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Artificial Lift Techbook 2016

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ARTIFICIAL LIFT TECHBOOK: OVERVIEW 4 | May 2016 | hartenergy.com wells that are still producing. The "Artifcial Lift Spending per New Well" chart does not mean that each new well sees $325,000 of artifcial lift spending. However, the industry's surge toward oil well drilling in the U.S. has been a big driver of this increasing intensity of artifcial lift spending per well. Schlumberger, via acquisition, is the current artifcial lift market leader. After adding Camer- on's lift product line to its own, Schlumberger's share will be 21%. If Halliburton is able to complete its acquisition of Baker Hughes, Halliburton will stand in second place with 18%. Weatherford will remain in third with 15%. Spears' research points to six main types of lift system: rod lift, electric submersible pump (ESP), progressing cavity pump (PCP), hydraulic, gas lift and plunger. Since production-related "rope, soap and dope" and automation/monitoring systems also will be sold through many of these lift com- panies, Spears includes an "other" slice of the lift pie. For rod lift, 2014 was the peak year, but that lift technique has been declining in favor of ESP and PCP. The price of an artifcial lift system was fairly sta- ble from 2012 through 2014, but heavy discounting started with the decline of oil prices and today lift products are sold for about 30% below their peak prices of two years ago. Obviously, oil and gas development in North America has evolved over the last 100 years. A vast majority of onshore wells were drilled on a unique, dedicated pad: one pad, one well. Scattered throughout a developing oil feld, one would fnd multiple well pads that ranged from 1 acre to 3 acres in size. The success of horizontally drilled wells and multiple-stage fracture jobs onshore saw opera- tors taking a page out of a wetter playbook. From large offshore platforms, several wells could be drilled and directionally steered to tap a reservoir from miles away from a single structure. While the onshore industry was geared to drill one well per facility, offshore could drill four, eight or 12 wells from a single facility. Engineers sought ways to bring lean manufactur- ing to the drilling and completion process onshore. Multiple well pads provided the best solution to this need, as evidenced by its wide adoption across every major horizontal play in the U.S. One Colorado well pad drilled in 2015 has 25 wellheads, for example. It is when artifcial lift enters the picture that problems are introduced into the equation. While one drilling rig can drill all the wells, one fracturing crew can fracture all the wells and one coiled tub- ing unit can clean out all the wells, each well still requires a unique, dedicated lift system. One well, one lift system. Two conditions might be driving operators toward less common, newer technology linear lift systems: proximity to urban living centers and the technical need for long-stroke rod lift systems. The look of the linear system technology is less intimidating since large pieces of steel are no longer whirling around and moving up and down. Spears sees the artifcial lift industry combining these new types of lift technology with older, proven technol- ogies as time goes by. For 2016, Spears is forecasting a declining new oil well drilling number due to suffciently high quantities of oil being delivered from within the U.S. market. After 2016, the oil oversupply should remedy itself and drilling should again rise. Mean- while, ESP spending per new oil well continues to rise, helping the ESP market remain relatively sta- ble while drilling drops. n 2012 2013 2014 2015 2016 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Cost Index (Q1 2008 = 1.0) Artifcial Lift Price Trends in the U.S.

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