Rod / Beam Lift Equipment

Beam pumping/rod pumping / sucker-rod lift / pump-jack / Reciprocating rod lift is the oldest and most used method (onshore only) in many countries around the world. The unit is made of a number of components, both surface, and subsurface. The power source located at the surface drives the down-hole pump. The pump contains a plunger and set of valves, and works similar to a piston and cylinder. On the upstroke, the sucker rod fills the pump chamber and displaces the fluid on the down-stroke

IMPORTANCE

LEVERAGE STRATEGIC ROUTINE BOTTLENECK

BUYER POWER

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WEAK

BUYER POWER

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BALANCED

BUYER POWER

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STRONG

Category Description Image

Category Description

Beam pumping/rod pumping / sucker-rod lift / pump-jack / Reciprocating rod lift is the oldest and most used method (onshore only) in many countries around the world. The unit is made of a number of components, both surface, and subsurface. The power source located at the surface drives the down-hole pump. The pump contains a plunger and a set of valves and works similar to a piston and cylinder. On the upstroke, the sucker rod fills the pump chamber and displaces the fluid on the down-stroke. Depending on the size of the equipment, this lifting method can pump up to 1,000 B/D. It can be used in a range of operating conditions. Modern days, there is a great variety of pumps that are geared towards more specific applications and may have some uncommon features, but all are governed by API Specification 11E.

 

The Beam/ Rod Pump consists of:

  • Prime Mover ( electric motor or a an engine)
  • Beam, Counter Weight and frame
  • Gear box ( Gear Reducer
  • Down-hole pump assembly
  • Control section at the surface

 

Although Rod / Beam pumping is the most widely used method and expected to dominate the artificial lift segment globally, the penetration rate is not what it used to be. Beam/ Rod Pumps are very reliable and can work for many years. Sucker rod is the only component that is most susceptible to premature failure. Friction, bending, stress fatigue and corrosion are the key reasons. 

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Risks & Opportunities

  • Having the right material selection and type of connection would prolong the life of the sucker rod
  • Depending on the down-hole conditions, fibreglass sucker rods can be used, especially in deep and corrosive wells
  • Remote monitoring allows measuring and monitoring of pumps and well performance, sucker rod string loads and other parameters, that together maximize the life of the Beam/ Rod Pumps and minimize shutdowns. It also removes the requirements of personnel to be on location to monitor the units.
  • Improving existing equipment vs. buying new 

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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. 

Globally, Rod / Beam pumping systems represent between 40% to 45% of the population. The biggest markets for this artificial lift method are North America, China, and Russia. While conventional oil production is a major segment for Rod / Beam systems, shale is a significant demand driver as well. 

Key Highlights 

  • The demand is down, as a result of a significant decrease in drilling and wells shut-in with artificial lift systems in the USA.
  • Reduction in purchases – many moved to “maintenance” mode and use existing inventories of materials
  • Supply and free capacity are growing, but this may be temporary. 
  • Deferred demand expected to come back in Q4 2020

 

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External Scanning

 
New Entrants is Medium
  • Moderate CAPEX required 
  • Many  Players
  • Battle for market share
  • Simple technology 

 

 
Supplier power is Medium
  • Many providers
  • No alternative for buyers 
  • Some product differentiation

 

Competitive Rivalry
  • A competitive environment
  • Technology is available to many players 
  • Battle for marker share
    Very limited product differentiation

 

Buyer Power is Medium
  • Many providers
    Lucrative market 
  • OEM spare parts required 
  • Can be critical to buyer revenue

 

 
Substitution
  • Does not exist 
 

 

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Cost & Price Analysis

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.


Cost Analysis 
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:

 

 

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Total Cost of Ownership

The total cost model shall include the costs of:

  • Acquisition
  • Installation
  • Operation & maintenance, including energy costs
  • Change-out / Work-over
  • Downtime

Cost of sucker rods may contribute as much as 30% of the TCO cost of the Beam/ Rod Pump system and a very careful consideration shall be given to the selection of material and ensure the longest working life at an optimum cost.  

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