By Petroleum Technology Transfer Council

Well-failure reduction program realizes benefits

Focused program yielded cost savings and created a system that encourages a team approach to every problem, assigns no blame and provides incentives for ongoing success

Godfrey J. Holasek, Jr., Medicine Bow Operating Company, Norman, Okla.; W.L. “Bill” Maxey, Harbison-Fischer, Oklahoma City, Okla.; Gary Brooks and Mike Bachman, Bachman Chemicals, Oklahoma City, Okla.; Dave Jones, Norris Rods, Ft. Worth, Texas.

Medicine Bow Operating Co. implemented a focused, well-failure reduction program in their waterfloods, and gas well operations in southwest Kansas and the Oklahoma Panhandle. The company was experiencing excessive well failures, as many as 112 per month from 200 wells. The team effort, involving company personnel and pump, rod and chemical vendors, focused on getting the metallurgy right, operating lift equipment under proper load conditions, and treating with the right chemicals at appropriate levels. Well failures dropped quickly, rapidly recouping the (approximately) $300,000 investment.

Some three years later, well failures are now stabilizing at about five per month, which represents a 96% decrease. Operating costs have been reduced more than $1.5 million per year, which includes savings in direct operating costs and labor. Lessons learned are being applied in other divisions of the company, and there is competitive advantage in acquisition opportunities, when one knows how to lower operating costs significantly. For the vendors, success in southwestern Kansas led to national agreements with Medicine Bow Operating Co., plus there is invaluable benefit of word-of-mouth advertising from a very satisfied customer.

THE PROGRAM

When Medicine Bow's Norman District office assumed operation of the fields in Feb. 2001, 3 – 4 failures per day were occurring. Pump, rod, tubing, electrical and mechanical failures were an everyday occurrence. No study had gone into the causes of these failures. H₂S levels were out of control, no corrosion or scale programs were in place, and equipment was improperly designed.

Oil well/waterflood program. To begin the program, no well was put back on production without first conducting an intense study to determine the cause of the failure:

• Chemical programs, such as reducing H₂S levels or controlling scale and corrosion problems, were put in place by Bachman Services. 
• Pump types and sizes were rigorously evaluated by Harbison-Fischer. 
• Speed and stroke lengths of pumping units were changed and timers were installed. 
• Rod strings were redesigned by Norris Rods. 
• Uncoated tubing in injection wells was replaced with internally cement-coated tubing. 
• Fluid levels were shot monthly to monitor pump performance. 

These changes took place the first year. Failure costs were at times offset with equipment costs. However, operating costs soon started showing the impact of the changes, decreasing $25,000 – $30,000 or more per month. The Failure Reduction Program meant fewer personnel in the field, creating a savings of over $750,000 per year.

Commitments were made to carefully selected venders to assist in this program. Each vendor was held responsible for its recommendation and products. In turn, Medicine Bow Operating was given cost-cutting opportunities for using their products, and vendors received company-wide commitments.

Gas well program. With the recommendation of Bachman Services, the cost of treating H₂S in the gas phase was reduced dramatically. H₂S concentration ranged 2,000 ppm and up. Treating 650 Mcfd was reduced by $60,000 per year, by changing from a sulfa treat system to a Triazine Tower. Chemical programs for controlling iron sulfide – which comprise batch treatments with surfactant, biocide and oxygen scavenger, and redesigning bottomhole pumps to run continuously rather than on timers, allowing solids to settle – significantly reduced pulling jobs due to sticking pumps. Resizing of compression created a $70,000 per year saving on the rental fleet. Adding a low-cost callout system to monitor compressor run time has reduced downtime considerably. Reports were created to assist pumpers in monitoring water production along with gas output. This soon allowed them to realize that water production is just as important as the gas. Keeping wells pumped off is a must.

OPERATIONAL AND ECONOMIC IMPACT

Savings were realized after the first year. In two years, failure costs were reduced from $622,000 to $327,000 in the entire Mid-Continent area. There are additional cost savings of about $750,000 per year from reduced labor. Proper controls on failures can, no doubt, make a losing field profitable. Lifting costs can be literally cut in half, or more, by applying certain actions to reduce failures. A savings of $4 – 6/bbl of oil is very achievable.

Changes did not always increase production. The thought was to keep downtime to a minimum, and the production would naturally increase. Obtaining committed vendors is essential. No blame is placed on current problems. Company and vendors work as a team to continue reducing failures. Meetings are held quarterly, and any and all problems are discussed. All field personnel now know that all failures will be evaluated as a team before placing wells back on production.

Plotting production versus failure reports, and distributing these reports to field personnel, is a very valuable tool, Fig. 1. Each field man needs to know at all times where he stands regarding his expected production target and Lease Operating Expenses costs. All involved vendor and company field personnel performed in a stellar fashion to reduce failures, and that performance continues to further reduce failures. 

Fig. 1. Mid-Continent district 2001 thru 2003 failure cost analysis.

THE AUTHORS
	Godfrey J. Holasek, Jr. is the Mid-Continent district manager with Medicine Bow Operating Co. in Norman, Okla. He is responsible for operations in the Mid-Continent area. His 34 years of experience encompass drilling, completion and production operations, much of that gained through Mid-Continent and Rocky Mountain assignments with independents. He is a member of the SPE and Oklahoma City API. He may be contacted at gholasek@mbow.net.
	W.L. “Bill” Maxey is district sales manager with Harbison-Fischer in Oklahoma City, Okla. He is responsible for Oklahoma, Eastern Kansas and Western Arkansas. He has been in the oil and gas industry for 32 years and with Harbison-Fischer for 27 of those years. He worked in the Permian basin before coming to Oklahoma in 1986. He holds a B.B.A. in business management from Hardin-Simmons University in Abilene, Texas. He may be contacted at, bmaxey@hfpumps.com.
	Gary Brooks is with Bachman Services, Inc., a specialty chemical company providing oilfield chemical products for use in production, drilling, stimulation and pipelines for over 40 years. Corporate offices are located in Oklahoma City, Oklahoma. The company also maintains offices and warehouses in Kansas, Illinois, Texas, Colorado and Utah.
	Dave Jones is the Mid-Continent regional manager with Norris Rods in Fort Worth, Texas. He is responsible for the northern half of Texas, including east Texas, Oklahoma, Kansas, Arkansas, and Louisiana. His experience includes 25 years of artificial lift practices, design, recommendations and failure analysis. He has been involved with different companies on Failure Analysis Teams in the Rockies, West Texas and now the Mid-Continent. He has a business degree from Texas Tech University. He may be contacted at djones@norrisrods.com.