Growth during the downturn
“We see Canada as a leading indicator of potential downturns on North American lands,” recounts John Gorman, Halliburton’s VP for Canada, who is optimistic about the future of his industry and the contribution his company can make to the future energy mix. “We started streamlining our efficiencies ahead of the curve, so at the time the downturn really hit, we were already on our path to creating structural differences within our organization to become a lower cost provider.”
Like all companies facing the oil price downturn Halliburton faces a number of challenges, but the way it has gone about addressing them is unique. Coupling the latest technological advances in the industry with a competitive shift in the way it manages its supply chain, Halliburton has set the wheels in motion to make solid market and operational gains.
“I think it's really served us well, especially seeing as we are now coming into the second anniversary of the downturn,” Gorman adds. “Even before the downturn, our mantra had been to be the lowest cost per barrel provider in North America - Jim Brown is our Western Hemisphere President and he really focused on that as our primary driver.
“From our high tech directional drilling and bit combinations to “Frac of the Future” technologies, we are drilling wells faster and producing more oil and gas per well to really improve our customers’ returns. In a time with economic challenges, this reduces the cost of services per barrel to the point where drilling and completion activities are justifiable.”
Utilizing nearly a century of expertise, the company is seeking to extract the highest possible value from its assets in order to thrive during the downturn. It is achieving this using superior products, materials and equipment, staffed by some of the most developed and experienced personnel in the industry.
Halliburton’s operations in Canada cover both conventional and unconventional oil and natural gas services. All told, the company’s Canadian business covers all facets of completion and production services: hydraulic fracturing, cementing, production chemicals, artificial lift, drilling and evaluation services; drilling, drill bits, mud, Landmark Graphics and various offshore services and operations .
Halliburton Canada’s operations are spread across Western and Atlantic Canada from Fort Nelson, BC to St. John’s Newfoundland. The company has been present in Western Canada since 1926 when Erle P. Halliburton sent his two brothers, George and Paul to Turner Valley AB to start the spread of Halliburton into an oifiled services company with global reach. Today, Halliburton is one of the largest oilfield services companies operating in western Canada providing excellent reliability and engineering to numerous customers from hydraulic fracturing to drilling.
Halliburton has been present in Atlantic Canada since the 1970’s when offshore exploration activities around the Hibernia offshore oilfield were first kicking off. Nowadays, the company is looking forward to the Hebron platform work starting as they are well positioned with multiple services involved to make a big impact on that project.
Gorman adds that alongside becoming the lowest cost provider, the oil price fall provided Halliburton with a chance to revamp a number of its operations and drill down on becoming a lean organization. A hitherto less explored activity that the downturn has necessitated is repurposing old oil wells which, as Gorman explains, has been an unexpected source of growth: “We believe we are going to grow out of the downturn. We have actually had a better adoption of some new technologies like refracturing wells. One of our key strategies is coming back into wells and giving them a new life - very often back to production and very often with a lower decline curve.
“If you can go into a well that's already been drilled and recomplete - you can do it for half the price or less of a new drill and very often get close to the original production out of it. That is being brought into the business which really wasn't there at all a couple of years ago.”
From a strategic perspective, Halliburton’s presence in Canada presents the company with an opportunity to competitively grow its market share to make long term gains in a key territory. “Most of the strategies would be around market share growth, given the depth and breadth of the downturn growth in revenue or profitability is not a priority but we have been very successful at what we are aiming to do.”
As one of the largest players in its field, Halliburton recognizes the potential positive impacts of making its supply chain more efficient. Gorman explains: “Halliburton is a very large organization and from a strong logistics base. So when we focused on being the lowest cost per barrel provider we focused on your recovery factor of what we were getting out of the ground.
“For example, we buy more sand than anyone else in North America - including construction companies. When you think of those kinds of volumes you can obviously create some strong relationships with our vendors to be a very low-cost provider given the volumes we go through.
Remote technology also plays a role. From its real-time logistics center in Houston, Texas, Halliburton is not only able to track every truck and rail car in North America, it is also able to report on any delays or issues its cargo might be experiencing – in real time.
“That also minimizes our trucking and rail costs and makes sure that we getting that product delivered when we need it,” Gorman adds.
“If you look through a lot of our pipelines that are very product or manufacturing dependent, the more you can have a high turnover of equipment, you can accelerate your cash generation from making a very efficient supply chain organisation.”
The company has looked at ways of increasing its production performance without reneging on its goal to be the lowest cost per barrel provider. A balance had to be struck. “We focused on trying to ensure that we have all of our technology resources available to make sure that our customers have the best technology to improve their production while keeping their costs at a reasonable level,” Gorman adds.
Through Halliburton’s Guiding Principles for Sustainability, the company continuously seeks to build on its role as an accident-free, environmentally responsible company. It achieves this using a six-point strategy that covers financial performance, health, safety and the environment, global citizenship, transparency and collaboration with suppliers. As a member of the Dow Jones Sustainability Indices, Halliburton endeavours to integrate the above principles into a business model that manages social and environmental risks as part and parcel of delivering long-term shareholder value.
With over a century of experience in the industry, Halliburton knows how to develop a skilled workforce across its field operations, manufacturing and professional roles. Its current talent management strategy is focused on maintaining its career and management programmes while making necessary adjustments to remain competitive during the downturn.
With upwards of 20 training facilities across the world, the company provides technical, operational and leadership training. Complementing myriad development programs, the company provides a number of fast-track career development opportunities.
Keen to provide broader and more immersive access to its educational initiatives, the company set up Halliburton University – an online learning system that enables employees to document career achievements while learning for role-based competencies, competency assessments, and technical training. It also provides a wealth of online courses. The company is also keen to foster the next generation of talent; it offers positions within its operations for recent graduates or internships for those still to complete their studies.
Gorman adds: “From a career progression perspective, we develop high potential employees and we have a partnership with the Mays School of Business at Texas A&M University where we provide financial and business leadership training. While there has been a need to cut costs in other areas, we have kept the Texas A&M training as part of our core leadership training initiatives.
Through the President’s Leadership Excellence Program, Halliburton selects 30 of its most capable candidates and, after vetting from the CEO, trains them to fill top management positions within the company. “We train them to become the next leaders of the company. Very often in organizational announcements, you will see ‘graduate of 2000 and whatever year of class’. This is something we are very proud of; we have a great partnership with Texas A&M,” Gorman says.
Given the cyclical nature of the oil and gas industry, attracting, developing and retaining the best talent comes with a number of challenges. Gorman and his HR teams have overcome this, however. Given the downturn, the company has had to look very hard at which staff it keeps on its books.
Gorman explains: “We are in a very cyclic industry and have to balance the current needs of the business with its future needs. It’s always a challenge to determine how long a cycle will last and what sort of structural changes we can make to the business in order to improve our own economics. It’s a challenge for the entire industry.”
Having refined an already highly effective business into an even more efficient operation, Halliburton’s Canadian operations are set to play a crucial role in the country’s energy mix for years to come. Gorman concludes: “I truly believe that Canada does the best job of being a very responsible environmental citizen and is embracing some of the most environmentally friendly produced oil and gas in the world.
“As Obama recently said during a meeting with Prime Minister Trudeau - the world needs more Canada and I think the world needs more Canadian oil and gas.”