OGPSS - American stripper well production

The Total (oil company) discussion on Enhanced Oil Recovery has an illustrative graph to explain why there is a growing need to get as much of the oil in a reservoir as can be economically recovered.



When the large flows of oil that I have written about previously stopped flowing from the major production fields in the on-shore United States, that did not mean that the wells from which they issued were immediately shut-in. Rather, in many cases, although the driving pressure to move the oil to the ground surface had largely disappeared, there was still a sufficient imbalance within the reservoir that oil would flow to the well. And so, before moving on to discuss other fields, I thought I would spend this space covering the pump jacks or “nodding donkeys” that dot the landscape over many of the older oilfields of the United States (and elsewhere).

These “stripper” wells that remove the final volumes of oil from a reservoir make up by far the largest number of wells, by category, that produce within the USA. The EIA reported that there were 363,459 producing oil wells in the USA in 2009. Of these 35.1% produced 1 bbl/day (bd) or less, and 78.7% (a total of 286,109) produced less than 10 bd. For Texas alone, the EIA reports that there are 141,582 wells, and 79.4% of these produce less than 10 bd. (H/t Joules Burn).

So when oil production gets this low, and intermittent, how does the owner get the oil out? The short and simple answer is that the oil is pumped out. And if the well is running slowly, then the pump won’t run all the time, but rather intermittently depending on how fast the pump fills. The original pumpjack design was put together in 1925 by Walter C Trout, and provided the basic design for the units still dotting the American landscape.

Parts of a pumpjack (Lufkin catalog).

That basic design has largely remained the same, but the instrumentation and controls have grown more sophisticated over the years. A baseline estimate of the power requirement is that it needs around 0.2 kwh/bbl/1000 ft to lift the oil to the surface. (Which is quoted as being about a 66% efficiency). Deeper wells are reported to require from 0.27 to 0.81 kwh/bbl/1000 ft. And if the wells are 4,500 ft deep that can give an electricity bill of up to $2,000. (H/t to Joulesburn for raising the topic). Part of the problem and loss in efficiency comes from the need to start and stop the pump, because of the low flow of oil into the well.

The Web site dealing with Stripper wells (those defined as producing below 10 bd) notes:

In the United States of America, one out of every six barrels of crude oil produced comes from a marginal oil well, and over 78 percent of the total number of U.S. oil wells are now classified as such. There are over 400,000 of these wells in the United States, and together they produce nearly 900 thousand barrels of oil per day, 15 percent of U.S. production.

The average stripper produces around 2.2 bd (ibid). (The 25-minute movie “Independent Oil: Rediscovering America's Forgotten Wells” can be obtained from Amazon, or by dropping a note to the Stripper Well Consortium.

Further it points out the economic factors that inhibit re-starting these wells once they are abandoned.

When marginal wells are abandoned, significant quantities of oil remain behind-- sometimes as much as 1/2 to 2/3 of the total oil. In many instances, the remaining reserves are not easily accessible when oil prices subsequently rise again: When marginal fields are abandoned, the surface infrastructure - the pumps, piping, storage vessels, and other processing equipment - is removed and the lease forfeited. Since much of this equipment was probably installed over many years, replacing it over a short period should oil prices jump upward, is enormously cost prohibitve.

The site notes that between 1994 and 2003 some 142,000 wells were plugged and abandoned, losing the remaining oil that they might have produced. This oil is sufficiently important (since it makes up about 10 - 20% of the domestic oil production, depending on what is counted) that DOE has a program dealing with Stripper Well Revitalization (covered on CNN here) and funds The stripper well consortium that investigates ways of improving the technology.

Many of the advances have focused on improving the pumping systems used in these old wells, since the old conventional plunger system are not that efficient, relative to the new units. The large number of wells means that even where these improvements are significant, it will take some period of time to get enough new units into the field to have a significant impact on overall production.

The Gas Operated Automatic Lift (GOAL) PetroPump developed by Brandywine Energy & Development Company. The pump removes fluid from the wellbore more consistently than currently available plunger lift systems. Test results on wells in New York showed a 1.5 to 2.3-time increase in gas yield using the GOAL PetroPump over other casing plunger- type tools. The tool is inexpensive to operate because it requires no external energy source and limited manpower.

One area that they have just started work on involves the use of high-pressure jetting for drilling laterals, with the work being developed by Buckman Jet Drilling Inc. Since I jet drilled my first lateral of this type back some 30-odd years ago and have some considerable familiarity with both the promises of the technology, and some of the problems and other issues that have arisen, I suspect that I will be following this in a bit more detail than I usually allow. But that too will come in a future post, for the moment I will note that, having watched the promotional video I do have some significant concerns that arose out of an earlier incident where a somewhat similar technology was claimed to be able to achieve considerable improvements in well production. In that case my concerns were expressed in Federal Court.

