Following a tightly controlled test on one of its own wells, Laredo Petroleum calculated energy efficiency greater than 25 percent by switching from the company’s across-the-line starter standard to a variable speed drive (VSD) supplied by Strategic Energy Products.
The back-to-back test was conducted in late September 2015 and designed specifically to measure the relative kilowatt-hours consumed when using an across-the-line starter versus a specific VSD system. The drive system won hands down, consuming one-quarter less electricity per stroke.
Electrical consumption is an important metric for producers. Reducing kilowatt-hours decreases costs per well and increases the total wells that can be served. Laredo Petroleum operates primarily in the Permian Basin, so the company is no stranger to the need for energy conservation.
This drive test supports a key company strategy to enhance returns through prudent capital allocation and improvements in operational efficiencies. The Tulsa, Oklahoma, company focuses on the acquisition, exploration and development of oil and natural gas properties. Its Permian activities are in Glasscock, Howard, Reagan and Sterling Counties on the eastern side of the basin.
“At Laredo, we are constantly looking for new ways to produce more oil while spending less money,” says Jeff Hunt, artificial lift technician at Laredo. “Conducting sound tests on new equipment is a big part of that philosophy.” The oil field has become much more electrified, making electricity a significant operating expense, Hunt notes. “Using less electricity per stroke means we spend less money per barrel of oil produced.”
Conserving a Finite Resource
Electricity is a scarce and important commodity for oil field operations. As areas like the Permian Basin have seen an increase in activity, they have also experienced a ramp up in electrical consumption and congestion.
Peak demand in the Permian Basin zone increased more than 40 percent since 2010, according to the 2014 State of the Grid report from the Electric Reliability Council of Texas (ERCOT). In the summer of 2015, Texans were asked to power down electronics in the afternoon to avoid power outages. Other states with active drilling and production are seeing similar increases in consumption of this finite resource. North Dakota predicts that by 2035 the Bakken will need three times the power it consumes today. More power is coming online, but so is more demand.
The reality of electrical availability creates two compelling cases for reducing consumption at the well. First, reducing kilowatt-hours reduces cost—and electricity is a significant component of operating costs. Second, reducing consumption per well frees kilowatts for additional wells. If producers can reduce consumption by 25 percent, then they can increase the number of wells by one-third.
New drive technology has the potential to significantly reduce electrical consumption as well as boost production and cut maintenance shutdowns. VSDs apply only the power needed to meet operating parameters such as strokes per minute.
They help keep power factor above 90 percent. However, many drives simply burn off excess energy rather than using less energy. Operating costs are high because energy is wasted.
Regenerative drives put power back on the line, saving operating costs, but they have a higher initial cost. The VSD used in the Laredo test avoids these issues, saving excess energy for the next stroke and thereby reducing kilowatts per stroke and saving money for the producer.
Hunt was intrigued but skeptical that the drive could significantly reduce kilowatt-hours. “We were drawn to this particular drive because of its flexibility and increased electrical efficiency compared to other drives,” Hunt says.
Laredo has used other VSDs in the past. “Many drives use dynamic braking and resistors to actually burn off excess electricity,” Hunt adds. “That protects the pumping system, but the user still pays that burned off electricity.”
To determine the savings that Laredo could achieve, Hunt worked with Strategic Energy Products to define a test on an active well.
Electrical Test Configuration
Strategic Energy Products designed the test to focus specifically on kilowatt-hours consumed. Strokes per minute were set so that no pump-off would be required, and the test length was limited to 48 hours to minimize potential weather effects and other outside influences.
The drive manufacturer supplied a self-contained test trailer that could meter electrical consumption for the test. During the first 24 hours, Laredo ran its standard configuration already installed at the well—an across-the-line starter with a Lufkin pump-off controller (POC). No pump-off condition was encountered.
During the second 24-hour period, the setup used an energy-efficient VSD system contained within the test trailer and connected to the already installed POC. “Switching between the two setups was almost as simple as throwing a switch,” says John Wappler, Strategic Energy Products principal. The power meter was reset, VSD connected and starter bypassed, all within 8 minutes. No pump-off happened during this period either.
Hunt characterizes it this way: “We ran the unit with the starter at 7.1 strokes per minute for 24 hours and then ran it at the same speed with the VSD for another 24 hours. This was enough time to get an adequate sample size for each method but also a short enough time to limit outside factors from skewing the results. For example, if we had run a test for a month and a storm knocked out power at the site for a few days, that could impact the test. We felt this was a reasonable ‘apples-to-apples’ comparison, and we worked together with the guys from Strategic Energy Products to monitor the process and document the results.”
The results were unequivocal—the VSD outperformed the across-the-line-starter. During the 24-hour period, the across-the-line-starter consumed 236.8 kilowatt-hours.
By comparison, during its 24-hour period, the VSD consumed 175.4 kilowatt-hours. This represents a 25.9 percent savings. “The VSD uses all the electricity it pulls from the grid—and it pulls much less than other systems,” Wappler says.
After the test, Laredo purchased its first unit, which Hunt will monitor over several months. The unit was delivered in less than two weeks. “That kind of responsiveness gives our customers great confidence in the service they can expect,” Wappler says.
“The test results were quite impressive and definitely support our strategy to improve operational efficiency,” Hunt says.
“Initial reports indicate that we will be able to cut our electric bill between 25 and 30 percent. We will look at using more of these in the future, possibly on all vertical wells and problem wells.”
Laredo is already seeing the benefit of easy integration. “It took just a couple wires to connect the VSD to our current pump-off controller, and the system was incredibly easy to use,” he says. “Because the VSD integrates with any POC on the market, we have a lot of options as we look at other candidate wells.”
The team at Laredo believes that using the drive to match the strokes per minute to reservoir inflow will extend equipment life and increase production by maximizing the number of effective strokes. “If the VSD can improve wells like the one we tested, its benefit on failure costs will save a considerable amount of money,” Hunt says.
Wappler agrees. “Companies like Laredo easily spend tens of thousands of dollars for every well pull,” he says. “At the same time, the well is out of production for several days.” This could quickly amount to 1 to 2 percent of annual production.
In the future, Laredo may explore other ways to obtain even more value from the drives. For example, drives can be used to optimize strokes per minute for the operating conditions. “Laredo can decide if it is best to run all day at a lower average rate or for limited hours at a higher rate,” Wappler says. “They have the control and the data to fine-tune to their objectives.” This approach could result in incrementally higher production or greater efficiency—or both. “The VSD is unique, effective and economical,” Hunt says. “Users will actually spend less on electricity.”