Thursday, September 24, 2020
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:
- Improving expense accounting accuracy and details
- Focusing on incremental individual operating costs to improve investment decisions
- 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.
Philip Hart, as President of Excalibur Ventures, provides consultations to improve fields through Reservoir and Operational Studies and also designs oilfield equipment for Omega Technologies in Houston, Tx. He started optimizing fields in 1978 as an Exxon Engineer, taught schools around the world, wrote SPE and SPWLA papers, and was President over companies that operated 2,300 wells. Working with innovative teams, Philip oversaw costs being reduced from $45MM to $25MM per year, while raising production from 13,500 to 19,000 BOPD and increasing valuations from $45MM to more than $300MM. Besides uncovering oilfield gems, he enjoys mission work and family time.