operating system has been left in the dust by the advancement of technology. This is especially true with decanter centrifuge back drive operating systems.

Originally, the decanter screw conveyor was held in place by a fixed torque arm and in many applications still is. When variable screw conveyor speeds were required, one of the first methods of control was the Eddy Current Brake.  The Eddy Current Brake is a DC voltage based speed control. 

Unfortunately, parts for this type of control system are becoming increasingly hard to find. As an alternative, Hutchison Hayes Separation was able to provide a brand new screw conveyor speed control system that is PLC based and uses an off the shelf AC inverter duty drive motor. 

The new control system utilizes HMI touch screen technology and allows the customer complete control of their screw conveyor operating speed. Additionally, several operating modes are offered. The Torque, or Load, Control operating mode allows for consistent process outputs despite fluctuating feed stream conditions.

This AC inverter duty motor, PLC based control system is an easy upgrade to just about any decanter centrifuge. It allows the operator many more years of trouble free performance from their mechanically sound decanter centrifuge.

Upcoming Trade Show Appereance

We will be exhibiting at the World Dairy Expo, October 4 – 7, 2016 in Madison Wisconsin. Along with our partner, Nutrient Control Systems. Our booth number is TC #882 & 883 at the Alliant Energy Center in Madison. We will have our HH5500 SlimLine Hydraulic on display. This decanter centrifuge is designed for nutrient removal from cattle manure.

 

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