Cockpit view of Allied Wireline’s e-drive truck

(Photo courtesy: Allied Wireline)

As producers continue to move more rigs away from dry gas plays to liquids-rich plays due to the significant price differentials, gas processors and other midstream companies aren’t the only ones standing to benefit from the switch.

As more of these producers begin to drill in these liquids play they will look at logging their wells. Although the wireline logging industry has traditionally been dominated by large players such as Schlumberger, Baker Hughes, Halliburton and Weatherford International, independent Allied Wireline is moving into a sector that is seeing more and more independent producers arrive.

Allied Wireline can offer these smaller independents a reliable and efficient wireline logging choice through its long-term partnership with GE Oil & Gas that allows Allied Wireline the ability to offer customers exclusive access to GE’s logging tools and related equipment.

“We’re a new company and our early customers will be dominated by independents with majors coming later. We think we’ll be working with the major E&P companies eventually, but it will take time to be qualified. The small and large independents will be a bigger part for us early on,” Larry Albert, president and CEO of Allied Wireline, told Gas Processors Report.

Albert said that while the company is initially working with producers on liquids plays due to the market, he anticipates working with the same group of producers on gas as the market begins to recover. “The same people we work with today on the liquids-rich plays, we’ll be working with on the gas plays when gas pricing improves. From a skill standpoint there’s no difference between someone working on a gas or oil well.”

“What we’re trying to do is be very efficient. What’s unique about the GE tools and the technology we incorporate in our trucks is that everything is designed to be very efficient at the well site due to proprietary e-drive technology. Logging trucks are designed with a big reel of steel cable (the “wireline”) in them and the reel is typically powered by a hydraulic pump. Working with National Oil Well Varco ASEP division we have put together e-drive units that utilize a large electric generator and electric motor that controls the movement of the wireline in and out of the well,” he said.

Allied Wireline’s e-drive truck

(Photo courtesy Allied Wireline)

The e-drive is more efficient and safer than hydraulic units according to Albert since they are controlled by modern software and computer controls and can be remotely operated, which allows Allied Wireline to rig up much quicker. Due to the advanced technology there is less chance of leaving tools in the well. The smaller size and weight of the GE tools also helps Allied be more efficient since the tools can more easily maneuver through adverse borehole conditions.

“We’re trying to be the company that delivers more efficiently, more safely and more reliably. The GE tools are designed to be very short and light so they can pass bends in the well much easier than other longer and heavier tools. Our customers also don’t need to drill their holes as deep because the tools have sensors that read the formation closer to total depth. As you get the tools closer and closer to the bottom of the well you don’t need to drill as deep to get logging measurements across the formations of interest. We think we can get to the bottom of the well quicker and faster than our competitors can. All that means savings for our customers: time, rig time, more opportunities to get logs when maybe they couldn’t get down with competitors’ products,” Albert said.

Although the company is new player in the field of wireline logging, having announced its relationship with GE in April and completing the field commercialization of its open-hole logging services in the fourth quarter of 2010, the company began to take shape in 2009.

Larry Albert, President and CEO of Allied Wireline

(Photo courtesy: Allied Wireline)

“It was kind of the low cycle for the industry, which was pretty depressed. It wasn’t a good time to be thinking of a new oilfield service company of any sort given the state of the business at the time, but we noticed that there hadn’t been a fully-integrated independent wireline company since the 1970s,” Albert said.

Thinking that there might be a market for such a company, Albert began to put together plans to create Allied Wireline before the market rebounded. The timing actually worked as a benefit for the newly created company as it made hiring and staffing easier in a depressed market. “We figured if we could be ready and get off the ground early in 2010 we could take advantage of upturns in the market,” he said.

There are two segments in the wireline business: open-hole and cased-hole. Open-hole involves running tools down into the newly-drilled borehole to acquire data to tell if the well is productive or not, while cased-hole involves completing the well and includes logging the pipe in the ground to determine if the cement put in place is good or bad, logging to determine where production is coming from, plus perforating the wells to allow the oil and gas to flow. Perforating involves the use of explosive shaped charges to shoot holes in the casing, through the cement and into productive rock formations.

“There are a lot of independents in the business in the cased-hole segment mainly because the technology threshold is not as high and there are a lot of independent suppliers for cased-hole technology. Open-hole technology is more complex with a very high R&D effort required,” Albert explained.

Allied Wireline was able to overcome this high threshold by forming a partnership with GE, which had been doing open-hole research and development for several years, but had not yet commercially deployed their technology. “Our idea was to entice GE into an agreement where we acquire their open-hole logging tools and surface technology and bring it into the U.S. market. We knew that if we could get into the open-hole business that the cased-hole business would be fairly easy to enter with plenty of opportunities to buy the equipment we needed,” he said.

Like many of the newer entries into the midstream, Allied Wireline found that the easiest, most secure route to obtaining capital was through the private equity market. Albert said that while money seemed to be looking for a place to work everyone was a bit cautious in 2009. The company found backers in Turnbridge Capital out of Dallas and Swift River Investments out of Boston. These companies then brought on smaller investors involved in oil and gas in Dallas, Houston and Louisiana.

Allied Wireline is planning to concentrate on a smaller area to reflect its early concentration on the liquids-rich plays in the Southwest – primarily the Permian, Ark-La-Tex, south Texas, north central Texas as well as the Mid-Continent.

Currently the logging tools and services offered by Allied Wireline and GE Oil & Gas are well suited to work in vertical wells, but Albert said that Allied Wireline met with GE officials regarding adding technology for use in horizontal wells that will further expand the company’s potential client base since a large percentage of wells being drilled are horizontal.

“Typically with wireline companies, we work with gravity. We have a tool on the end of a wireline that is being lowered into a wellbore. That tool will drop as long as the wellbore deviations from vertical are less than about 60 degrees. Once that deviation goes closer to horizontal you can no longer use gravity to feed your tool into that well. We’ve got some ideas that include a memory mode that will log with tools run on the end of drill pipe. The tools can be deployed through the deviated section and when retrieved the log data can be dumped at surface. We will be working on other technologies such as batteries, turbines and wireless telemetry to get logging data into horizontal wells,” he said.

Although Albert doesn’t expect the market to really fully recover until after 2011, he expects growth this year, which combined with new tools from GE and expansion into other areas gives the company a bright future. – Frank Nieto