RedNews Issue No.1

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ISSUE NO. 1

Inside this issue

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> PowerBall and eRED – Success Stories > New Faces join the Team > Team Awards Recognise Standards > Sporting Success > Win an iPad 2

Expanded Product Fleet to Improve Production Time Red Spider has invested heavily in expanding our suite of game-changing completion products in response to growing customer demand.

operation by reducing wireline runs from eight to one.

The eRED routinely removes 24 hours from operations; the removal of 10 wireline runs providing the greatest saving so far of 36 hours from a single subsea job.

As well as increasing the range of products, we have also added significantly to the overall product fleet in the last quarter in response to customer feedback and market research. By manufacturing and holding a suite of completion tools in-house, Red Spider can help speed up the offshore production process by having the ability to service operator demand in the North Sea, North and South America and Asia Pacific.

It quickly became apparent from the eRED’s continuing success that there were other potential applications for Remote Open Close Technology in the completion of wells. Further customer requests followed by investment in extensive research and development work has resulted in two new products, eRED-FB and PowerBall .

Our first product, eRED , has been used widely across the North Sea by a host of operators and has brought them multi-million pound savings. The valve has built a reputation for reliability and has allowed North Sea operators to save up to $900,000 during a single

eRED is fast becoming the industry standard solution for a range of downhole applications and we are confident the new additions to the product line will be widely welcomed for subsea operations thanks to the savings and reduced risk they offer. ■

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Downright Clever, Downhole Simple

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Welcome After a very challenging time for many companies in the oil and gas sector, Red Spider is able to look back on 2010 as a year of record levels of work and very successful in terms of development work carried out and completed.

2011 is on track to surpass this with 60% growth forecast for the current year. There are several reasons for this: • existing products attracting new customers as well as winning further business from existing customers, including BP, Shell and Statoil • expanding into new international markets • introducing new spin-off products offering reliable completions solutions that will save hours of rig time and improve safety performance Impetus for our growth and ability to invest in new product development came through investment of $12 million from Energy Ventures and Simmons Parallel Energy Fund last year, which is helping Red Spider to accelerate commercialisation and roll-out of our ROCT technology.

It is also supporting a comprehensive internationalisation plan, most immediately covering Asia-Pacific and North and South America, two regions with enormous scope for our specialist products.

We have a real feeling of Red Spider moving to the next level in our growth strategy. Since the investment, we have changed our strategy to be more aggressive and confident. There is a big market in Asia Pacific and North and South America and we have now been able to develop the product pool we need to cover these regions properly and for the long term.

Steve Nicol Chief Executive Officer

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PowerBall- Engineered for Maximum Reliability PowerBall is a pioneering reservoir isolation barrier that prevents fluid loss during the upper completion phase of well construction. Its increased reliability will differentiate it from its competitors, and could potentially save operators up to $800,000 per operation by delivering major time reductions in subsea operations and significantly enhancing safety.

Red Spider worked with ITF, the oil and gas Industry Technology Facilitator, on product development and commercialisation. A total of $800,000 was invested in the development of the technology by four operator members, including BG Group, BP, Chevron and Maersk Oil, while Red Spider committed in excess of $11,200,000 to the project.

UK Region Manager, Andy Skinner said: “PowerBall will offer reliability and huge savings to the global energy industry. Crucial to delivering this product in such a short time frame has been commitment from the four operator sponsors brought together by ITF.

By moving the mechanical parts of the ball mechanism below the closed ball area of the tool, and as a result, protecting them from debris, Red Spider has turned traditional reservoir isolation barrier technology on its head with PowerBall.

Set to give added reliability and save oil and gas operators time and money, PowerBall can operate in any type of well, including cased and open-hole wells.

Through the ITF process we were able to pool the knowledge from the project sponsors, which allowed us to draw on their industry experience to close-out potential problems that may have delayed development of the technology.”

PowerBall has been tested extensively to ensure reliability at our dedicated test facility in Aberdeen. Well completions technology challenges include optimising lower completions, which PowerBall successfully achieves by using electronic logic in its primary opening mechanism. This offers the user increased flexibility during the opening sequence; which is another benefit as the tool set-up can be changed, if required, on the well site.

