Smart Business Houston | July 2010

When Kemal Farid wrote Merrick Systems Inc.’s first software in 1989, he envisioned a company headed down a path of helping oil and gas companies with their tax management needs. Since then, the company has reinvented itself several times over.

Today, Merrick is a software development and professional services company that caters to the upstream and midstream oil and gas industries’ production operations. Much of the company’s success and change has come from the fact that it serves as an incubator, listens to the oil industry’s needs and runs a lean operation.

As president and CEO of Merrick, Farid has led the company through several transitions, introducing new product development and adapting to marketplace changes. That’s not easy, but Farid has developed relationships with driven entrepreneurs to produce ideas and instilled a customer-oriented culture that allows Merrick to stay close to client needs and market trends.

That closeness to the industry helped Farid realize several years ago that Merrick’s portfolio of products and services was ready to compete for international business. Under his leadership, the software company has found multiple international partners and grown its business globally by 30 percent in the last three years.

But he doesn’t plan to stop there. Farid has developed a vision for high revenue growth in the next five to seven years. The plan calls for organic growth, acquisitions and developing products that may help further advancements in additional energy solutions, including the potential for a “green” division.

While Farid’s vision may lead Merrick to more inventing and reinventing, he is currently focused on enhancing the company’s core products to reach short-term growth goals.

Feature Articles, Aug 03 2009 (Digital Energy Journal)

There have been many improvements in reliability to RFID (radio frequency identification) tag technology for oilfield operations over past years, says Merrick Systems – and now they’re tough enough to be used on drill pipe

It is easy to see the appeal of installing RFID on oilfield equipment. It allows engineers, managers and the C-suite alike to keep track of where equipment is and where it has been.

RFID technology is widely used in many industries such as retail, medical, transportation and packaging, but new technologies now allow RFID tags to survive the harsh environments of oilfield operations – extreme temperatures, pressures, corrosion, abrasives and vibrations, as well as be readable through drilling mud and dirt.

The problem, says Steve Ball, RFID Business Manager with Houston-based Merrick Systems, is that many companies tried RFID in the past – back when tags weren't tough enough for the oilfield – and gave up on it once the tags failed.

Through many years of research and development, Merrick has developed a system it says is tough enough for the oilfield industry. Now is the time for those who were frustrated by RFID in the past to have another look at it.

“In oil and gas you need hard, robust tags that can stand up to an extreme environment,” Mr Ball says. “They are going to be painted, sand blasted, they need to be readable through mud, and they need to be reliable when used over and over again.”

Merrick’s patented tags have been designed to survive pressure up to 20,000 psi and temperatures of 360 degrees F, making them suitable for rigs and drills. They can also withstand high corrosion, meaning they will outlast the life of the asset they are attached to.

Over the longer term, oil companies might aim to have their entire inventories tagged – and many companies are already starting along this path.

“There's a lot of design work and engineering that's gone into developing and testing these tags and making sure they are survivable,” said Kemal Farid, Merrick’s CEO. “We’ve invested many years to getting where we are today.”

“The adoption curve is long - it is happening steadily but slowly,” said Mr. Farid. “We're still in the early part of the adoption cycle.”

The Merrick drill tag

Merrick’s RFID tags are about the size of a 5 cent piece, with a hole in the middle, so they can be affixed to the tool joint of drill pipe.

“You just drill a small pocket in the tool joint, thread the hole and you screw the tag into it,” said Mr. Farid. “People can attach it to almost any kind of surface—it’s a very robust mounting”.

“They've been designed to stay affixed to drilling equipment during their typical use or extreme use for that well,” said Mr. Ball. “We've had the tags survive drilling through the most abrasive formations.”

Merrick’s portfolio of tags can be installed on risers, drill pipe, downhole tools, flow iron, logging tools, wireline tools and any surface or subsurface equipment. “Some of our tags are going through testing, some are in production, some are already in customer pilots, and some are in full operation” said Mr. Farid.

The cost of each tag is in the “tens of dollars” range, Mr Farid said – more expensive than tags used in a normal retail environment because they have to be ruggedized to meet the industry’s needs.

Once Merrick developed a tag that was tough enough for drill pipe, customers started asking for the same tags to be installed on all of their heavy duty equipment and risers.

One Gulf of Mexico diving company approached Merrick after testing a range of different identification methods on equipment, including standard RFID tags and stick-on labels, and had not found them robust enough. “The customer went through extensive testing for every tag out there,” Mr Farid said.

