After a brief uptick, the crude oil price per barrel has again started going down and analysts forecasts that we are heading towards new lows. The reasons for this continuing drop are plenty- Rising global uncertainties such as Greece debt crisis, Iran nuclear deal, Increasing Dollar value along with lowering Euro, Slump in Chinese stocks etc.. The price is also not helped by OPEC's continued high level of production and continuing increased production at North American shale plays. This has led to a situation where global demand is not being able to keep up with rate of increase in supply. As a result, we are left with a surplus of oil that is ready to hit the market. This along with the fact that there are currently about 4000 drilled but uncompleted wells waiting to come into production as soon as the oil prices go higher (>$60/ barrel) only gives us a clear indication that the oil prices will keep getting lower and that lower prices will stay for a while.
While the lower oil prices is not such a bad news for many, Exploration & Production (E&P) companies are getting hit the hardest as they are struggling with not being able to recover cost of drilling new wells. As a result, we will start seeing drop in new well constructions. We have seen that the rig count was dropping steadily for 29 weeks and just started to rise. It is expected that the unexpected rise in rig count is temporary as is not sustainable in the low price environment. However, for these companies to continue their operations, they need revenue flowing and only way they can secure this is by continuing to produce more oil.
With decreasing activities related to drilling new wells, one way E&P can continue their production levels and stay afloat is by extracting more out of their existing wells and optimizing their cost of doing so. Enhancing production from existing wells is not entirely new to the industry though not many E&P companies focused on it until now as the higher oil prices meant they were after quick rewards. Plus, enhancement techniques are not always cheap and hence the incentives were too low to invest in it. However, with the oil price environment quickly changing and trending lower, E&P companies are forced to show renewed focus on enhanced recovery techniques. The results are already there to see as the crude oil production levels in US hit record high even while the rig count kept dropping.
While there are several techniques followed around the world to enhance oil production, one of the ways that is gaining significance in the recent times is Gas lift technique. In the United States, gas lift is used in 10% of the oil wells today. Gas lift is a form of artificial lift technique where gas bubbles lift the oil from the wells that have insufficient reservoir pressure. The process involves injecting gas through the tube casing of the well bore. Injected gas aerates the fluid to reduce its viscosity, thereby enabling it to flow easily so that the formation pressure is able to lift the oil column and force the fluid out of the wellbore.
In the video attached to the below link, Emerson's Lou Heavner describes how optimizer technology is being applied to optimize gas lift operations.
http://www.emersonprocessxperts.com/2015/07/optimizing-multi-well-gas-lift-operations/
Lou further describes that "Gas lift operations begin with reliable and accurate flow measurement on the injected gas being supplied to the wells. For offshore platforms and well pads with multiple wells undergoing gas lifting, it is important to optimize the allocation of the gas, particularly where supply gas is limited.
The optimizer uses models created from the well test data to maximize production for the amount of gas injected. The platform or well pad may have constraints such as the volume of produced water, which can be handled by the water treatment process. The constraints are added to the model to reduce the injected gas to the wells with the highest water cuts to address these constraints while maximizing the oil produced "