Randal Graves has worked for NOV Hydra Rig since 1982 and has been involved in the coiled tubing industry for over 26 years. He has held various positions with Hydra Rig including International Technical Sales and Vice President of Sales. He represented NOV Hydra Rig as a charter member on the original Icota Board of Directors. He is currently Director of Sales for the NOV Hydra Rig group, with sales coordination responsibilities for the Texas, Canada, Oklahoma, and UK locations.

Successful growth of any manufacturing company requires development and implementation of new technologies and expanding the product lines. It's especially important for manufacturers of drilling equipment because oil and gas reserves have been depleted in almost every production region so there is significant growth in number of technologies and methods for oil recovery.  The range of equipment and tools used in the oil and gas service industry is also expanding each year.

When the market is active one of the main elements of successful development for companies in this industry is to balance resources dedicated to production and development of new products. In our group, it's evaluated at a formal meeting at least once a year. During this meeting we discuss what new developments we have seen or what modifications we should make to our equipment. This practice allows us to innovate even when most of the resources are going toward production. The main goal of these meetings is to ensure that we continue to move forward by developing and implementing new and improved designs of our product lines.

Right now we are working on some major projects. The details are still confidential but one project will advance the way we control the equipment. The other major, active project involves enhancing our technology for coiled tubing drilling, as we see it became a more accepted technology used in the United States and Canada.

There is tremendous growth in coiled tubing drilling in Canada, primarily for coal bed methane production. That is because these fields are relatively shallow- less than 2000 meters deep and we'll usually have multiple zones of coal beds with dry gas, so it is important to drill these wells underbalanced. Generally they would bring damage to the structure of the well and would not be as effective as they would if they drilled conventionally. Coiled tubing drilling is not necessarily cheaper than conventionally drilled wells. It allows you to drill underbalanced, which can greatly increase the well's production. It is also very fast. For example, in Canada drilling from well to surface takes only two days. That type of drilling has applications in many other areas in the world. It has become more common in the U.S., in the Middle East, and we think this will also happen in Russia and the CIS region as a whole.

One of the main goals of widening our product lines is the production of fracturing equipment. In the past several years there has been tremendous growth in fracturing in Canada, for methane production. It was followed by growth in fracturing in the U.S., mainly based on works done on shale, which is unconventional gas production on some fields in north Texas, eastern U.S., northern Arkansas and northern Louisiana. Traditionally, the normal natural gas production in the U.S. has been in areas like western Oklahoma, where the gas is very deep - 15,000 to 20,000 feet.  So the production requires the drilling rig to get down to this gas, which is under very high pressure and produces very rapidly. This makes production quite profitable.

The new technologies introduced over the last several years focused on finding an economical way to extract natural gas from fields that are not typically profitable, like methane and the shale production. For the production of shale fields and coal bed methane, it took advances in horizontal drilling technologies, as well as development of new fracturing methods to make production of these unconventional gas sources economical. As a result of the advances in these technologies, rapid development of these types of fields have created tremendous growth in the manufacturing of fracturing equipment in the U.S. over the last several years.

We expanded our position in the fracturing equipment market by acquiring the Rolligon company, which became part of NOV Well Intervention and Stimulation Equipment Group in late 2006. NOV Rolligon's product offering includes fracturing pumps, blenders, and liquid additive systems, as well as cementing, acidizing, and coiled tubing support pumps.

NOV Rolligon has been primarily in the U.S. market, and has been the manufacturer of choice for the majority of the rapidly expanding US-based fracturing service companies during this period of rapid growth. It takes several different pieces of equipment to make up a complete fracturing fleet of equipment. The manufacture of the fracturing pumping units is fairly straight forward, but there are other units that make up a fracturing complex that require a very high level of engineering and manufacturing experience. One of the main units of this equipment is the blender which is probably the most complicated piece of the fracturing complex. NOV Rolligon's blenders have built a reputation in the industry as being one of the most technically advanced and reliable unit on the market today. Modern frac fleets are also equipped with sophisticated centralized control systems that allows operation and monitoring from a single location, called the Frac Van. NOV Rolligon's frac fleet control system utilizes field proven hardware components that have been field proven and used in many other mobile equipment applications, making their control system a robust and dependable system. It is applicable for the fracture because its robust electronic control and reporting system enables a proper control of the frac job from a central control station.

NOV Rolligon also has equipment operating in Russia. It is mainly a U.S.-market oriented company, so they have not done direct sales in Russia and most of their products have been sold through the other companies. These sales have been made to at least five Russian fracturing companies. In fact most foreign equipment operating in Russia has been sold not directly from the manufacturer, but became a part of complexes, assembled by Russian companies. It is important to know NOV Rolligon equipment now operates in Russia for blending and fracturing all of the pieces that make up the fracturing complex, and thus already has its own place on this market.

The development of new equipment also includes providing new options for customers for shipping equipment we already produce and implementing new joint projects between NOV Hydra Rig companies. One of the main projects which we already launched is the development of fracturing equipment for Russian and CIS area markets.

The other company from NOV Hydra Rig group, NOV Fidmash, now manufactures fracturing equipment for the CIS region. Particularly, it has recently supplied a complex to Belarusneft. That was the first joint venture effort between NOV Rolligon and NOV Fidmash, where NOV Fidmash supplied and built the pumping unit, manufactured the housing and the platform for control complex, and NOV Rolligon manufactured and supplied the blender and control system.

Now we want to continue this project, because of its successful start. Both companies are recognized in their own areas. So now we intend to present to the Russian oil and gas service companies three possible ways to supply fracturing equipment. First, we can offer them a complete system that is built by NOV Fidmash if they want to buy Russian or CIS products, on Russian carriers etc. and then NOV Fidmash will acquire control systems and blenders from NOV Rolligon to complete that complex. There are certain Russian customers who prefer to have completely Western equipment. For those customers we offer the complete complex built by NOV Rolligon in the U.S. or we can offer a combination- NOV Fidmash built pumping units, NOV Rolligon built blenders, and then we put these things together at NOV Fidmash and supply to the customer. This option gives the customer the advantage of Western technology, with a local source for service, parts, and assistance.

In summary, even if the company is a dominant leader in the market, it can't maintain its leading position without significant efforts and investments in development of new equipment and technologies and adding new product lines.