By Jesse Mullins
Can any industry be more dependent on pipe than the oil and gas industry?
Pipe defines, perhaps more than any other component, what energy exploration, production, and delivery are all about. At every step of the process, pipe is the point of contact, the unifying element, the vessel that makes oil and gas production possible.
Just ask Jimmy Burleson, president at Tubular Inspection Productions, an Odessa-based manufacturing firm that supplies a large percentage of the region’s pipe inspecting professionals.
“Basically, all pipe is good,” Burleson says by way of beginning. “Even if it has a hole in it, some rancher’s going to use it for his corrals.”
From there, pipe can range in quality all the way up to the joints used for high-pressure, big wells.
And all along that spectrum, from the lowliest to the most demanding expectations of pipe, there will be various levels of inspection, to ascertain quality and dependability.
Said Burleson: “Tubing is your pipe that is up to about 3 1/2” diameter, casing would be up to about 13 3/8”. Drill pipe runs from 2 3/8 to 6 5/8. Then you have the little sucker rod, which is from about 5/8 to 1 1/4”. All of these can be inspected so all of our customers will be in some type of business to inspect either pipe or threads, or something to do with pipe.”
Tubular manufactures equipment to inspect any of these varieties of pipe. Burleson said that his company has, besides its office in Odessa, an office in Dunby, Scotland.
“So, basically, we have two dealer-inspection products: one for the USA, as well as Tubular Inspection Products U.K. We have units from Australia to China to Russia to Canada… all over the world. Including the Middle East. Our U.K. office handles, obviously, most of the international. There is also a different type of inspection which is still pipe, but it has to do with the ends of the pipes, the threads. And we supply all of the parts for people to inspect that.”
The inspections Burleson describes are not government-mandated requirements, not regulatory expectations. No, these are steps taken by oil and gas companies wanting simply to keep their supplies and equipment in good condition and repair. Failure to do so will be costly. Especially downhole. But failure, anywhere, is costly, and knowing how good your pipe is helps a professional to make the best decisions with it.
As Burleson remarked, the oil company (or whoever is drilling a particular well, whoever owns a particular lease) will hire somebody to drill the well. Whether they provide the pipe, or whether the drilling company provides the pipe, they’re going to want pipe that is going to meet the specifications for what they’re doing.
“The life of the joint of pipe can be just really dependent on where it’s at,” Burleson said. “In some cases you’re gonna have a lot of gas, which might eat the pipe up faster. It all just depends on where in the ground it’s put. Pipe comes in different grades and different hardnesses. But the joint of pipe will come out of a mill somewhere and it’ll be inspected [first] as a brand new product and then through its life. It could start out in a high pressure situation and then as it degrades over time they might move it and use it in a slow situation where there’s not much pressure anymore. Then eventually it becomes not usable for that purpose and they might sell it as scrap to be used in corrals or whatever else you might want to use.”
Most people in the business, when they think of pipe inspections, think of Tuboscope. Burleson acknowledged Tuboscope’s long domination of the industry.
“The giant of our industry,” he said. “In the beginning, they were almost a monopoly. It was all just… Tuboscope. Then the company that I went to work for out of college became a manufacturer of pipe equipment. So that company became, essentially, a competitor [one of the earliest] with Tuboscope. Tuboscope is still the largest and a lot of that size is through acquisitions.”
Tubular, which sells equipment to Tuboscope, is not itself in the business of pipe inspection. The company restricts itself to equipment manufacture and sales.
“But there are lots and lots of independent pipe inspection companies ranging from the smallest guy that has a truck and goes out and inspects what’s called ‘bottom hole assembly,’” Burleson said. “He inspects threads and [uses] black lighting and so forth. And [from there] it goes all the way up to the guys that inspect the giant 13 3/8” casings.
Chad Beard, owner of Chad’s Inspection Service, is a regular customer of Tubular Inspection Services. The Beard family, going back three generations, has been in this field—a stretch running to 40 years.
“My grandfather was Curley Beard,” Chad said. “He owned Curley’s Pipe Inspection Services. Curley sold out to Tuboscope, and Curley and I continued to work for Tuboscope for probably 12 years.”
Eventually Chad Beard decided he had mastered the skills to start his own operation, and Chad’s Inspection Services, a Monahans-based company, was born in 2010.
“So far, it’s been a fun ride,” said Beard, whose specialties have been drill pipe and bottom hole assembly.
The objective, for Beard and others like him, is to prevent any failures that could be happening in the hole—any kind of “tubular failures,” per se.
