Category description

The Gas Lift method is widely used in field known to have a significant amount of natural gas produced with oil and deep-water subsea projects.

Gas lift valves are fitted on a mandrel (conventional or side pocket) that is installed in the production tubing. With the conventional mandrel, the tubing must be pulled out in order to change the gas lift valve, whereas with side pocket mandrel, the gas lift valve can be retrieved and installed using a wire-line unit, which makes it a lot more cost efficient than the conventional mandrel. Gas lift valves are activated either hydraulically (fluids) or pressure assisted, in order to open and close the valve. 

This artificial lift method requires constant supply of gas under high pressure and flow assurance.  Hence, due diligence shall be conducted at the FEED stage to satisfy this requirement. 


Pros

Best for solids and sand handling 

Highly effective in deviated wells & high GOR wells 

Low maintenance cost for down-hole equipment ( valves retrievable by wire-line)

Flexible to production rates variations

Cons

Source of gas required 

Cost of gas compression and equipment reliability 

Relatively inefficient method due to high capital and maintenance costs of compressors and flow assurance

Difficult  to lift low gravity crude

The gas lift system consists of:

  • Down-hole valve
  • Mandrel
  • Control section at the surface
  • Gas compression and piping


Risks & Opportunities

Ensuring ease of access and maintenance of Gas lift valve is critical

Supply & Demand Dynamics

More than 75% of wells worldwide use artificial lift. Depletion rate and maturing of the oilfield is the major driver for using artificial lift technologies.  The segment is expected to witness the growth rate of almost 9% CAGR till 2023 (source: GM Insights). North America holds almost half of the market and will continue to be the dominant place. A number of artificial lift suppliers are actively expanding their presence globally with more R&D hubs manufacturing plant and services centers.

While the conventional production require artificial lift at a later stage during production, unconventional fields use artificial lift very early, due to fast decline in production. According to Frost & Sullivan, by 2025, 92% of the wells will require artificial lift.  

Globally, Gas Lift systems represent around 8 % of population, but circa 25% in non-rod pumping. Biggest market of Gas Lift systems is USA, China and Venezuela. Currently, GCC represents the smallest market for Gas Lift.

A number of demand drivers present in the GCC that will provide an small annual growth

  1. Redevelopment phases in major oilfields (including offshore) , hence utilization of artificial lift technologies is expected
  2. Over 5,000 wells are using ESP or Gas Lift

External Scanning



 
New Entrants is Medium
  • Moderate CAPEX required
  • Many  Players
  • Battle for market share
 
Supplier power is Medium
  • Many providers
  • No alternative for buyers
  • Some Product differentiation
  • Can solve customer problem

Competitive Rivalry
  • A competitive environment
  • Technology is available to many players
  • Battle for marker share
  • Some product differentiation

 

Buyer Power is Medium
  • Many providers
  • Spend is small
  • Switching cost can be high
  • Can be critical to buyer revenue
 
Substitution
  • Too costly for buyer
 


Portfolio Positioning



  • ROUTINE

High
Low
High

Cost & Price Analysis

Price Analysis

Gas Lift systems represent a fairly low market share globally. Coupled with medium R&D costs and small market, the pricing of Gas Lift equipment (valves, mandrels etc) has always been driven by an opportunistic approach and top-bottom pricing, with high premiums charged. In the long run, the prices for Gas Lift systems will not exhibit significant volatility and might be driven by commodity prices.  


Cost Analysis 

Since Gas Lift equipment consist of valves and mandrels, the major cost component are metals. Depending on the design and application, the costs of Gas lift valves and mandrels may vary  3x due to selection of materials and processes, such as welding, brazing and fabrication techniques.

Selection of elastomers / fluoroelastomers (high quality synthetic rubber for sealing) affect the cost as well, and will a significant element for high pressure and high H2S environment. 

Acquisition for Gas Lift equipment is primarily influenced by two factors - Assembly / Manufacturing costs and R&D costs.


Total Cost of Ownership

Total cost model shall include the costs of:

  • Acquisition
  • Installation
  • Operation & maintenance, including energy costs
  • Change-out / Work-over
  • Down time
  • Compatibility with other manufactures of side mandrels 

Technical Insights