Caledus technology set for Sakhalin

Well construction technology company Caledus has secured a milestone contract to provide bespoke equipment for some of the most complex extended-reach wells in the world.

The client is ExxonMobil, with which the Aberdeen firm has agreed a $850,000 package to fund the development and testing of a heavy-duty Arctic service variant of its proprietary SwivelMASTER technology. This is a downhole tool designed to enhance deployment of sand control systems in such wells.

According to Paul Howlett, chief executive officer at Caledus, the system will serve to improve operational efficiency while also contributing to enhanced rig site safety during the construction of extended-reach wells (ERD).

Once satisfied, Exxon’s intentions include deployment of the system at Sakhalin Island in the Russian Far East, where it is operator of the Sakhalin I development.

One result of the deal is the need for Caledus to find additional engineering personnel, so boosting the current workforce of some 40 mostly high-end design and field engineers.

Howlett said of the contract: “This is a big deal for us … a bespoke tool for a big project. The wells are to spud (start) in 2009.

“We’re delighted to be working alongside a major such as ExxonMobil on a drilling campaign as high-profile as Sakhalin Island.

“It is testimony to our company’s ability to innovate and deliver fit-for-purpose, reliable solutions that a Houston-based ‘big boy’ should select an Aberdeen SME to assist in wells of such complexity.”

Howlett said it was brilliant news, too, that the all-too-common veil of secrecy which so often surrounds relationships between small supply-chain firms and petroleum-company clients had not been applied by ExxonMobil.

He felt this would help Caledus attract the calibre of recruit needed to take the company to the next level.

The technology at the heart of the arrangement was originally developed in conjunction with Chevron, and Caledus has run it for Shell in East Asia.

Moreover, it also gained profile at the 2007 Offshore Technology Conference in Houston.

Howlett pointed out that Caledus, which is becoming known for its Slimwell technology, has only been in business for three years and self-funds its R&D.

Additionally, it offers a suite of bread-and-butter products and services designed to underpin cash flow until Slimwell finds its commercial feet.

He got through ExxonMobil’s door by being bold – and by exploiting the fact that he was visiting the Offshore Technology Conference in Houston, so was on the super-major’s doorstep.

Howlett’s message to other small UK firms in the upstream supply chain is to put themselves about, attend leading shows like OTC and spend the money.

“You’ll fail if you sit back on your haunches,” he added.

Caledus turned over £10million in 2007, twice what it earned in 2006. Howlett is predicting an 80% leap in the 2008 financial year.

He describes the firm as being sufficiently “cash generative” to underpin growth and plough back into further R&D.