However this customer found that Merrick’s tag, developed for drilling, would succeed where the other tags failed.

“It can be painted over, you can get grease on it - it can be inset into a mechanical iron configuration, it can be part of the skid,” he said. “You can install one tag that will last the life of the equipment, so you’re not always replacing and re-associating tags in the database.”

RFID’s application is meeting global demand — Merrick currently has projects in the US, North Sea, and in the Middle East. There are rigs using its systems in China, Brazil and West Africa, among other locations.

Benefits

So far, oil companies have realized many benefits from the data generated by the radio tags.

At a basic level, the system is used to track the location of items – to improve management of the items themselves, and track maintenance history and requirements, current location, and usage history.

Many oil companies benefit from tracking riser inspection and maintenance information using RFID technology to make sure what goes in the hole will get the job done.

“The inspection information is recorded on an intrinsically safe handheld device, then uploaded to our system on the rig, which in turn transmits to the ERP system,” said Mr. Ball.

The system can also be used to keep track of the history of specific pieces of pipe. For example, if a dogleg has been drilled, one length of pipe has been fatigued and probably needs to be pulled out of service when the drill pipe is removed. RFID allows engineers to track that usage and ensure that the fatigued pipe is replaced with a more suitable joint. The benefit of RFID is that the removed joint can be utilized in a less severe location in the drill string to fully utilize the life cycle of that pipe joint.

“You collect history about how the pipe's been used that tells you whether or not it’s appropriate for the drilling operations,” said Mr. Farid.

The system also makes it possible to configure more complex drill strings. When building a string, engineers put together different types of pipe at different depths. If a pipe is mislabeled or its usage hasn’t been tracked properly, it can be placed in the string incorrectly, causing the string to fail.

“This system can help ensure your drill string is being built as planned, with the right pipe in the right order,” said Mr. Farid.

“This may also turn out to be a very important technology in automated drilling,” he said. “If you have automated equipment, it needs to be able to correctly identify the piece of equipment it’s picking up - ensuring the right piece of equipment is used in the right order. You have to use RFID for that - you don’t use barcodes.”

There are also safety benefits to RFID because it makes it easier to set up systems to monitor that the right equipment is being used for the current job.

Choosing your standard

Tags aren’t one size fits all – There is a range of different RFID technologies available to meet specific needs, including passive tags, which can be scanned manually, and active tags, which are battery-powered and actively send out signals for scanners to pick up. There is also a choice of low and high frequency which affects the distance at which a tag can be read. More advanced systems can integrate with a GPS (global positioning satellite receiver), for near real-time asset tracking.

But in the oilfield, the most appropriate technology is probably the most robust one – no batteries in the tags, and low frequency data – which means the data is less susceptible to interruption from paint, mud, drill fluid and dirt.

Lower frequency tags are also most suitable for achieving accurate reads at short distances of equipment that is close together, like on a pipe rack, Mr. Ball said.

A high frequency data tag might be appropriate if you want to (for example) track items in a truck by scanning a pallet as it drives past a reader. However, because of the asset orientation, varying distances and speeds at which the tags will scan, the reliability of scanning can be compromised.

Higher frequency tags are also less likely to be readable through grit. It is also not possible to mount a high frequency tag directly on metal because of interference – for example, tollway tags that use higher frequencies must be mounted on the glass windshield.

“I think the complexity of the different frequencies and types of tags available is contributing to the long adoption cycle. Engineering groups, IT departments, production companies and drilling companies are all getting up to speed on their options,” said Mr. Farid.

Merrick has a variety of different tag types in its system, including its own designs and off-the-shelf products. It uses standard RFID communications systems to ensure that its products are compatible with other systems.

Data management

Data read from the tags can be kept on standalone software, or integrated with maintenance management systems or riser management systems.

“We brought our experience from the last decade and a half with field computing in oil and gas production environment when we launched this tool,” Farid said.

Merrick’s software tool can integrate with a company’s enterprise asset management system (such as SAP or Oracle), and can run on mobile devices, so users can access data literally from the field.

Merrick also provides a range of associated consulting service, to help customers determine what equipment they will track, how they will install the tags and how they will get the best out of the information.

RFID’s early adopters are finding that the technology has many potential uses that are still being uncovered. Mr. Farid added, “Once you have the ability to electronically identify a piece of equipment and know what it is, the applications are limitless - this is really going to be able to change the game of drilling operations and asset traceability.”