Xtreme Drilling faces ONGC day-rate roadblock

Vol 20, PW 6 (01 Dec 16) Exploration & Production

Houston-based Xtreme Drilling is focusing on CBM operators in India as it scouts new opportunities after successfully completing a 90-well contract on behalf of Halliburton for Cairn India at Mangala.

Over the past few month Xtreme has held two meetings with oil minister Dharmendra Pradhan and several with ONGC director onshore VP Mahawar as it doggedly promotes the merits of its high-performance XDR rigs that cut shallow well drilling time by two thirds. "If it takes 30 days for John or Quippo to drill a shallow well," adds a source, "Xtreme can drill the same in 10 days!" Xtreme's biggest challenge is to force a change in mindset at ONGC which hires rigs by the day not metres drilled.

"Xtreme is very uncomfortable with day rates when it takes two-thirds less time to drill a well than conventional rigs," we hear. "Xtreme can't compete with John or Quippo's day rates." In its meeting with Mahawar, Xtreme was advised to visit ONGC's independent asset heads to press its case for payment by metres drilled.

Until ONGC changes its mindset however Xtreme has little choice but to focus on limited CBM opportunities where rigs are already paid by metres drilled and not by the day. No surprise then that Xtreme is closely monitoring ONGC's rig tender at Bokaro and Reliance's next move at the Sohagpur (West) and (East) blocks after its contract with Towell Drilling ends.

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