One other recent breakthrough that they have highlighted recently involves the conversion of the significant amounts of water than come from these stripper wells, but which is often brackish, and thus difficult to dispose of, into water of potable quality (i.e. you can drink it). In a slide presentation by Texas A&M, who developed the membrane technology used, the resulting water is compared with Evian, Perrier and similar commercial products. Given the problems that Texas is currently facing with drought this could well solve two problems at one time. Further by lowering the cost of water disposal it, like other SWC developments, can encourage the economies of these small producers and sustain their production further into the future.

Each well may not contribute much, but in the aggregate even small changes can add up, when the totality of the wells affected runs into the hundreds of thousands. This improvement in the tail of well production, sadly, is only likely to be viable in the relatively small on-shore wells and close off-shore where the costs of maintaining the infrastructure above the well is minimal. Once those costs become significant it becomes more difficult to make the economics of the process work.

I’ll talk about some of the other ideas for stimulating these wells in a post somewhat later in the series. But this, from Total, is one I have written about before.

P62. Pick Points

Well after being told that we had to “Drill, Baby, Drill,” a Federal appeals court has" Just Said No!” It ruled that permits for off-shore drilling, whether in Alaska or the Gulf, must give greater consideration to environmental impacts of such oil exploration.

The lawsuit was brought by three environmental groups that want to protect the ecosystem and the Native Village of Point Hope, Alaska, a tribe that lives off the wildlife on the Chukchi Sea coast.

It is of particular concern down in Louisiana where it might have significant impact out into the Gulf.

Don Briggs, president of the Louisiana Oil and Gas Association, was dismayed by the court's ruling. "We have so much science to prove that in the Gulf of Mexico, the environment is protected. Wildlife actually flourishes around offshore production facilities," Briggs said. "I believe that this is just politics."

The appeals court ordered the Interior Department, now run by President Barack Obama's appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead with the program.

However the story is a little different up in Alaska, and in this particular case, since among other things it impacts the subsistence living of the local tribes.

Eskimos living along the coastline worry that drilling noise may disturb migrating bowhead whales, walruses and seals, which they depend on for food. They've also questioned whether Shell is prepared for a potential oil spill in the Beaufort Sea, where moving ice can make a cleanup difficult.

"Americans are looking for a clean energy future, and trading animals and their habitat for massive oil company profits is the way of the past," said Charles Clusen, director of the Alaska project for the Natural Resources Defense Council, in a statement.

The Manifa oilfield in Saudi Arabia has gone through a number of “on again, off again” cycles. While it has the potential to produce over a million barrels of oil a day, the chemical content of the oil is such that it cannot be economically refined by existing facilities. Thus Aramco have planned to build a couple of refineries in Saudi Arabia to allow them to usefully bring the field into production. Well it now looks as though work is going to start again on building some of the on-shore crude handling facilities. (The oilfield is just offshore). Last year plans were announced for a new refinery at Jubail that would process the oil, with initial production scheduled for 2011, and the refinery was supposed to be up and running in 2012. Well it has now slipped to 2013, and will only process 400,000 bd, of the Manifa production, but the work is going forward, though the economic downturn is anticipated to have lowered the overall cost. The other refinery planned to take the remainder of the Manifa oil has been planned to go into Yanbu. The partnership this time is between Aramco and ConocoPhilips, and current plans are for initial bids to be solicited this summer, with contracts awarded before the end of the year. Production is again anticipated for 2013.

Gazprom has just successfully raised $2.25 billion in bonds, and Gazprom Neft (the oil branch) is going to go ahead this week to raise some 10 billion roubles ($299 million) in a domestic sale this week. They may need some of the money to recompense Turkmenistan, who is still claiming that the blast in the gas pipeline the other week, was Gazprom’s fault. Given that Gazprom was hoping to get more gas from Turkmenistan, this is not good for them, since it continues to delay pipeline expansion.

The third summer of drought in California is causing additional tensions in that state as water restrictions are reimposed, at the same time that water supplies to farms are being cut.

"Up to 19 million southern Californians this summer will feel the impact of a new water reality that has been in the making for years, if not decades," said MWD board chairman Timothy Brick in a statement.
In the Central Valley, meanwhile, tens of thousands of farmers, farm workers, and local officials protested federal and state water cuts during a series of marches this march.

Between 70,000 and 80,000 farm workers are out of work this year as a result of water shortages, according to a study from the University of California, Davis. California ordinarily supplies America with half of its fruits and vegetables.

Some 100,000 acres of agricultural land will not be planted.

At the same time the state is praising the success of the re-flooding of Owens Lake as a way of both stopping regional dust storms from the lake bed, and coincidentally providing a wetlands for migrating birds. The only problem?

