Artificial Lift Screening for Unconventional Wells

Executive Summary

Every oil well, whether conventional or unconventional, will eventually lose its natural
energy and stop pushing fluids to the surface as pressure within the reservoir declines. When this
happens, an artificial lifting system (ALS) is installed to reduce wellbore pressure and enable the
well to continue to produce. Rapid pressure depletion of unconventional wells results in up to 80%
production decline within the first year. This necessitates the installation of artificial lift earlier in
the life cycle when compared to conventional wells. This is due to the special reservoir
characteristics of unconventional wells, such as low porosity and ultra-low permeability. These
features make the production from wells in such formations unjustifiable and highly uneconomical
unless an artificial lift system is used within the first 300 days of the well’s life.

This project implemented a two-stage screening method for the most common artificial lift
systems implemented in unconventional wells. This screening method was then applied using a
test well in the Bakken field with data provided by Professor Kabir. The first screening analyzed
the physical limitations and key attributes of the most commonly used artificial lift systems. The
physical limitations and attributes analyzed for each method included maximum operating depth,
production rate, Gas Liquid Ratio (GLR), and adaptability to production decline. As part of this
first screening, the effect of different parameters (water cut, GOR, and reservoir pressure) on oil
production was tested numerically, by generating Inflow Performance Relationship (IPR) and
Vertical Flow Performance (VFP) curves for our test well.

The second screening is an economic analysis of the lift methods that made it through the
first screening. This analysis will be based on their forecasted cumulative production. The
cumulative production was forecasted in KAPPA (Topaze), using the wellbore pressures generated
from PIPESIM. These forecasted production values were utilized to construct the economic
analysis which was performed using a discounted cash flow.

First Stage Screening

For the first stage screening, a comprehensive literature survey was performed to determine
which artificial lift methods were most commonly used in unconventional reservoirs and their
physical limitations. In addition, we also interviewed two of the leading artificial lift experts within
the industry, Dr. Rajan Chokshi, and Mr. Janvier Lissanon. Based on this research, we developed
an attribute matrix for the four most commonly used lift methods in unconventional: Rod Pumps,
Electric Submersible Pumps, Gas Lift, and Plunger Lift.

Table 1: Key Attributes to consider when screening for Artificial Lift Systems

Attribute Gas Lift Rod Pump ESP Plunger Lift

Depth (ft) 2000-18000 <=16000 2000-15000 6000-19000
Liquid Production Rate (STB/d) <40000 100-6000 1000-30000 50-200
Operating Temperature (°F) 450 <550 400 200-550
Bottom Hole Pressure (psi) >500 300-6000 500-6000 1500-5000
>400 scf/bbl per
Gas Liquid Ratio (scf/bbl) 300-5000+ 200-4000 <=1000 scf/bbl
1000 ft of depth
Solids Handling Capability Good Fair to Good Poor Poor to Fair
Intermittent Flow Capability Excellent Good Poor Excellent
Adaptable to Production Decline Excellent Excellent Poor Fair to Good
Reliability Excellent Fair to Good Poor Excellent
Capital Cost High Medium High Low
Operating Expenses Low Medium High Low

Based on this initial screening, two methods were chosen for further analysis: rod pump
and gas lift. ESPs were eliminated due to the lack of adaptability to production decline, high liquid
production rates, and poor reliability. Plunger lift was eliminated from consideration due to the
high GLR necessary to make in effective lift system. The test well under consideration was an oil
well with liquid dominated flow.

PIPESIM was used as part of this first screening. The primary purpose of using PIPESIM
was to generate wellbore pressures produced by each of the artificial lift methods and to determine
when artificial lift would be needed.

Second Screening

To move from the PIPESIM simulation to the economic analysis, it was essential to
implement a model of a well and forecast its production using the wellbore pressures simulated in
PIPESIM for each method. KAPPA (Topaze) was used for the production forecasting. The model
was then forecasted for a 10-year period of time using the simulated wellbore pressures obtained
from PIPESIM. The rod pump wellbore pressure was 336 psia and the gas lift wellbore pressure
was 570 psia. The wellbore pressures were held at constant values for each artificial lift method
over the ten year forecast. These forecasted production rates were used to perform our economic
analysis over the life of the well.
The total production for each method over a ten year period are as follows.
 Rod Pump: 362,000 bbls
 Gas Lift: 351,000 bbls

Overall, the difference in production gains between the two methods were relatively small over a
ten year period.

The last step in the second screening was to perform an economic analysis using the forecasted
production values. This was done with a discounted net cash flow over the ten year period using a
minimum rate of return of 10%. A comparison of the results is summarized in the figure below.

10 10
8 8
6 6
4 4
NCF Cumulative NCF
($MM) 2 2
($MM)
0 0
Discounted NCF
-2 -2 (Rod Pump)
-4 -4 Discounted NCF (Gas
-6 -6 Lift)
Year

Figure 1: Discounted Net Cash Flow Comparison

Summary

With these results for our test well, gas lift would be the preferred method if multiple wells
were drilled with close proximity to each other and were able to utilize the same compressor
station. The rod pump method would be preferable if multiple wells could not use the same
compression source or if the infrastructure for injected gas would be cost prohibitive. Both
methods produced nearly identical production gains. The gas lift has numerous strengths in which
it minimizes cost and maximizes production due to its multi-well adaptability, as well as lower
failure frequency.