Artificial Lift: Toolbox Optimization
Authors: Presley Jennifer 
Published: December 2022

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The story of artificial lift has long been one of maintaining the status quo or the “if it ain’t broke, don’t fix it” approach, but adaptation and experimentation have been present along the way.

From this pairing came innovations like the widely recognized symbol of the oil patch—the pumpjack—and the hidden marvels of technological wizardry that dwell downhole.

In this second part of a two-part series on advances in artificial lift, we’ll look at the state of optimization and a trio of techniques and technologies under development or new to the market.

No ‘Snowflakes’

For more than a decade the oil and gas industry has worked in from the edges in its quest to solve the puzzle that is the developmental life cycle of a shale reservoir.

Each stage in the cycle has been one of adversity, with the drilling and completion stages presenting a host of challenges in the process of unlocking resources from reservoirs thousands of feet deep vertically and laterally long.

These challenges continue into the well’s production stage, accelerating the cycle of adaptation and experimentation as crafty production engineers and field service technicians look for solutions to stave off the dreaded decline curve.

“Our understanding of shale reservoirs has gone through the roof. In the early days, people were just starting to understand what shale is. Geologists knew the construct of shale, but to produce from it was a new phenomenon,” said Spandan Spandan, partner at McKinsey & Co., adding that the industry’s understanding of well design and construction has also come far.

“This essentially allowed us to convert wells from a snowflake—each well optimized for its own conditions—to something that could be mass produced. The manufacturing era of wells was driven by the understanding of wells and by optimizing to the extreme,” he said.

Shale producers looking to capitalize on the manufacturing era encouraged operators to select equipment and services based primarily on price, forcing service companies to focus on developing low-cost technology options, according to a 2017 McKinsey report.

That focus remains as the world continues to recover from the COVID-19 pandemic along with geopolitical turmoil that has elevated global demand and placed pressure on oil and gas supplies.

“We’ve seen a lot more volatility. The war in Ukraine has highlighted how the market is trying to balance affordability of energy, plus security of supply, and emissions. Historically, we had only two factors. Now we are trying to balance all three of them quite actively. And all of this is being done under the umbrella of the energy transition,” said Spandan.

New Commercial Model

One challenge facing the artificial-lift sector, particularly shale, is the establishment of a commercial model that allows operators to invest in artificial lift without having to make a long-term commitment of capital, Spandan said.

“That is something that both the service company and the operator will need to collaborate on to come up with a commercial model that enables that. We’ve seen some movement within the industry to move the capex spend on artificial-lift systems into an opex model,” he said.

“But the next step of evolution for the industry is to perhaps have production optimization as a service, one that bundles the sensors, the lift system, specialty chemicals, all of that as a service, that the capex is converted into something that’s opex.”