Advertisement

Follow Us On:

Predator Drilling looks beyond in situ and expands into natural gas

Red Deer drilling company moves away from SAGD and diversifies into a support role

Jan 9, 2012

by Steve MacLeod

When the full force of the economic downturn hit at the end of 2008, the oil and gas industry started to struggle. Predator Drilling (No. 15 on the 2010 Alberta’s Fast Growth 50) was no exception. The Red Deer-based company was less than a year old and had assembled a fleet of five rigs in its first five months in business. As it headed into the winter drilling season that year, four of the rigs were sent to Fort McMurray. But a handful of companies backed out of their contracts as production plans were shelved. “In the winter of 2008-09, we had a total of 128 drilling days,” says CEO Shane Walper.


Predator Drilling CEO Shane Walper
Photography by John Gaucher

That wasn’t what he had planned when he raised $15 million to launch the company earlier that year. He’d seen an opportunity to provide drilling services in the oil sands after touring a handful of operations in the region. “When Predator was a dream, working for Suncor was one of our goals,” Walper says. “It didn’t happen on day one.”

In fact, the recession put those plans on hold for more than two years. But as is clear from Predator’s position at number 15 on the Fast Growth 50 list, the company has found another path to success. Walper says it did so by embracing changes in the way the oil sands are being developed and by identifying a couple of niche markets.

Predator managed to sustain itself until the winter of 2009 through layoffs, a tightened budget and a new round of debt and equity financing. During that time, Walper hatched the plans that would be the foundation of the company’s success. He watched as more and more in situ operations were developed by producers looking for ways to tap the bulk of the 170 billion barrels in the oil sands that is trapped deep below the reach of mining operations.

Companies needed larger rigs with the capability of drilling thousands of metres underground for in situ techniques such as steam assisted gravity drainage (SAGD). While most drillers competed for the big contracts associated with the large rigs, Predator was happy taking smaller jobs that other outfits overlooked.

“The wells needed for SAGD are much bigger than what we [can do],” Walper says. Instead, Predator’s fleet of smaller rigs is used for the less glamorous but equally important function of core drilling as well as to drill observation wells, disposal wells and water source wells.

Predator also began to focus on pre-setting. The company will drill a well to a depth of about 130 metres so the surface casing can be set before the larger drilling rigs come on-site. “Then the big SAGD rig comes in and doesn’t have to do the surface work,” Walper says. “It improves the productivity and efficiency of the big rigs. As the industry ramps up, those big rigs are in more demand and that’s where we see an opportunity to shave a day or two off their schedule. We really see it as a growth market.”

Advertisement

Business started to turn around the following winter, and by February 2010, Predator had all five of its rigs working in the oil sands. The company was also able to hire back some of the staff it had laid off in the previous year and begin adding more equipment to its fleet.

It has since added six more rigs and, here again, the decision to stay small proved fortuitous. With most drilling companies looking to build larger rigs and cash in on horizontal drilling activity in the oil sands and across Western Canada, smaller rigs have been available at a discount. “With the downturn, cash is king and companies are looking to unload iron that they’re not using,” Walper says. “Drilling contractors have been quite focused, and the market we’re in is somewhat out of favour because everyone is going deeper and horizontal with their double and triple rigs.”

Predator has also been able to snatch up rigs from companies that are switching their focus away from natural gas. Walper is betting on that market turning around, and is confident that Predator will be there to capitalize on it when it does.

Looking at the company’s track record, you might not want to bet against Walper. Not quite four years after its creation, Predator met and surpassed its goal of providing three rigs to Suncor. It managed that feat a year ago, and has also provided rigs to MEG Energy, Cenovus and Statoil.

Walper’s challenge now is to find ways to keep Predator’s rigs working outside of the busy winter season. He doesn’t yet have the answer. “We’re a company based on growth; how or what it looks like right now, we’re not sure,” he says, “but mastering the details of whatever business you’re in is really the way to success.”

Advertisement

Alberta Venture welcomes your comments. Please stay on topic and be respectful of other readers. Review our comments policy. If you see a typo or error on our site, report it to us. Please include a link to the story where you spotted the error.

Comments are closed.

Advertisement
Small Business
Small Business
Brought to you by ATB Financial
Venture 250
Venture 250
tiny thing
Business Person of the Year
In partnership with MacPherson Leslie & Tyerman LLP and Alberta School of Business Executive Education
Alberta Oil
Alberta Oil
Magazine
Advertisement