Selection of Artificial Lift Systems for Deliquifying Gas Wells Page 2
Status
· Document written and edited
· Chair: Cleon Dunham,
· Team: Not applicable
· Comments: Not applicable
1.3 Know the Components of Your Economics
This describes the factors that must be known about the economics of gas well production. For instance, in some cases gas well deliquification may be highly profitable; in other cases, it may be uneconomical.
- Know the value of your products
The value of your product is a hard thing to keep up with these days, as the market value fluctuates often. The job of keeping up with values belongs to the Accountants and Economists of the company. The most important thing for the artificial lift staff is to be generally aware of the value so decisions can be made wisely. It makes no sense to spend a lot of money to enhance gas production if the resulting increase in income isn’t enough to payout the increase in cost.
- Royalties, taxes, overhead, and net income per MCF or M3
It’s not enough to know the value (sales price) for gas. The income made by the Operating Company is “net” income which is equal to sales prices minus royalties, taxes, and overhead costs.
The Accountants should be able to provide the artificial lift staff with a reasonable value of net income per MCF or M3 that can be used to justify expenses for well work.
- Know the components of your revenue – expected uplift, increased production over time
The reason for applying artificial lift is to increase production. The goal here is to increase both the current production rate and the ultimate recovery by lowering the final abandonment pressure. Accountants and Economists can try to predict prices. Only the artificial lift staff and the Reservoir Engineers can predict increase in production (uplift) and increase in ultimate recovery that result from the artificial lift system.
- Contract constraints – commitments to delivery volumes, BTUs, penalties
In some situations, we are not free to produce all we can. Sometimes there are contractual constraints. Sometimes there are commitments to deliver specific volumes of gas or there will be penalties for non delivery. Sometimes the BTU content of the gas must meet a minimum value, so the amount of non-choleric caloric gases such as CO2 must be limited. If such constraints exist, they must be known as they may affect the artificial lift decisions that can be justified.
- Acceleration vs. increase in reserves
If an artificial lift installation increases the gas production rate, is the resulting increase an acceleration of the same production from the reservoir that would be obtained anyway, or is it an increase in reserves. This makes a big difference in the economics of the job. Acceleration means that the well will ultimately produce the same amount of gas, just produce it sooner. An increase in reserves means that the total amount of gas produced by the well before abandonment will actually be larger. In general, to obtain an increase in reserves, the ultimate abandonment pressure must be lower. Often, if the liquid load can be removed from a well, and if it can continue to be removed over the life of the well, the ultimate abandonment pressure can be lowered and the ultimate recovery will be increased.
- What ultimate bottom-hole (abandonment) pressure can be achieved
The ultimate abandonment pressure depends on a number of factors.
o What is the reservoir drive mechanism? This is a question for the Reservoir Engineer. If it is a depletion drive reservoir, it may be possible to reduce the pressure to a very low value. It if is a water drive reservoir, the wells may “water out” at a substantially higher pressure. This difference is profound and it has a profound impact on the types of artificial lift system that makes sense for the well.
o What is the impact of any liquid blockage in the reservoir? This is a question for the Reservoir Engineer. If liquids have been allowed to accumulate in the reservoir, and if they can’t be fully removed, the reservoir may not “see” the actual operating pressure at the bottom of the well.
o Can the liquid load be removed and can it continue to be removed? This is a question for the artificial lift staff, and the type of artificial lift system that is used.
o What is the operating surface wellhead pressure? This is a question for the Facilities Engineers and the artificial lift staff. Is wellhead compression used to minimize the wellhead pressure?
o What is the operating bottom-hole pressure? This is a question for the Production Engineer and the artificial lift staff. It depends on the surface pressure, the depth of the well, the size of the flow path (e.g. tubing), the flowing gradient of the gas and any liquid, etc.
- Know the components of your costs – CAPEX, OPEX, Maintenance (repair/replace)
The most important aspect of project economics for the artificial lift staff is the cost side – capital costs (CAPEX), operating costs (OPEX), and maintenance costs including costs to repair and replace equipment. The artificial lift staff can’t control the sales prices, but it can control CAPEX, OPEX, and maintenance costs.
- Consider all components of CAPEX
Often there are many things to consider in determining the overall or “real” cost of a project. In addition to the cost of buying the artificial lift system, there are costs for associated components, installation, commissioning, start-up, etc. The typical components of capital expenses (CAPEX) for each type of artificial lift system are discussed in Section 2.4. All of these costs must be considered in preparing the justification and the AFE (authority for expenditure) for the project.
- Consider all components of OPEX, Maintenance Costs
The other major components of cost are the cost to operate the system (OPEX) and the cost to maintain the system. Too often, these costs are under estimated. This will hurt the real economics of a project and can sour the attitude of management for this type of work in the future. The typical components of OPEX and R&M (repair and maintenance) costs for each type of artificial system are discussed in Section 2.4. These costs, and how they are projected to occur over time, also must be considered in preparing the justification for the project.
- Know the resources you need and that are available (people, services)
A final aspect is the resources you need for the project in terms of people and services. If these are readily available, it may be easy to determine their cost. If they are not readily available and have to be imported from another location, it may be more difficult to estimate their cost and they may be more expensive.
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