Category description

Completion is a process of having a well ready for production or injection, after it has been drilled to the required depth. Equipment used in well completion ranges from being a simple packer, to sophisticated intelligent systems that would ensure the optimum production with little intervention from production engineers. Components of the completion equipment include production packers (various types), liner systems, subsurface flow control equipment (sleeves, nipples, chokes, valves plugs), subsurface safety valves (SSSV) and screens, when required. SSSV is the most critical component and subject to extensive testing and inspection.  Components of well completion equipment are very specialized and in some cases designed and manufactured to meet specific well requirements.

Key reasons for well completion are:

  • Prepare the bottom of the well
  • Connect the reservoir section, so the hydrocarbons can be produced
  • Isolate production zone from other areas
  • Reservoir integrity 
  • Access for well intervention and stimulation

Well completion process involves cleaning the well, running production tubing, perforating and stimulating, if required. There are many types of completion systems and methodologies, each geared towards specific reservoir types and conditions. Selection criteria are driven by the following factors and achieving the right balance between costs and anticipated performance is vital. 

  • Down-hole pressure & temperature
  • Operating modes (Natural Flow vs. Artificial Lift)
  • Flow rates
  • Type of reservoir
  • Metallurgy of equipment
  • Elastomers
  • Number of zones
  • Well intervention costs ( how expensive it is to re-enter the well, if required)


  • COMPLETION EQUIPMENT
    • Open Hole 
    • Liner Completion 
    • Cased Hole Completion


Open hole completions (barefoot completion) is a completion method whereby casing or liner is set above the production zone and produced fluids flow directly to the open wellbore. It is mainly used in reservoirs, which are well known to engineers, and have less risk. Future remedial works or well treatment can be challenging. 

Liner Completion is a type of completion whereby casing is set through the production zone, as in open-hole completion, but a liner package is installed in the production section of the well. Advantages of this method include better sand control, clean out and do not require perforation, in most of the cases. 

There are different types of liners used, namely:

  • Perforated Liner significantly reduces well completion costs
  • Screen & Liner used mainly in formations with soft walls, it is required to prevent any risk of walls caving into the wells and restrict flow of fluids. Installed screens stop the particles entering the wellbore. 
  • Gravel Packs (special coarse sand) is used to allow hydrocarbons to flow, but leave the sediments out. It works as a simple filtration mechanism. 
  • Cemented Liner used when the liner is cemented throughout the pay zone or horizontal section of the well. It provides a better isolation control, but higher risk of damage to the reservoir. 

Cased Hole completion - is one of the most frequent method used in the industry, but costly.  Production casing is run to the required depth and set in the pay zone. Perforating guns are used to perforate the selected areas.  Cased hole completions could be single string and dual string (parallel tubing), big bore / monobore. 

Multiple completions is a completion methodology which allows completing several intervals in the wellbore, be it vertical or laterals. It also allows producing / closing the areas of the reservoir as may be required. While single completion are mainly used in shallow formations and onshore, where drilling costs are lower, multiple completion predominantly used in a more costly environment.  The key advantage of the multiple completion is that production of multiple reservoirs can be achieved, via one wellbore.  The major drawback of the multiple completions is the work-over, being very complex and costly.  

Slim-hole completion is completion approach when small diameter wells are drilled due economic reasons (small potential and well life), technical challenges (too many wells drilled in the same field). A small diameter pipe is set as casing in the wellbore. The same pipe is then used as production tubing when a well starts producing. If the well is planned to be under artificial lift, slim-hole completions are not used.  

There is large variation of completion equipment types, even within the same family of application.   

Risks & Opportunities

  • The key value driver of completion approach and equipment is “install-and-forget”. The less human intervention required, the more effective approach is.  
  • Ease of servicing / work-over is another key value driver 
  • Intelligent-well technology and intelligent completions are the next “big things” that would change the way operators control and maximize production. With a number of various sensors and flow valves that are controlled from the surface, collection and analysis of data will allow to automate the process and intervene from the remote locations, in order to control production. This will allow conducting early diagnostic and preventing failures, hence less mechanical intervention to the well. However, it comes at higher capital and operating costs, so a detailed cost-benefit analysis should be conducted
  • Technology in completion equipment is evolving and developing further. Wider utilization of composite materials and nano-technology, as well as systems that will be more cot efficient to install / service would drive the innovation in this category. 