“If a joint of pipe comes apart downhole, then that results in a fishing job, and that costs the oil company money or the drilling company money, depending on who may be paying for the service,” Beard said. “So, basically, what we’re trying to do is save the drill strings, save the oil company’s money, the drilling company’s money. We’re kind of the preventative maintenance, kind of the care-and-handling-of-the-pipes for these guys.”
His customers include companies such as Energen, Desta Drilling, Clayton Williams Energy, Big Dogs, EOG Resources, Arrington Oil and Gas—the list goes on and on. Currently 9 people work for Chad’s, with four trucks committed as blacklighting units. There are two drill pipe inspection units, and a crew that does clean-and-drift on casing. “Clean and drift” is essentially the chore of cleaning the pipe threads. The crew “drifts” the tubes on the casing to make sure the bit will pass through the casing when drilling commences.
“We’re a small company compared to businesses like Tuboscope,” Beard said. “This past year we had revenues right at about $2 million.”
Anyone involved in the business of pipe inspection must have a good sense of the overall operations on an oil and gas well, to be able to foresee any contingencies or eventualities. Or, as Beard puts it: “You’ve gotta be a little bit knowledgeable in the whole process.”
Beard said that the biggest change he is seeing is an increase in customers wanting to bring their pipe to the inspection company’s own facility. That in itself is surprising, from the standpoint that most inspection companies are mobile operations. They go to the customer.
“We’re mobile, Tuboscope is mobile—most of the inspection companies are mobile,” Beard said. “But now customers are wanting to send their tubulars into our facilities. This is still a new thing, but it’s becoming more and more a ‘best practice,’ it seems like.”
Beard is reluctant to say that in-facility inspections are superior. “We feel like we do the same quality job anywhere,” he said. But he allowed that many customers get the feeling that they are getting a better inspection job if the inspecting company is not rushed or pressured.
Competition is on the upswing in the current boom.
“I would say there are 15-20 inspection companies in the Permian Basin right now,” Beard said. “Whereas we used to have just a few.”
Breakdowns do happen, especially in boom times.
“We’ve had customers call us and ask for us to come out and re-inspect pipe that another inspection company has done,” Beard said. And, you know, we may find something a little bit different than what that previous inspection company found. We’re seeing that more and more.”
Another of the more reputable inspection companies in the Permian Basin is Lone Star Services, based in Odessa. Robert Mathis, owner of Lone Star, agreed with Beard that the influx of new competition has meant that marketplace standards have been compromised.
“There is a company that does a lot of ‘third party’ monitoring in our industry, to keep everyone to the same standard,” said Mathis. “That company—T.H. Hill Associates, based in Houston—certifies their work. But a lot of the new inspection companies coming into our area will pick and choose where they work, so that they do not have to be monitored by a third-party monitor.
“Another drawback to work from these newcomers is that they don’t know our area as well,” Mathis added. “We know our environment and the conditions that are found here.
“Some of our customers will try those new companies to get the cheap price, then they come back to us,” he said. Mathis said that Lone Star has eight drill pipe inspection units and four blacklight inspection units, or, as he put it, “more capacity than anyone in West Texas or Southeast New Mexico.”
Burleson, of Tubular Inspection Products, agreed that the business was changing. For his part, he took a broader frame of reference, going back several decades.
“I’ve been in this business since I got out of college in 1976, and in the beginning we were so dependent on OPEC,” he said. “The OPEC countries decided that maybe the price was getting too low so they would cut back on production. We were always at their mercy. In 1982 and ‘83 the oil industry just died a death. Our drilling [previously] had gotten up in the [range of] 4,000-plus rigs. OPEC decided to show us who was boss. The industry died a death.”
But things have changed—dramatically—since then.
“The difference now is with all of the new shale plays and the directional drilling, along with the frac’ing, there’s a lot of natural gas involved. Well, we [United States] don’t import natural gas. Maybe a little bit from Canada or Mexico but you don’t bring it in from Saudi Arabia. And it is a clean burning fuel. It diffuses our dependency on foreign oil. So now we have a market that is pretty much ours. We are finding more and more that these large fields—the Eagle Ford Shale, the Barnett Shale, the Marcellus—there are a lot of them and they are finding new ones all the time. So now we’re not so dependent. And while they’re getting this natural gas out of the ground, they’re getting oil out of the ground. So we are not nearly as dependent. That’s the biggest change that I’ve seen.”
That’s a change that’s good for pipe inspectors, for manufacturers of pipe inspection equipment, and for users of pipe within the industry—and that takes in just about everyone.