Well-documented challenges exist within the industry during well completion activities as the technologies utilised are often exposed to large amounts of debris, leading to operational failure and costly shutdown time.

“Ground-breaking technology like PowerBall provides benefits for the entire international community.”

Another unique element to the PowerBall technology is that it has separate modules to house components including the sensors, electronics and secondary back-up systems, all of which can be operated remotely without shutting down a well.

Keith Mackie, ITF’s technology manager said: “Effectively tackling industry wide challenges such as well completions is a prime focus for ITF and its membership. When a groundbreaking technology like PowerBall is successfully delivered into the market place it provides benefits for the entire international community.’’ eRED-FB is a completion placement valve that can save around 32 hours rig-time by eliminating the need for any interventions during the operation. It is essentially a tubing mounted eRED, permanently deployed as part of the tubing string which when open, provides a full through-bore for well fluids. The eRED-FB is particularly suited to completion placement operations.

Red Spider again worked with ITF, the oil and gas Industry Technology Facilitator, on product development and commercialisation on this new product to ensure alignment with the new product and the client requirements. A total of $580,000 was invested in the development of the technology by operator members, while Red Spider committed in excess of $960,000 to the project. ■

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New Faces Join the Team Red Spider’s strategy for growth hinges not only on the success of our products, but also on having the right people in place to make it happen.

David Allan, Chief Operating Officer, comes from a background of more than 17 years in the oil chemicals sector, latterly as operations manager at Intertek Testing Services.

In the role, he was involved in the significant growth of the Aberdeen business over a six year period with the company. A Robert Gordon University graduate with a young family, he has also recently qualified as a Chartered Chemist.

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Europe and Africa Sales Manager Barry Kiloh joins us from Baker Hughes where he held a number of senior sales positions across Europe, latterly as Business Development Manager for the company’s intelligent production systems (IPS) product line. He has worked in the oil and gas industry for around 15 years in total, including at Schlumberger and Expro in operational roles.

At our Norwegian division, Red Spider AS, sales and well services engineer Per Arnfinn Monge has more than 20 years experience working in the oil and gas industry. His most recent position was with Wellbore as Senior Project Engineer and he has worked previously with Halliburton and Petroleum

Engineering Services. He joins Oddvar Dalane, Red Spider AS’s Sales Manager, and the rest of the team in Norway supporting existing customers and developing new business opportunities.

Sales Engineer Euan Fraser and Senior Sales Engineer Richard McKimmie have joined the UK sales team to help strengthen customer relations and develop business opportunities.

Each has more than 17 years’ experience in the oil and gas industry. Euan has worked with Hydrafit Subsea and Baker Oil Tools, while Robert Gordon University graduate Richard was latterly a Service Manager at Halliburton Energy Services, working with Schlumberger prior to that. ■

Team Awards Recognise Highest Standards

Meet the Red Spider Team

It’s important to all of us at Red Spider to uphold the company values of teamwork, honesty, trust, respect and openness in all we do within the team and when dealing externally with our customers, contacts and suppliers.

Red Spider is exhibiting at the SPE/ICoTA Tubing & Well Intervention Conference & Exhibition in Woodlands, Texas, from April 5 – 6.

“There is enormous potential for our products in the US and South America and we have had high levels of interest resulting in ground-breaking project work in this region. The conference is an excellent forum for us to show our new completions technology to a highly-relevant audience,’’ says US Sales Manager John O'Hara.

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We create opportunities in a supportive environment within the organisation to overcome challenges through innovation and positive energy allowing us to meet deadlines.

We overcome barriers and challenges by having an enthusiastic, ego-free, can-do attitude that is flexible and allows us to be competitive and deliver where others cannot.

Honesty Graham Pirie, Assembly and Test Team Leader Trust Lorraine McCracken, Well Services Personnel Co-ordinator Respect Willie Burnett, Senior Design Engineer Openness Willie Burnett

To recognise the dedication of the team to meet these goals, we decided to hold our first internal awards this year with all the winners voted for by their colleagues.

