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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.
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 M 3 that can be used to
justify expenses for well work.
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.
Selection of Artificial Lift Systems for Deliquifying Gas Wells Page 2
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.
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.
Selection of Artificial Lift Systems for Deliquifying Gas Wells Page 4
Copyright
Rights to this information are owned by the Artificial Lift Research and
Development Council (ALRDC). This material may be used by any member of
ALRDC in any way they see fit as long as they refer to the ALRDC Artificial Lift
Selection document where it is presented.
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