As it stands, each year the project uses about 60,000 acre-feet of water worth about $54 million -- enough to supply 60,000 families.

There are no easy choices, although, as is noted:

"We're beginning to get to the real cost of water," says Colin Sabol, vice president of marketing for ITT Corporation, the world's largest provider of pumps and water equipment. He notes that US consumers pay on average only one-third of what Germany pays for its water.

Germany "charges a price that allows them to reinvest in their infrastructure," Mr. Sabol says.

Some $250 million in stimulus funds are going to be directed at helping with the problem. Perhaps they could learn from the “grey water” controversy out there. Back in the early 1990’s the State carried out an experiment that allowed homeowners to use grey water (that from showers and dishwashers) for irrigation. The project at the time was a success, with great things predicted. Unfortunately bureaucracy stepped in and made the regulations so complex that the benefits never officially happened and there are only 200 legal systems in the State – maybe this could be changed, since it is estimated that up to 16% of the state consumption could be saved and reused.

P43. Pick Points

Half-a-dozen or so stories of interest:

I wrote earlier today about the pickup in gasoline demand that EIA had reported, and this was also noted by other folk, and the resurgence has led to a rise in the price of crude to $42 a barrel. . EIA aren’t the only ones trying to explain the situation, the Canadians also have some words on gas prices. Then there is the Rolling Stone interpretation. But rather that the technical explanation others are just blaming the rise on inflation.
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U.S. production of crude has slightly increased in the recent past, and industry are urging Congress and the Obama administration to expand drilling offshore, because although renewable energy sources will provide some future volume, at present we still need to grow basic oil production to meet the existing need. However that argument is not strong enough to stop Interior Secretary Ken Salazar from withdrawing leases for oil shale production on federal land, while he works out a plan for higher royalty rates. The Administration is however offering a second round of leases but there is opposition from local mayors near the operations. The techniques used in getting gas out of shale in the US has proved quite successful in generating production from shales that were thought impractical, and so now the Europeans are considering using them over there . Gas from shale is still only 5% of production in the USA though it is expected to reach levels of up to 50% before too long. The Canadians are now trying it, and proving along the way that just because the technique works doesn’t means it will make money. On the other side of the country, however, shale production is already making money .

It does appear that the Shotkman field is finally going to start development, with the initial engineering work being awarded to Aker Solutions who with Technip France and SBM Offshore been awarded a 25 million EUR contract on the development of a concept definition and engineering design for the project floating production unit. Recognizing that a business opportunity lies out there Russian authorities are now ready to elaborate a new EU-Russia energy agreement, to regulate relations and help speed up progress in projects like Shtokman, the Russians say. Royal Dutch Shell however remain to be convinced. They need to be sure that they will receive production rights after exploration and development, and in Russia this is no safe bet even with a local partner.

One example of potential problem comes from the Karachaganak field, where Gazprom and the Kazakhstan Government are thinking of suspending the joint venture Of course not all projects fail for political reasons Chevron has just pulled out of Northern Taiga Neftegaz a venture with Gazprom Neft after reserves in the Pyakutinsky and Aikhettinsky fields in the Yamalo-Nenets Autonomous Area, did not meet the original projections of some 45 million tons of oil.

The latest scheme is for Total to join with Gazprom and fund a pipeline to carry Nigerian gas through the Sahara to Europe, some 2,580 miles away.

As the planting season starts in South Asia the Bangladesh Prime Minister has directed authorities to ensure power to agriculture to protect food production.
The ministry of power, energy and mineral resources has stated that 130 MW of additional electricity has been added to the national grid and 700 MW more will be added by June. However the demand from the people of Bangladesh is that the government should cut the price of fuel oils.
 This year the price is 10% up on the last Boro season when the price was Tk 40. Bangladesh is still trying to find ways to economically exploit its high quality coal reserve . The proven gas resource are widely believed to soon be exhausted. In the absence of a decision the energy deficit is widening. This summer will witness massive load shedding.

Iranian and Russian technicians are conducting a test run of Iran’s first nuclear plant, a major step toward full operations. Work on Bushehr started 34 years ago, during the reign of the shah with the help of the German contractor Siemens but was suspended after the 1979 revolution. Pilot operations at the 1,000-megawatt light-water reactor, built with Russian assistance under a $1 billion contract, have long been delayed and it's unclear when the reactor could be switched on. Wednesday's tests were a computer run to ensure that the reactor's processes work properly. For the tests, technicians loaded a "virtual fuel" of lead into the reactor to imitate the density of enriched uranium, said Iranian nuclear spokesman Mohsen Shirazi.

There is an interest to form strong bilateral relations between Bulgaria and Italy to move forward with the South Stream gas pipeline.

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.