Chief Executive Steve Nicol: “A huge well done to the award winners and to the whole Red Spider Team. Last year was a very busy one for us with a number of big changes in the business. We would not have achieved what we have without the dedication and hard work of our team.’’ ■

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This year’s winners are as follows: Teamwork Martin Davidson, Assembly Well Services Technician

Most Nominations – (Joint Winners) Martin Davidson and Lorraine McCracken.

April also sees Red Spider taking part in the Next Generation NGO&G Summit in South Africa on April 5 – 7. A paper detailing a project that used eRED, Red Spider’s first tool, resulting in significant rig time savings, will be delivered at the summit. Chief Executive Officer Steve Nicol is attending along with Africa Sales Manager Barry Killoh.

“Despite being newcomers to the market, we are extremely positive about the scope for us to work in the region based on the amount of inquiries for our products,'' says Steve.

Society of Petroleum Engineers' Annual Technical Conference and Exhibition (ATCE), Denver. 30th October – 2nd November Red Spider will be among 300 companies exhibiting at the event which will see more than 400 peer-selected technical papers covering current applications and future technologies. ■

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eRED– A Success Story Dual eREDs save at least 10 wireline runs from subsea completion...

Background The Eastern Trough Area Project (ETAP) is an integrated development of seven different reservoirs. Four separate fields are operated by BP: Marnock, Mungo, Monan and Machar.

The Machar well in this case study is a subsea producer (tied back to the ETAP platform). The de-completion, sidetrack and two stage re-completion was performed from a semisubmersible rig in the last quarter of 2009.

The Red Spider eRED intelligent downhole equalising device was previously used successfully in several platform and subsea operations for BP in the UK and Norwegian sectors. The programmable electronics and sensors enable the eRED to be repeatedly instructed to open and close using pressure and time commands. This particular operation was the first time two eREDs had been used in series in one completion, with each tool programmed to respond to its own unique command, specifically applied pressure over a given time period.

The deep-set eRED was then instructed to close with a pre-programmed pressure and time command of 750 psi (500-1,000 psi window) applied to the tubing for 10 minutes. A delay of five minutes was included to allow for bleeding-off of applied pressure prior to the ball closing.

Operation The Lower Completion Following the de-completion and side track, the lower completion and liner hanger were RIH (run-in-hole) to depth in the newly drilled 6" open-hole section. A ball was then dropped and circulated to depth. The completion was then pressured up to set the open hole packers. The pressure was increased to set the liner hanger and release the running tool.

The Upper Completion In this particular operation, the two traditional plugs were replaced with eREDs; primarily for the benefits of improved safety and removal of risk by removing wireline runs. Both eREDs were pre-installed onshore, one as a deep-set barrier below the production packer (on a standard 4.313" lock) and the second in the tubing hanger (on a standard 4.875" lock). Both eREDs were fully tested from above and below before shipping as normal.

Offshore, a laptop was connected to the eREDs and diagnostic checks were made to ensure they were operating correctly. The upper completion was then RIH with both eREDs fully open allowing fluid to bypass and allowing pressure to access the lower completion for well control. With the completion at depth, the tubing hanger was landed and locked in place.

programmed pressure and time command of 1,750 psi (1,500-2,000 psi window) applied to tubing for 10 minutes. A delay of five minutes was also included.

With both eREDs now closed providing a fully testable dual barrier, the drilling BOP was nippled down and the subsea tree was installed and tested. Still without any form of intervention, the tubing hanger eRED was opened remotely with its command trigger.

Positive feedback that eRED had opened was observed at surface by a tubing pressure drop. The deep-set eRED was then opened remotely with its command trigger. Once again positive feedback that the eRED had opened was observed at surface by a tubing pressure drop.

Measure of Success eRED will simplify subsea operations and save 10 wireline runs per job The production packer was then set hydraullically by pressuring up against the deep-set eRED. The first attempt to pressure test the production packer was unsuccessful. As the eRED was set up with repeating triggers, the instruction to re-open the ball was given with the same pressure and time command of 750 psi (500-1,000 psi window) applied to tubing for 10 minutes (but no time delay). Following troubleshooting, the eRED was then given the instruction to close again with the same preprogrammed pressure and time command.