Supply & Demand Dynamics

Demand

The demand for completion equipment is affected by two factors: 1) new well completion and 2) work-over (well intervention). In the long term, with drilling activities worldwide ( especially in USA)  and steady growth in well intervention activities, due to continuous efforts on maintaining and maximizing production within existing oilfields, demand for completion is set to increase substantially. Overwhelming majority of completion equipment is used in North America (more than 40%), followed by Asia Pacific and South America.

According to Markets and Markets global demand for completion equipment and services is forecasted to grow at almost 4 % per year and reach US$13B by 2019. The growth in this market is heavily driven by drilling unconventional wells, with multi-zone isolation and fracturing. In addition, increased number of discoveries in deep water and ultra-deep water has a great impact on the demand as well.

Middle East region represents one of the smallest market for completion equipment.  Well intervention and re-development of fields to maintain production, would be the key drivers, in addition to un-conventional gas drilling activities in Saudi Arabia. Those demand drivers should provide an annual growth in excess of 5% till 2019.


Supply 

With occasional redistribution, the top 4 companies are Halliburton, Schlumberger, Baker HughesGE and Weatherford, who have been dominating the market for many years, with smaller companies sharing the rest. More than 80% of the market is supplied by the top 4, with Halliburton and Baker Hughes GE being the leaders. There are a number of smaller companies such as Superior Energy Services, Tendeka, TAM International, Weir Oil and Gas and more.  Yet, those smaller companies are limited to or highly specialized in certain type of equipment. 

External Scanning

The balance of power is almost equally spread between buyers and sellers, as the suppliers might have unique technologies that are critical to buyers. However, coupled with highly completive environment and a small potential for new players, buyers are in a stronger position.


 
New Entrants is Medium 
  • Raw materials are commodities 
  • Low-tech  & High-tech markets
  • Moderate to High CAPEX
 
Supplier Power is Medium
  • Low-tech & High-tech equipment
  • Many suppliers
  • Volumes are critical 
Competitive Rivalry 
  • Highly competitive 
  • Battles  for market 
  • Two-tier market 
Buyer Power is High 
  • Spend is significant 
  • Low switching costs & Many suppliers 
  • Some applications are unique 
 
Substitution 
  • Does not exist 
 


Portfolio Positioning

  • LEVERAGE



High
Low
High

Cost & Price Analysis

Price Analysis

Over the past several years, prices completion equipment showed a steady upward trend due to higher demand in shale drilling in North America and escalating materials costs. Yet, following the indsutry downturn, market shall witness a correction, as a result of reduced activities and decreased cost of commodities. On average prices declined by 20%-35% during 2015 and 2016. 2018 and beyond is shall not exhibit significant volatility, except the costs of raw materials. 


Cost Analysis
Major components of completion equipment are made of steel and elastomers / fluoroelastomers (high quality synthetic rubber), with the rubber being around 70% of the cost of the packer. Steel and rubber grades used during manufacturing are dependent on application requirements and driven by hostility of the environment, i.e. HP/HT, H2S/CO2 content.  Metals used are low-alloy steels, nickel alloys, martensitic and PH stainless steels, and cast iron.  Up to 10 components is included when manufacturing elastomers.

Depending on the design and application, costs of completion equipment may vary by 4 x, due to material selection. Sour applications would significantly increase both costs and lead time for completion equipment.

In addition, an important factor that drives the cost of completion equipment is the design of the system based on down-hole conditions and initial assumptions. Manufactures tend to design systems with common design and refrain from spending additional R&D costs to “tailor-made” the system, which in turn makes them more competitive. The moment the completion equipment becomes unique, R&D share of the cost increases significantly. 


Key cost drivers are:

  • Manufacturing & assembly costs- 
    • Metal and process related, hence steel and metal prices
    • Capacity utilization of manufacturers
    • Cost of elastomers / fluoroelastomers (high quality synthetic rubber)
  • Research & development costs - for most completion systems that are designed for standard applications, the R&D costs spread over a longer period and larger markets. For any “tailor-made” systems, the R&D costs are expected to go up significantly. 

Strategy

  • Use standardized products and optimizing inventory and utilization
  • Locate manufacturers close to oilfield, so transport costs are  improved
  • Learning curve in designing and manufacturing most effective systems is important, hence changing contractors frequently may not be beneficial
  • Frequent market testing  / bidding for lower tier equipment