There are a lot, maybe thousands, of wells out there that are sub-optimal producers, or worse, actual money pits, depleting their owners’ cash flows. The technology exists to optimize these wells, but too few are ever optimized.

It should be clear from the start that “optimization” for a well could include shutting it in and abandoning it. Several years ago, I wrote about such an optimization project in Russia. The ill-fated Yukos Oil Co. had some 14,500 wells in its inventory. A study initiated by the company’s vice-president revealed that may of these wells were simply circulating water — injecting it into well A and producing it from well B. In what was probably the most successful turnaround in modern history, the company identified these money-pits and shut them all in. Within a short time, Yukos’ production had doubled, while its well-inventory had been reduced to almost half. With operating expenses halved and production doubled, profits soared.

Cutting well inventory was an unpopular, but necessary, decision, and the company prospered. It adopted an aggressive well-monitoring and evaluation program whereby every day, each asset manager in the company was required to report the asset’s 10 worst producers, along with a list of 10 candidate wells with the highest potential for improvement. At one point a well making more than 10,000 b/d of oil was shut-in and re-worked, because its potential was reckoned to be more than 18,000 b/d of oil. Nervous executives almost balked at the idea of shutting-in such a prolific producer, but the result was a clear winner.

Yukos’s subsequent demise was political and had nothing to do with production. The point is that the company would likely have died of natural causes years earlier had it not taken the bold steps it did to cut costs and build revenue.

Stories like this one are rare. Why is it so hard to manage an enterprise for maximum profitability? The easy answer is that people are too lazy to bother with it, but I don’t believe that. It could be that the answer is reluctance to invest today in a project that pays out in the future. But that’s what oil and gas companies do every day. So it must be that people are unaware of the tremendous technological strides that have been made to enable true production optimization and extension of wells’ economic life.

I have been talking to people about artificial lift; in fact, that’s one of the features in this month’s issue. I mention installing instrumented pumps that save money by preventing catastrophic failures. They signal their operating conditions — motor winding temperature, vibration, power factor, and pressure — to a monitor that can often anticipate and prevent costly downtime by recognizing the symptoms of impending failure. Moreover, pumps can also be instrumented to signal well performance data to a surveillance team that can make adjustments to pump speed and pressure to keep the well producing at peak performance and efficiency.

Almost any pump can be instrumented; kits are relatively inexpensive, compared to the value they provide. The main benefit is minimized downtime, the corollary of which is maximized production time. They also relieve harried production engineers from having to spend hours poring over hundreds of well reports to find the few wells that are underperforming. Companies that have instrumented their fields arrange to send pump and well performance data to a centralized facility where each well is monitored 24/7; then they only have to deal with those wells that show signs of sub-optimal performance or deteriorating equipment.

Often the well-performance solution is immediately at hand. The center can transmit a signal to the pump drive to speed up (or slow down) which alleviates the problem, at least temporarily. Some companies elect to man their own facilities; others outsource this task to a service provider. Either way, those who monitor their pumping wells are ahead of the game.

With growing numbers of wells being put on the pump, why not take the time to do it right? It will reduce well maintenance costs dramatically, extend pump life and actually enable production to be optimized. Just a thought.