Gas Lift Equipment

Gas Lift is one of the artificial lift methods, whereby a pressurized gas, produced by a nearby well, is injected continuously or intermittently into the production tubing to lift the fluids. The gas then travels to a well through a gas lift valve (s) at certain depth. The underlying principle of the gas lift method is that gas reduces the density of the fluid by aerating it with gas bubbles. This in turn reduces bottom-hole pressure, aiding fluids from the reservoir to travel to the wellbore a lot faster and easier

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Category Description

The Gas Lift method is widely used in field known to have a significant amount of natural gas produced with oil and deep-water subsea projects.

Gas lift valves are fitted on a mandrel (conventional or side pocket) that is installed in the production tubing. With the conventional mandrel, the tubing must be pulled out in order to change the gas lift valve, whereas with side pocket mandrel, the gas lift valve can be retrieved and installed using a wire-line unit, which makes it a lot more cost efficient than the conventional mandrel. Gas lift valves are activated either hydraulically (fluids) or pressure assisted, in order to open and close the valve. 

This artificial lift method requires a constant supply of gas under high pressure and flow assurance.  Hence, due diligence shall be conducted at the FEED stage to satisfy this requirement. 

 

The gas lift system consists of:

  • Down-hole valve
  • Mandrel
  • Control section at the surface
  • Gas compression and piping

 

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Risks & Opportunities

Ensuring ease of access and maintenance of Gas lift valve is critical

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Supply & Demand Dynamics

More than 75% of wells worldwide use artificial lift. Depletion rate and maturing of the oilfield is the major driver for using artificial lift technologies. North America holds almost half of the market and will continue to be the dominant place. While the conventional production requires an artificial lift at a later stage during production, unconventional fields use artificial lift very early, due to the fast decline in production. According to Frost & Sullivan, by 2025 92% of the wells will require some form of artificial lift.

Globally, Gas Lift systems represent around 8 % of the population, but circa 25% in non-rod pumping. The biggest market of Gas Lift systems in the USA, China, and Venezuela. Currently, GCC represents the smallest market for Gas Lift.

A number of demand drivers present in the GCC that will provide a small annual growth

  1. Redevelopment phases in major oilfields (including offshore), hence utilization of artificial lift technologies is expected
  2. Over 5,000 wells are using ESP or Gas Lift

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Cost & Price Analysis

Price Analysis

Gas Lift systems represent a fairly low market share globally. Coupled with medium R&D costs and a small market, the pricing of Gas Lift equipment (valves, mandrels etc) has always been driven by an opportunistic approach and top-bottom pricing, with high premiums charged. In the long run, the prices for Gas Lift systems will not exhibit significant volatility and might be driven by commodity prices.  

 
Cost Analysis 

Since Gas Lift equipment consists of valves and mandrels, the major cost component is metals. Depending on the design and application, the costs of Gas lift valves and mandrels may vary  3x due to the selection of materials and processes, such as welding, brazing and fabrication techniques.

Selection of elastomers/fluoroelastomers (high-quality synthetic rubber for sealing) affects the cost as well, and will a significant element for high pressure and high H2S environment.  

Acquisition for Gas Lift equipment is primarily influenced by two factors - Assembly / Manufacturing costs and R&D costs.

 

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Total Cost of Ownership

Total cost model shall include the costs of:

  • Acquisition
  • Installation
  • Operation & maintenance, including energy costs
  • Change-out / Work-over
  • Downtime
  • Compatibility with other manufactures of side mandrels 
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