This is an exclusive member-only content. Login here to view the video.
Techniques to Reduce Operating Costs for Increased Reserves and Profitability — Philip HartNov 13, 2021
Employing certain practices in past field operations reduced operating costs by over $4.4MM per year and helped increase reserves by more than 3 million barrels of oil (MMBO). These practices are broken into three main topics:
1. Improving expense accounting accuracy and details.
2. Focusing on incremental individual operating costs to improve investment decisions.
3. Implementing innovative expense reduction techniques.
The brief accounting overview concentrates on simplifying invoice coding, creating detailed equipment expenses, and developing more precise allocations. These improvements allow “troublesome” equipment to be identified and optimized, while providing improved financials. The focus on determining individual operating costs allows shut-in wells to return to profitable production, pinpoints wells losing money, and improves the economics of workovers and new drill wells. Using this approach, one field increased reserves by more than 3 MMBO.
Lastly, nine operational techniques that reduced costs are reviewed in detail (and 10 more highlighted). These applications reduced pumping failures by 61% (saving $2.1MM/year), decreased energy costs by $1.3MM/year, and saved other expenses by $1.0MM/year. With accurate detailed accounting, incremental individual well cost analysis, and cost-cutting efforts, a field’s cash flow and reserves can be increased substantially.
This presentation is from the Distinguished Lecturer 2020-21 season.