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Artificial Lift Techbook 2018

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2 | July 2018 | hartenergy.com ARTIFICIAL LIFT: OVERVIEW A s the oil and gas industry continues recovering from the most recent bust cycle, the artificial lift segment is finally beginning to climb out of its slump. Because artificial lift equipment typi- cally is not purchased until a well is completed—or much later—the sector's recovery has lagged behind other oilfield services. According to Dimitar Kostadinov, a senior ana- lyst with McKinsey Energy Insights, the artificial lift market has been improving with the recent rise in well completions. The firm expects the artificial lift sector to be strong in 2018 and to turn in even stron- ger results in 2019 due to completions of new wells. Kostadinov does not, however, believe pricing will recover to pre-2015 levels. One reason is because beam pumping units and gas-lift technologies have been largely commoditized but also because international players have aggres - sively entered the local market to put pressure on prices, according to McKinsey. Operators changed the way they bought artificial lift equipment during the downturn. In the past they preordered units and even paid extra for access to manufacturing capacity for beam pumping units and electric submersible pumps (ESPs), according to Kostadinov. Now the operators are tending to contract for the units much closer to the expected installation date. The shift minimizes inventory and improves cash flow. The company said if such an approach continues, artificial lift procurement will be more of a spot market than a bulk market. "It's been an interesting journey since the down- turn and the commodity price change," said Paul Mahoney, president of Apergy Production and Auto- mation Technology. "It seems there's a trend back to financial discipline and operating within cash flow." Stability in oil pricing is having another effect, he said. "A lot of the operators are getting back to taking care of their wells. There's more maintenance and repairs. Well servicing activity is starting to pick up slightly and is projected to pick up some more here in the balance of this year," Mahoney said. When it comes to artificial lift in unconventional plays, he noted there seems to be a move toward pro- viding lift earlier in a well's life. "It's driving more activity on the gas-lift, electric submersible pumps and, in some cases, the hydraulic lift area. We're seeing more activity and good growth rates in those areas," Mahoney said. "You have some of the shorter laterals from earlier unconventionals work in 2013 and 2014 starting to mature, and the production rates have declined to a point where some decisions on a change of technology is afoot, convert- ing to the tried and true reciprocating rod lift arena." According to Kostadinov, the last few years have shown some changes in the preferred technology used in artificial lift, with operators installing more gas lift at the expense of ESPs and some higher capacity beam pumping units. The cost of installing gas lift is lower than other technologies, associated gas pro- duction is abundant and compressors can be rented to spread the cost over time. McKinsey noted some Permian-focused independents have entirely shifted to gas lift for their newly completed wells. The last year has shown a resurgence in ESP use, boosted by rental offerings, according to the company. Beam pumping units have been pushed back in the Companies seek artificial lift technologies and innovations that can handle a wide array of operating environments. Artificial Lift Market On the Move By Jennifer Pallanich Contributing Editor

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