Citadel Drilling (Citadel) was formed in 2013 to address the ongoing and evolving needs of oil and gas producers in Canada and the USA, by providing innovative solutions through the design and manufacture of modern drilling rigs, cutting edge technology and best-in-class engineering solutions.
“We wanted to make improvements to existing rig designs,” begins Dan Hoffarth, CEO. “To do so, we needed to understand the future of the industry. When we started the company, we spent a couple of months interviewing clients to find out what changes would have the greatest positive impacts on their drilling programs and what their views were on areas where the rig needed to be improved. As a consequence, we were able to prioritize what industry professionals actually wanted.
“Working in the construction, manufacturing, and operations cycles of drilling rigs, it would have been very easy for us to go ahead and recreate a product, but we didn’t want to miss the opportunity to innovate. Hence, our TA²CT Series 1 and TA²CT Series 2 rigs were borne, and I’m proud to say, are still meeting today’s definition of super-spec.
“We started building rigs and operating them in Canada. Business was going well until around 2015 when oil started to trend negatively. The industry didn’t collapse but it did take a downturn. We were fortunate, however, that with some of the newest rigs and best people in the industry, we were able to maintain operations, but the business model was significantly impacted,” he continues.
At this time, management made the decision to examine its model and pivot towards the US. While it was operating efficiently in Canada, the move to a different country and basins was bold and required extensive research and planning in terms of service delivery and operations. Dan elaborates: “We discovered that in Texas at that time the unemployment rate was exceptionally low, so we wouldn’t have been able to man a sufficient workforce. As such, researching and developing the path of bringing our Canadian workforce with us was a big part of our strategy. We were able to transition from one basin to another, taking our people with us. The foundation of any company is its people, and bringing our people with us was a huge benefit during the initial stages of winning contracts and establishing operations. Once one rig was operational, over the course of the following year and a half, we had all six rigs transitioned and working under contract in Texas.”
The ability to adapt
As Citadel celebrates its tenth anniversary, Dan reflects on the challenges and strategies facing the industry and those operating within it. “I don’t think many of the challenges facing the sector are new. There has always been labor, equipment, financial and sustainability challenges at play. Those challenges evolve and adopt differing aspects, but we always have to be able to adapt accordingly, and successful navigation of such challenges indicates a sound fundamental understanding of the industry.
“Alongside adaptability, I would say a great company culture is also essential. Often, a company culture’s true colors are only apparent in difficult times. Every organization can talk a good talk when the going’s good, but people’s genuine buy-in is evidenced when an organization is challenged. Empowered, dedicated people have an intent to see a company succeed. Without those ingredients, I don’t think a company has a chance in any business, let alone ours,” he emphasizes.
Indeed, this is a business that Dan knows well, having started in the industry as a rough neck and working through the field positions as well a number of additional executive positions over the years. He was approached to join and co-found Citadel as CEO and looking back, is proud to have worked his way up through the ranks. “Our COO, Dave Hoffman, was my rough neck when I was a driller. His brother works for the company, and one of my brothers was my first rig manager and still works for the company. In many cases, Citadel is very much a family firm, and if not always literally, then metaphorically. I have always been fortunate to be surrounded by a network of supportive friends and colleagues,” Dan enthuses.
Experience such as Dan’s provides insight into the industry and the challenges facing it. “Reliable and affordable energy should be a right, not a luxury,” he continues. “I see this industry coming to the table with new and disruptive, environmentally conscious solutions every day. I think we are viewed by many as a public enemy, but we are providing energy, products and the means to survive and thrive as a society. The energy business is as capable of transformation as any other sector and should be viewed as an incredibly valuable global partner in the future of energy production.”
Technology and efficiency
From facing an oil crisis to pivoting to new markets, Citadel has faced a number of challenges in its ten-year history. “Just as our position in Texas cemented, Covid hit. As a cross-border company, we were faced with concerns surrounding our labor force and legislation. Our prime concern was obviously the safety and wellbeing of our employees, but we also needed to remain operational for the sake of our people. Some of the rigs shut down, others worked through, and our approach was if we can keep everybody isolated, we can keep everybody healthy.
By creating sheltered working environments, with as many home comforts as possible, we were able to support our people, their families and their financial needs. Of course, in doing so, many of our workers didn’t see their families for weeks and, in many cases, months on end, which was an incredible sacrifice and a measure of our company’s inspiring culture. That period of time demonstrated the supportive, symbiotic relationship that exists between Citadel and its people.
“Furthermore, we used this time of uncertainty to better understand new concepts and execute equipment maintenance. We also engaged in funding a start-up called Opla Energy, an MPD solutions provider that is focused on optimization and performance drilling. Opla is part of the modern energy wave: a smart, dynamic company built on fresh ideas from experienced professionals,” Dan explains.
“We are currently scaling that business, and it is moving at a fast pace right now. We offer fully automated MPD systems and cutting-edge engineering solutions with best in-class quality. Innovation is a core value for Opla, and it allows results to be maximized through the use of technology that combines rig hardware with software and engineering support from a remote technical operating center. I think Opla was a big feather in our cap at a turbulent time, and this type of challenge is what really makes us evolve and improve.
“It’s a daily challenge for leadership to identify and explore the future needs of the company. We need to be able to understand the merits and risks of every product we consider and every dollar we spend. We need to be unafraid of failure, but equally able to recognize when something isn’t working and pivot accordingly. Traditionally, senior management is responsible for determining the future of a company, but we have never viewed that approach as being all-encompassing. For us, the best ideas, while not necessarily complete, come from all sorts of people within the organization and can be the ignition points that start great concepts,” he expounds.
Citadel is headquartered in Calgary, with operations centers in Leduc, Alberta, and Odessa, Texas. Opla also boasts a manufacturing facility in South Calgary, an operations center in Houston, Texas, and plans to run a remote operations center out of that facility to serve its US clients. Dan continues: “We look at everything we can possibly do from a programming and software perspective. We support our people internally at all levels and of course, our field workforce too. We have always looked at technology and efficiency as two of the main decision-making pillars at Citadel, and fundamentally, believe we have to get better at what we do every day.
“While we haven’t exhausted all possible areas for improvement, two or three years ago, what we were drilling in 30 days, now, we’re doing in seven-to-ten. This continues to be the case in every basin in which we work. Contractors the world over are seeing new software and different digital technologies that enable more automated, repeatable and consistent decision-making and as a consequence, greater efficiency.”
Looking to the future, Citadel’s aim is to continue to evolve, and to identify those small repetitive processes that can be improved incrementally and replicated organization wide. “We don’t take big risks,” elaborates Dan, “but we will continue to scale technology at the Opla MPD division. Technology is a big part of our future as well as of the future of the industry, as a whole.
“We are pretty proud of what we have accomplished,” he concludes. “We are one of very few companies of our size that participate exclusively in this area of industry. The companies we typically compete against are extremely large public entities. We go head-to-head with some of the biggest and most respected industry names and are really proud of the team for ensuring we’re able to do so.”