PCP please – From the garage to world leader: the story of a PCP pro

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Kudu’s VH 60 Drivehead keeps the well pumping in a Saskatchewan oilfield. Photography for Kudu Industries in Macklin.

Kudu provides persuasive proof that you don’t have to be a huge multinational to be among the best. That is what Calgary-based Kudu has spent over twenty years perfecting – and over 20 patents using Progressing Cavity Pumps (PCP) in the artificial lift field proves it.

Kudu is an ISO-certified oilfield equipment manufacturer widely recognized for its PCPs, and related products and services. A privately held company with a workforce of approximately 300 staff, Kudu has emerged as the world’s second-largest manufacturer and distributor of PCPs. Significantly, Kudu has found a niche as a specialized pump manufacturer in a field where its major competitors typically are subsidiaries of much larger multinational conglomerates.

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The KUDU Care Program is an industry best practice for service and support.

Certainly, Kudu’s success didn’t come easily. Furthermore, once success arrived, Kudu soon stood on the brink of bankruptcy as the oil industry took a dive in the late 1990s. Kudu founder and chairman Robert Mills along with his son, co-founder and current CEO Ray Mills faced financial ruin. It would have amounted to a cruel reversal and sad ending to what until then had been an uplifting corporate story.

With their track record of innovation in product development and sales, the Mills weren’t about to succumb to this “near-death experience.” With help from National Research Council Technical, the next round focused on process innovation. That meant improving quality and reducing costs by adopting lean production technology, specifically the Toyota Production System (TPS). The latter involves a string of process changes relating to production flows and inventory controls. Along with TPS came adoption of ISO9001 standards.

Aside from the general economic conditions, other factors contributed to bringing Kudu to the brink of bankruptcy. The company had grown rapidly from a start-up working out of the family garage to a 70,000-square-foot manufacturing facility. In line with popular manufacturing trends at the time, Kudu increasingly outsourced production and supposedly played it safe by building inventories.

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The PCP Well Manager optimizes well production and protects against pump off.

As Ray explains: “Everyone was telling us that if you wanted to get your prices down on a particular item, you need to order a large volume. If we found ourselves out of inventory – our solution was to buy more inventory to make sure it didn’t happen again. To control inventory, we tried to forecast demand by ordering material based on forecasts rather than on customer demand.”

Lean production prompted physical changes at the plant, such as installation of overhead bridge cranes to improve product movement and flows. Acquisition over a two-year period of new machining equipment and training staff to run it allowed most production – including until-then outsourced activities – to be reeled back into the plant. Uniquely among all its competitors, Kudu now does all machining in-house. This, in turn, benefits customers through one-stop shopping and sole-source responsibility.

Where the Action Is

Kudu likes to be where the action is by having thirteen field stores throughout Alberta and Saskatchewan. Field service centers located in Estevan, Kindersley, Swift Current, Macklin and Lloydminster are at the epicenter of PCP activity.

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The Calgary facility is ISO-certified and actively pursues Lean methodology.

“Saskatchewan provides a great opportunity for our products and services. The business climate is open and ready to take action in this ever-growing industry,” explains Alex Damjanovic, COO Kudu.

Kudu also has offices located in Russia, Romania, Kazakhstan, Oman, the U.S.A. and Australia. Their proximity to oilfield activity enables Kudu to have the knowledge, adaptability and responsiveness tailored to each operation’s needs. Kudu’s PCP specialists are considered the best in the industry and offer solutions that fit uncomplicated wells; customized options are available for a variety of tough conditions, as well.

Kudos for Kudu

Kudu has received numerous awards including the Innovation Insights Award for Manufacturing Practices from the National Research Council of Canada. Kudu was also recognized as one of Canada’s Top 50 Best-Managed Private Companies, Calgary Manufacturing Industry’s 2008 Best Employer for medium-sized manufacturers, the Alberta Exporter of the Year 2011, and received the Oil & Gas Manufacturer 2011 and 2009 awards.

All these successes have led to a feature story in the new KPMG book titled That’ll Never Work: Business Lessons from Successful Canadian Entrepreneurs.

Kudu Gives Back

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Kudu’s proprietary Tough CoatTM has superior resistance to corrosion compared to a typical chrome rotor.

Whether it’s supporting educational programs, funding sports teams or participating in local activities, Kudu gets involved. Implemented in 2002, the Kudu High School Scholarship program has helped many students progress in their educational careers. The program is directed to the rural communities in Alberta and Saskatchewan where Kudu has field offices.

A male and female student achieving the highest marks in their final year of study and enrolled in a full-time science-based program in college or university is awarded $500.  Kudu also donated $150,000 in 2007 to Lakeland College in Lloydminster to help fund the new Bill Kondro wing. Kudu’s donation was the second-largest made to Lakeland College.

Committed to Research and Development

Kudu’s product development is collaborative in nature. Listening and partnering with customers to support their initiatives and success is the Kudu process. The result is over 20 patents using PCPs in the artificial lift industry and co-operative research along with joint technical paper contributions with such majors as Husky, PennWest and Shell.

Though first geared toward heavy-oil production, Kudu PCPs found new applications in medium and light recovery and subsequently in coalbed methane production and gas-well dewatering. Propriety technology such as Tough Coat™ – metal coating that provides improved resistance to corrosion and abrasion compared to a chrome rotor; the PCP Well Manager – maximizes production through automation and optimization; or the thermal package – complete system for temperatures up to 350°, are all examples of Kudu’s successful first-to-market products.

Opportunities for Growth

Not surprisingly, Kudu obtained its first foothold in Canada – and particularly in Western Canada’s mature oilfields, where approximately 40 per cent of wells rely on artificial lift. With Canada accounting for 75 per cent of the world market for PCPs, it remains a proving ground for advances in this technology.

As heavier and lighter pools elsewhere in the world mature, expect them also to turn to PCP technology. With its proven PCP and supporting products, Kudu is well positioned to meet such growing demand.

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