Even as the energy industry continues to report explosive growth of new unconventional oil and gas production activities throughout the U.S., the industry is still experiencing a learning curve as companies seek to better understand the technical challenges involved with operating in such fields. How fast will total production decline over the life of the well? Which artificial lift system is needed at a given time? What is the optimal combination of artificial lift systems to maximize production while lowering lifting cost?

As a result, a tremendous amount of effort and money is being pumped into unconventional wells R&D, which includes improving existing techniques for drilling, setting up equipment in the field and pursuing new technology advancements—including artificial lift systems and remote monitoring applications that help operators maximize the performance of new and existing wells.

Artificial lift, used in 94% of the roughly 1 million oil-producing wells around the world, helps lift hydrocarbons to the surface in reservoirs with low pressure and improves the efficiency of naturally flowing wells. A vast majority of the new unconventional oil and gas sites are horizontal wells, with most of them requiring some form of artificial lift technology. With operators investing $8 million to $12 million per well, artificial lift and other well optimization applications have become key targets for R&D.

Research centers

A number of artificial lift research initiatives are underway within the industry, including one spearheaded by the Artificial Lift R&D Council, which established the Horizontal Well Artificial Lift Consortium at the University of Tulsa in Oklahoma. Officially known as the Tulsa University Horizontal Well Artificial Lift Projects, the consortium (which began with 15 companies) is studying how to improve the design and operability of artificial lift, including for shale fields where wells are often deep with long horizontal lateral sections.

Companies also are actively researching artificial lift. GE Oil & Gas has ramped up its unconventionals R&D investments by partnering with customers to find solutions at the company’s flagship Global Research Center in Niskayuna, N.Y., and at its Oil & Gas Technology Center in Oklahoma City, which broke ground earlier this year and is currently working out of a temporary lab space. The Oklahoma City technology center is GE’s first research facility dedicated to an industry, and its scientists and engineers will be working to crack the code on unconventionals to find new oil and gas innovations and field test products to determine commercial viability. Scheduled to open in 2015, the center will focus on accelerating mid-to later-stage oil and gas technologies related to production systems, well construction, water use optimization, CO2 solutions and energy systems. The facility will capitalize on its close proximity to unconventional oil and gas companies in an important producing region and will draw on the expertise of more than 3,000 scientists, engineers and researchers from GE’s Global Research organization.

At the May 2014 groundbreaking for the new research center, Oklahoma City-based Devon Energy signed an agreement with GE to collaborate on innovations in several specific technology areas, including artificial lift systems used for increasing the flow of liquids from production wells.

Even as such research efforts continue, the unconventionals sector is already moving full steam ahead and now accounts for more than half of all new wells that are being drilled in the U.S., primarily in three basins: the Eagle Ford, the Permian and the Williston. These three basins account for nearly half of the wells drilled in the U.S.

The industry is expected to invest more than $140 billion to $160 billion annually in overall oil and gas activities between 2013 and 2019 in the U.S. alone, with much of that driven by unconventionals. By 2035, unconventional gas production is expected to account for 35% of the world’s increased supply of energy. In turn, the unconventionals boom is driving rapid growth in the artificial lift segment: In 2014, the global artificial lift market was valued at $14.8 billion and is growing at an annual rate of 10% to 12%.

Complete portfolio

GE Oil & Gas has invested more than $6 billion in acquisitions within the last three years alone to quickly move from being a relatively small player to become one of the largest artificial lift equipment suppliers in the world. In 2011, the company acquired the John Wood Group PLC Well Support division, including its electric submersible pump (ESP) business platform. The $2.8 billion transaction enabled GE to begin capitalizing on the fast-growing demand for EOR technologies including for unconventional fields. ESPs are a popular artificial lift option at the beginning of production when flow rates are generally expected to be at their highest.

In 2013, GE completed its acquisition of Lufkin Industries Inc., a leading provider of artificial lift technologies and a manufacturer of industrial gears, for about $3.3 billion. The Lufkin acquisition broadened GE’s artificial lift capabilities beyond ESPs to include rod lift—the industry’s most common type of artificial lift system—as well as gas lift, plunger lift, hydraulic lift, progressive cavity pumps and a sophisticated array of well automation and production optimization controls and software. The company now offers the industry a complete artificial lift product portfolio.

GE’s Well Performances Services business—the home of GE’s artificial lift operations—has seen a majority of its ESPs deployed in the Midcontinent and Permian regions while Lufkin has been a prominent player in the fast-growing Bakken Shale Field of North Dakota. However, with both the former Wood Group ESP and Lufkin product platforms now part of GE Oil & Gas, the company has a full menu of artificial lift solutions located across North America and can provide support based on the operator’s well lifecycle requirements.

This is crucial because during the production life of an unconventional well, as it shifts from higher to lower flow rates, operators are expected to require at least two different artificial lift technologies to maximize production rates and ensure the best performing and most efficient system is used at each stage of the lift of the well.

Monitoring tools

Because of the extreme fluctuating nature of unconventional well performance, remote monitoring and diagnostic tools also are increasingly critical for helping operators better understand and predict how a given well will behave in a given period. Given the learning curve that the industry faces with unconventional wells, remote monitoring tools—such as GE’s suite of Predictivity products that leverage the power of big data and the Industrial Internet—help operators address the critical question of when is the right time to move from one artificial lift technology to another at a given well.

Situational awareness is crucial for unconventional oil and gas operations in remote locations.

With conventional monitoring systems for ESPs, when a ground fault occurs on the ESP power cable, the gauge’s power supply is cut off. Although the pump continues to run, its performance is no longer monitored, thus reducing the operator’s ability to effectively monitor activities and optimize production. To address this decades-old problem, GE Oil & Gas introduced its Zenith GFI Ground Fault Immune ESP monitoring system, the first ground fault-immune gauge that is designed to not be disturbed by cable ground faults, allowing operators to manage against production losses and equipment failure through continued reliable data delivery despite ground fault conditions. The technology is expected to have a significant impact on the artificial lift market, with an average of 15% of existing ESP gauges losing production data due to ground faults within the first year of operation, resulting in up to a 25% reduction in fluid output compared to pumps optimized with a live downhole gauge. A 25% loss from a well producing 800 bbl/d at $100/bbl equates to $7.3 million per year in lost revenue from a single well. The GE Zenith GFI system helps operators avoid such losses.

The growth potential for artificial lift applications for unconventional oil and gas well performance is not just limited to North America. The U.S.—where the unconventionals revolution began—is expected to be merely the launching point for what is expected to become a global segment as other countries—chiefly China and Argentina—seek to rapidly develop their respective unconventional resources. A bit further along will be Mexico, which is in the process of implementing a sweeping national energy reform program. As a result of these reforms, Mexico is expected to open up production in the country’s portion of the Eagle Ford shale play, which is already being rapidly developed on the U.S. side of the border.

Buckle up; the energy industry’s unconventionals learning and opportunities curve is about to go international.