Cost & Price Analysis
Over the last several years, the demand for Beam/ Rod Pumps was fairly stable with significant growth in North America. However, the oil price downturn, global requirements for Beam / Rod pumps are hampered, due to a reduction in activities. In the near term, this will put pressure on services companies and manufacturers, to reduce pricing. Yet, since the artificial lift supply/demand cycle has a different nature, i.e. in the downturn operators would concentrate on improving existing fields, then new projects, the price pressure will be less than other oilfield services.
Since the method is used mainly in marginal wells and a preferred artificial lift method for unconventional production, in the short term, the demand for the systems and high-priced consumables may be affected significantly, due to low oil price environment; hence prices shall be heading down.
Onwards maintenance of Beam/ Rod Pumps is another large area of opportunity for suppliers, due to switching costs for operators. Depending on the operator requirements for Beam/ Rod Pumps, pricing models may be geared towards onward operations & maintenance of Beam/ Rod Pumps.
A Beam / Rod Pump consists of Surface Equipment and Down-hole assembly. The majority of the components are electrical, instrumentation and steel.
A complete set of Beam / Rod Pump ranges between US$50k to US$ 500k and primarily driven by the type and of the unit and downhole conditions, such as operating depth, loads, corrosion risks, as it all greatly affect the material selection for sucker rods.
Key cost drivers and their impact: