In 2019, the United States was the largest producer of oil in the world, producing 19.5 million barrels of oil per day. The U.S. oil production rates have more than doubled during the last decade. According to the U.S. Energy Information Administration, about 63% of this produced oil comes from shale oil. The current plunge in oil prices is expected to hit the U.S. shale producers hard, especially considering the higher breakeven cost per barrel of the U.S. shale wells when compared to the players in the middle east and elsewhere.
It is widely anticipated that there will be a sharp drop in oil production, and a resultant drop in production of associated gas. It is estimated that the monthly gas production in the U.S. will fall from 94.4 BCF/D in March 2020 to 87.5 BCF/D in December 2020. The drop in net natural gas production is expected to drive the gas price up.
“EIA forecasts that Henry Hub natural gas spot prices will average $2.11/MMBtu in 2020 and then increase in 2021, reaching an annual average of $2.98/MMBtu because of lower natural gas production compared to 2020”. Source.
This scenario provides a new outlook towards associated gas utilization, and gas lift optimization.
Over the past few years, U.S. shale oil operations have seen a significant increase in use of gas lift as a preferred artificial lift method. The challenges offered by the unconventional wells such as extreme rates of decline, high volumes of associated gas, aggressively drilled wells with high dog-leg severity make gas lift a robust natural choice of lift type. During the last few years, at low gas prices, the objective of gas lift optimization was to maximize oil production while accounting for the cost of injected gas as negligible. Reports cite that excess gas produced from wells was flared due to lack of incentive to invest in gas conserving technologies due to low return on investment.
As higher gas prices, low oil prices and high break-even production cost occur, monetization of all available resources becomes vital for survival in the oil and gas industry. The role of gas lift optimization focused on achieving a balance between produced oil and injected gas and is expected take a central position in maximizing net revenue while minimizing lease operating expenses. With high rates of decline, constantly varying gas-liquid ratios, complicated trends in inflow performance gas lift optimization is a greater challenge on unconventional wells. Implementing a scalable solution to optimize gas injection rates field-wide, providing gas injection recommendations on a timely basis is critical considering the volume and the variability.
OspreyData’s gas lift optimization methodology harnesses machine learning models applied on sensor data, well design, location, and completion data. The simulation augmented approach to couple field data with physics-based simulation for automated inverse modeling and providing optimization recommendations.
For a more detailed discussion on these benefits, feel free to request our webcast replay entitled “Increase Gas Lift Production with Artificial Intelligence.” It discusses these topics in conjunction with greater detail about the benefits of Gas Lift Optimization with our Production Intelligence solutions. If you want to start maximizing your oil production and increasing your ROI, contact us to set up an appointment with our sales team to discuss easy implementation on your oilfields. We say easy because Production Unified Monitoring is a cloud-based tool that can be accessed from any web browser without any hardware or software installs. Contact Us Today!