When you have a meltdown in any industry, like oil prices dropping by more than half, hard and fast decisions need to be made. The survival instinct kicks in and you change the way you do things.

Michael SALEEBY CEO MCC CHEMICALS

The right chemistry

March 16, 2017

TOGY talks to Michael Saleeby, CEO of MCC Chemicals. MCC is a manufacturer and supplier of specialty chemicals for the upstream, midstream, downstream and water treatment segments of the onshore oil and gas industry.

Headquartered in Houston, MCC Chemicals distributes its products around the world through a global network of agents and distributors and regional offices in Dubai and Singapore. MCC has developed in the USA by taking a hands-on approach, providing operators with custom-made chemical solutions to fit client specifications. The company also offers oilfield services such as toll blending, tank cleaning and central processing facility management.

• On changes to the hydraulic fracturing (fracking) sector: “Fracking contractors have started improvising due to difficult oil market conditions. They have modified their ways to reduce costs. For example, major commodities such as guar are no longer required. Now they are utilising a slick water system as a substitute for a crosslinked gel system. Consequently, we have started having enquiries for different specifications and quantities of friction reducers and other additives that are used in large quantities for pressure reduction and flow efficiency enhancements of the water pumped into the wellbore.”

• On the USA compared with other markets: “Hydraulic fracturing is the main oil extraction method used in the US due to the shale revolution. Furthermore, due to EPA [US Environmental Protection Agency] regulations, drilling activities in the US are limited mostly to water-based mud. In other parts of the world, oil-based mud drilling is the conventional way used to extract hydrocarbons, mostly because it is cost effective and acceptable by local [environmental] regulations.”

Besides touching on these topics, TOGY talked at length to Michael Saleeby about the dynamics of the chemical sector and how the company is weathering current industry conditions. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Michael Saleeby below.

 

How has the chemicals sector adapted to the evolution of hydraulic fracturing (fracking) techniques?
Fracking contractors have started improvising due to difficult oil market conditions. They have modified their ways to reduce costs. For example, major commodities such as guar are no longer required. Now they are utilising a slickwater system as a substitute for a crosslinked gel system. Consequently, we have started having enquiries for different specifications and quantities of friction reducers and other additives that are used in large quantities for pressure reduction and flow efficiency enhancements of the water pumped into the wellbore.

How do other markets differ from the US market?
Hydraulic fracturing is the main oil extraction method used in the US due to the shale revolution. Furthermore, due to EPA [US Environmental Protection Agency] regulations, drilling activities in the US are limited mostly to water-based mud. In other parts of the world, oil-based mud drilling is the conventional way used to extract hydrocarbons, mostly because it is cost effective and acceptable by local [environmental] regulations.
As for oil production, overseas markets are mostly government controlled, and it is mandatory for local and foreign entities to invest in state-of-the-art facilities to enhance oil processing. Hence, our customers are less in numbers but larger in terms of production, and it is less costly and challenging to market our production chemicals due to centralised chemical injection systems. In the US, by comparison, production is deregulated and privatised and managed mostly by small operators, and chemicals are injected well by well. Therefore, it is necessary to provide integrated services with a team of chemists managing the chemical injection programme for all the wells, which are scattered in a wide geographical area and sometimes producing different types of crude.

What is your focus for the US market?

Our main focus here in the US are the hydraulic fracturing, drilling, acidising and cementing market segments. We also select production chemicals projects according to the size of the oilfield and feasibility.
In the US, the industry is privatised, and wells are owned by private citizens as well as oil companies.
When producing wells are owned by the former, fewer chemicals are used due to budget constraints. When the producing wells are owned by oil companies, chemical injection programmes will be a must and chemical purchasing is carried out through a long-term master service agreement. This is where we choose to offer our production chemicals, which are cost-effective compared to our rivals’.

How has MCC adjusted to global oil and gas industry downturn?
We are somehow still in a survival mode like everyone else in the oil and gas industry. We had to cut costs across the board and restructure. We, unfortunately, had to lay off some of our staff who had been with us for a decade or more. We had to find ways to change the process and reinvent ourselves in a leaner and more efficient way; things happen for a reason sometimes. When you have a meltdown in any industry, like oil prices dropping by more than half, hard and fast decisions need to be made. The survival instinct kicks in and you change the way you do things. We removed red tape, empowered our staff and streamlined processes so we are able to make decisions faster and be more responsive to the customers’ needs.

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