The production packer then pressured tested successfully on the second attempt.

The tubing hanger eRED was then instructed to close with its different pre-

Both eREDs functioned as designed, enabling BP to remotely open and close and then perform multiple tests against them.

A total of six deep and four shallow wireline runs were eliminated from this particular operation resulting in a significant reduction in HSE exposure.

Highlights – ROI • Reduced exposure to potential WoW (waiting-on-weather) to rig up slickline and general risks associated with interventions - potentially very significant for winter operations • Reduced POB requirements (four man wireline crew required later in the programme and for shorter duration) • Reduced slickline service costs for both personnel and equipment • Operator confidence to remotely open and close eRED • Pre-installed eREDs and annulus filter sub reduced slickline runs from twelve to two

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Sporting Sponsors Red Spider and Deveronvale Highland League Youth development signed a three year sponsorship arrangement in 2010 to benefit both the Highland League youth squads and Red Spider’s staff.

Andy Skinner, UK Region Sales Manager of Red Spider, explains developing a partnership that involves more than displaying the company’s logo on the team’s shirts and kit is a two-way process: “When we decided to sponsor a local team, the opportunity to have an active role in the chosen club by getting staff, partners and clients involved was a high priority.

“Deveronvale football club was looking for a company to sponsor their youth teams but they were looking for more than financial investment – the coaches were keen to have a corporate sponsor that was interested in taking a hands-on approach to supporting the club. Therefore sponsoring Deveronvale’s Highland League Youth development programme is the perfect partnership for both Red Spider and Deveronvale.”

Red Spider has held company days out at the football ground where staff have taken on players in five-a-side matches and organised regular corporate days for clients.

The Deveronvale Highland League youth teams and their coaching academy, known locally as ‘youth at the vale’, is well respected

for its approach to coaching talented young players who aspire to play first team professional football – many of the youngsters that train with Deveronvale become successful footballers. And although the Highland League club is based in the costal town of Banff, boys from across the NorthEast join the youth team, which coaches players between the ages of 12 to 19.

“Deveronvale has an excellent record for developing young players, and producing and giving first team opportunities for its junior

Win an iPad 2 We have an amazing 32GB ipad 2 with Wifi to give away. For your chance to win, visit www.redspiders.com/ipad2 and answer the following question:

What is the greatest number of hours saved on a single subsea eRED job? a. 12 b. 24 c. 36 Hint: the answer can be found at www.redspiders.com The winner will be drawn from the first 1000 entries received.

squads. The quality of youngsters coming up through youth at the vale is very high quality and it is undoubtedly due to the coaching standards and commitment from all involved in youth development at the club.

We are very excited to have the opportunity to be part of their team.” said Mr Skinner.

Graeme Burnett, head of youth development for the Vale, said: “Red Spider has been great to deal with and we are looking forward to a successful working partnership in the years ahead.” ■

Staying on track Red Spider has agreed to help Scots bobsleigher Gillian Cook with much-needed technical tools to keep her on track.

Gillian has swapped pushing for driving as she competes in Europe and World Cup events this year.

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Norwegian Office UK Headquarters Italian Office Houston Office

Dubai Office

UK, Europe & Africa Red Spider Technology Peregrine Road Westhill Aberdeenshire AB32 6JL

Norway Red Spider Technology AS Koppholen 19 4313 Sandnes Norway

t +44 1224 275000 f +44 1224 275001 e info@redspiders.com

t +47 40 00 69 13 e info@redspiders.com

Asia PaciďŹ c & Middle East Red Spider Technology FZE PO Box 18738 Jebel Ali Free Zone Dubai

North & South America Red Spider Technology Inc 9595 Six Pines Drive Suite 8210 The Woodlands TX 77380 USA

t +971 (0) 4 8873267 f +971 (0) 4 8873268 e info@redspiders.com

t +1 832-631-6081 f +1 832-631-6001 e info@redspiders.com

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