National Oilwell Varco 2010 Annual Report Download - page 11

Mill Systems and Sales. The Company engineers and fabricates inspection equipment for steel mills, which it sells and rents. The equipment is
used for quality control purposes to detect defects in the pipe during the high-speed manufacturing process. Each piece of mill inspection
equipment is designed to customer specifications and is installed and serviced by the Company.
Drill Pipe Products. The Company manufactures and sells a variety of drill stem products used for the drilling of oil and gas wells. The principal
products sold by Drill Pipe Products are: (i) drill pipe, (ii) drill collars and heavyweight drill pipe and (iii) drill stem accessories including tool
joints. Drill pipe is the principal tool, other than the rig, required for the drilling of an oil or gas well. Its primary purpose is to connect the
above-surface drilling rig to the drill bit. A drilling rig will typically have an inventory of 10,000 to 30,000 feet of drill pipe depending on the size
and service requirements of the rig. Joints of drill pipe are connected to each other with a welded-on tool joint to form what is commonly referred
to as the drill string or drill stem.
When a drilling rig is operating, motors mounted on the rig rotate the drill pipe and drill bit. In addition to connecting the drilling rig to the drill
bit, drill pipe provides a mechanism to steer the drill bit and serves as a conduit for drilling fluids and cuttings. Drill pipe is a capital good that
can be used for the drilling of multiple wells. Once a well is completed, the drill pipe may be used again and again to drill other wells until the
drill pipe becomes damaged or wears out.
In recent years, the depth and complexity of the wells customers drill, as well as the specifications and requirements of the drill pipe they
purchase, have substantially increased. A majority of the drill pipe sold is required to meet specifications exceeding minimum API standards. The
Company offers a broad line of premium drilling products designed for the offshore, international and domestic drilling markets. The
Companys premium drilling products include its proprietary lines of XT® and TurboTorqueTM connections and large diameter drill pipe that
delivers hydraulic performance superior to standard sizes.
Drill collars are used in the drilling process to place weight on the drill bit for better control and penetration. Drill collars are located directly
above the drill bit and are manufactured from a solid steel bar to provide necessary weight.
Heavyweight drill pipe is a thick-walled seamless tubular product that is less rigid than a drill collar. Heavyweight drill pipe provides a gradual
transition between the heavier drill collar and the lighter drill pipe.
The Company also provides subs, pup joints (short and odd-sized tubular products) and other drill stem accessories. These products all perform
special functions within the drill string as part of the drilling process.
NOV IntelliServ. NOV IntelliServ is a joint venture between the Company and Schlumberger, Ltd. in which the Company holds a 55% interest
and maintains operational control. NOV IntelliServ provides wellbore data transmission services that enable high-speed communication up and
down the drill string throughout drilling and completion operations that are undertaken during the construction of oil and gas wells. NOV
IntelliServs core product, The IntelliServ® Broadband Network, was commercialized in February 2006 and incorporates various proprietary
mechanical and electrical components into the Companys premium drilling tubulars to enable data transmission rates that are currently up to
20,000 times faster than mud pulse, the current industry standard. The IntelliServ® Broadband Network also permits virtually unlimited real-time
actuation of drilling tools and sensors at the bottom of the drill string, a process that conventionally requires the time consuming return of tools to
the surface. NOV IntelliServ offers its products and services on a rental basis to oil and gas operators.
Voest-Alpine Tubulars (VAT). VAT is a joint venture between the Company and the Austrian based Voestalpine Group. The Company has a
50.01% investment in the joint venture which is located in Kindberg, Austria. VAT owns a tubular mill with an annual capacity of approximately
380,000 metric tons and is the primary supplier of green tubes for our U.S. based production. In addition to producing green tubes, VAT produces
seamless tubular products for the OCTG market and non-OCTG products used in the automotive, petrochemical, construction, mining, tunneling
and transportation industries.
Fiberglass & Composite Tubulars. When compared to conventional carbon steel and even corrosion-resistant alloys, resin-impregnated fiberglass
and other modern plastic composites often exhibit superior resistance to corrosion. Some producers manage the corrosive fluids sometimes found
in oil and gas fields by utilizing composite or fiberglass tubing, casing and line pipe in the operations of their fields. In 1997, the Company
acquired Fiber Glass Systems, a leading provider of high pressure fiberglass tubulars used in oilfield applications, to further serve the tubular
corrosion prevention needs of its customers. Fiber Glass Systems has manufactured fiberglass pipe since 1968 under the name Star ®, and was
the first manufacturer of high-pressure fiberglass pipe to be licensed by the API in 1992. Through acquisitions and investments in technologies,
the Company has extended its fiberglass and composite tubing offering into industrial and marine applications, in addition to its oilfield market.
Coiled Tubing. Coiled tubing provides a number of significant functional advantages over the principal alternatives of conventional drill pipe and
workover pipe. Coiled tubing allows faster tripping, since the coiled tubing can be reeled quickly on and off a drum and in and out of a
wellbore. In addition, the small size of the coiled tubing unit compared to an average workover rig or drilling rig reduces preparation time at the
well site. Coiled tubing permits a variety of workover and other operations to be performed without having to pull the existing production tubing
from the well and allows ease of operation in horizontal or highly deviated wells. Thus,
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