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May 2000
Supplement Case Study
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How to cut electrical power costs by 30% with little or no
investment
James C. "Chris" Hall, Drilling &
Production Co., Torrance, Calif.
Bottom line. Operator experience confirms that
low-tech, low-cost actions can reduce electrical power costs by as much as 30% or more, when
applying simple, good business management practices and monitoring their operations.
Background. One of the action strategies developed
by the U.S. Department of Energy (DOE) in early 1999 during the oil price crisis was to help
producers learn how to lower their electrical power costs. These costs, depending on type of
operation, can range from 5% to as much as 50% of overall operational costs so even a
10% reduction is significant to operators, often extending the life of mature fields. While
more complex and costly solutions (such as the development of energy efficient equipment)
have their place, experience shows that reductions up to 30% can be achieved with little or
no capital investment.
Working with industry in a DOE-sponsored effort, the
National Association of State Energy Officials (NASEO) held workshops in Vernal, Utah, and
Farmington, New Mexico, to share practical wisdom on how to reduce power costs. Later in
1999, California oil producers, working in conjunction with the PTTC West Coast Region, held
two similar workshops there.
Practical power cost reduction. Many companies track
power usage and costs on a monthly basis, using that information to manage costs, monitor
field operations and make production decisions. But there are additional things to do
simple, but sound business management concepts that can lead to additional cost savings.
First step Locate and analyze power bills:
- Get one years worth of power bills (get them all,
make sure they are yours).
- Put them in monthly order and read them carefully.
- Become familiar with all of the terms and factors.
- Construct a spreadsheet to input data; include gross oil
and water production volumes.
- Look for trends or unexplained anomalies.
- Does the cost change from month-to-month make sense? How
many different rates are there? Why are the rates different? Are there any penalties or
late charges? If so, why? Do you need power at these sites? If so, why? Is the math
correct?
Second step Get outside help for free:
- Contact your utility representative; get to know the
person individually.
- Let the representative know that you want to work
together on reducing your power bills.
- Ask for an explanation of the bills and rates, and how
they are applied.
- Ask which rates are best for you.
- Ask how to operate your facilities to benefit from
various rates.
Third step Get into the field:
- Inventory your electrical motors, controllers and
equipment.
- Determine your expected power consumption does it
agree with your bills?
- Talk to field employees about how they manage power
usage. Most do not realize that they have some responsibility for this.
- Look at how equipment is operated and at what time of
day.
- Find power meters, verify that they are yours and match
them with bills being paid.
- Learn how to read meters, especially newer time-of-use
meters with digital readouts.
- Copy down power-meter information and verify that meter
factors match those on the bills.
- Using an amp meter, measure current drawn by each motor.
It should be about 70% of nameplate rating. If below 50%, power is being wasted with
oversized equipment.
- Stop, look and listen check to see that pumping
units are properly balanced.
Fourth step Step back and analyze:
- Determine if electrical rate you are on best suits your
operation. Corollary: Determine if you are operating to take advantage of the best
electrical rate.
- Determine if large, intermittent loads (i.e., water
disposal and shipping pumps) can be shifted to non-peak hours to reduce peak demand. This
can be a major item.
- Look for inefficient uses of power. See if motors are
properly sized. Look for "motor creep" (the up-sizing of motors when they are
replaced because "bigger is always better").
- Do not ever assume that because something is energy
efficient it is best suited for oil field use.
- Understand electric rates. Know how time-of-use rates
work and at what time of day the rates change. How does this integrate with the way your
wells and facilities are being operated? Also look at days of the week and seasonal
variations, as well as time of day.
Fifth step Take action:
- Set goals for what power usage and costs should be.
- Assign someone the responsibility to implement changes.
- Look for the elephants. Focus on large loads and
ways to reduce power.
- Change to the best electrical rate structure for your
operations.
- Operate facilities to take advantage of the best rate.
- Make every employee aware of their role in reducing
power.
- Follow-up on a regular basis.
- Make electrical power cost reduction an annual training
topic.
These first steps are very simplistic. But because they are
simple, dont assume that they have been done. Without continual attention, bad habits
or changed operating conditions can cause electrical power consumption to creep up
unnecessarily.
There are other steps that require a greater investment of
time, resources and capital. They are worth doing only after the initial steps outlined
above have been taken:
- Look for alternate electrical service providers (ESPs).
- Talk to your oil producer electric co-op. If you dont
have one, then create one.
- Find out about performance contracting how to get
paid to reduce your power consumption.
- Ask questions and share experiences with local operators
and others in the business. Search for knowledge using the Internet, PTTC, trade journals,
associations, etc.
- Determine if any industry workshops on this topic have
been held in your region. If not, ask for them.
- Get the available rate structures changed. Oil fields
have a very desirable flat load profile.
Proof that it works. Tejon-Grapevine field, Kern
County, Calif., is a mid-sized field on primary recovery, producing about 80 bopd at 92%
water cut. Major electrical equipment consists of 18 producing oil wells, two injection
disposal pumps going to three wells and one shipping pump. An audit of the power
requirements of the field discovered that:
- Motors were properly sized.
- Changing to a better oil field rate structure resulted in
an immediate 20% cost savings.
- The water disposal pumps, which were controlled by a
float switch, did not run continuously. By installing a clock timer and
overflow-protection circuits (cost = $200), load was shifted to off-peak hours when power
costs were less. This saved 5% during the summer months.
- Oil was being shipped by pump into pipeline at peak
electrical rate hours. By shipping earlier in the day, a 2% cost reduction was realized.
Other operators have applied the concepts described above to
reduce their power costs. Examples include:
- Tidelands Oil Production Co. operates several hundred
wells in a waterflood in Wilmington field, California. Motor sizes were examined for
proper sizing, and some mismatches found. However, unless motors are significantly
oversized, Tidelands has found it uneconomic to replace them. But when motors fail, they
are replaced with properly sized motors.
- Champlin operated a field that had access to two ESPs
with different rate structures. By installing equipment to switch between suppliers at
different times of the day and year, power costs were reduced by as much as 30% with a
12-month payout.
- Tidelands Oil Production Co., working with the California
Independent Petroleum Association and others, fought for rate changes. Rates were changed,
benefiting Tidelands and others. Tidelands has realized savings of up to 36% on some
meters.
In most oil fields, power cost reductions of up to 30% can
be achieved simply and with little investment. And they will be realized from now on. One
can reinvest the savings from simple steps in other more expensive and complex solutions
(controllers, efficient motors, better facilities) to further reduce power costs another
15%.
Acknowledgment
The U.S. DOEs Office of Fossil Energy provided partial
funding for the National Association of State Energy Officials efforts in this
program. In addition to Chris Hall, other producers who were primarily responsible for
organizing the California workshops were Robert M. Fickes, with Tidelands Oil Production Co.
in Long Beach, Calif., and Casper Zublin in Bakersfield, Calif.
The author
James C. "Chris" Hall is president of
Drilling & Production Co., Torrance, Calif. A third-generation oil producer, with
production primarily in the Kern County area, he has been extremely active in numerous trade
associations at the national and regional level. Mr. Hall received a special industry
leadership award from DOEs Office of Fossil Energy, has served as national chair of
PTTC and still serves on its board, representing the West Coast Region. He graduated from
Brown University in 1972 with a BS in mechanical engineering. |