Artificial Lift Market

Artificial Lift: Enhancing Oil and Gas Production

Artificial lift plays a vital role in the oil and gas industry by enhancing production from wells that lack sufficient natural reservoir pressure to bring hydrocarbons to the surface. It involves the implementation of various techniques and equipment to overcome the challenges of low-pressure reservoirs and maintain production rates. Artificial lift systems are crucial for maximizing recovery and ensuring efficient extraction of oil and gas resources.

Understanding Artificial Lift

Artificial lift methods involve the use of specialized equipment to lift hydrocarbons to the surface, facilitating continuous production from wells. These methods are employed when natural reservoir pressure declines over time, making it difficult for oil and gas to flow naturally. Artificial lift systems counteract this decline by applying mechanical or chemical means to boost production rates.

Types of Artificial Lift:

ESP is one of the most commonly used artificial lift methods, particularly in high-volume and high-pressure wells. It consists of a downhole pump driven by an electric motor and deployed deep into the well. ESPs are highly efficient and capable of handling various well fluids, making them suitable for a wide range of applications.

Rod pumping, also known as sucker rod pumping, employs a series of rods and a surface-driven pump to lift fluids to the surface. This method is well-suited for low-to-medium production rate wells and is cost-effective. It is widely used in both conventional and unconventional oil and gas reservoirs.

Gas lift is an artificial lift method that utilizes injected gas to reduce the hydrostatic pressure in the wellbore. By reducing the pressure, the natural reservoir energy can lift the oil or gas to the surface. This technique is effective in wells with high gas-oil ratios or where the reservoir pressure is insufficient for natural flow.

Benefits of Artificial Lift

Artificial lift techniques offer several advantages for the oil and gas industry:

• Increased Production Rates: By maintaining or enhancing production, artificial lift methods ensure optimal hydrocarbon recovery from wells, maximizing overall production rates.
• Extended Well Life: Artificial lift systems help to extend the productive life of wells, allowing for continued extraction of oil and gas resources even as natural reservoir pressure declines.
• Enhanced Operational Efficiency: Implementing artificial lift systems improves the overall efficiency of oil and gas operations, reducing downtime and increasing the reliability of production.

Factors Impacting Artificial Lift

Several factors influence the selection and performance of artificial lift systems, including:

• Reservoir Characteristics: Reservoir properties such as pressure, temperature, fluid composition, and flow rates play a crucial role in determining the appropriate artificial lift method for a specific well.
• Wellbore Conditions: Wellbore configuration, depth, diameter, and completion design influence the choice of artificial lift system and the equipment used.
• Fluid Properties: The characteristics of the produced fluids, including viscosity, gas content, and solids content, impact the performance and efficiency of artificial lift methods.

Government Policies and Artificial Lift

Government policies and regulations in the oil and gas industry can have a significant impact on artificial lift operations. Regulations related to environmental protection, safety standards, and production quotas may influence the implementation and choice of artificial lift systems. Compliance with government policies is crucial for ensuring sustainable and responsible extraction of oil and gas resources.

Dynamics of Artificial Lift Market

Drivers in Artificial Lift Market

The demand for artificial lift systems in heavy oil production is driven by several factors. Heavy oil is typically extracted using artificial lift methods such as Progressive Cavity Pumps (PCPs), rod pumps, and jet pumps. PCPs, in particular, are cost-effective for extracting sandy and viscous oil from wells. Key countries involved in heavy oil production, such as Canada and Venezuela, have significant reserves and contribute to the growth of the artificial lift market. Thermal recovery processes like Steam Assisted Gravity Drainage (SAGD) are commonly used for heavy oil production, and artificial lift systems are necessary to overcome challenges like equipment abrasion and flow assurance.

The exploration and production of unconventional oil and gas resources, including heavy oil, are driving the artificial lift market's healthy growth. Mature oil fields, which constitute a large percentage of global oil and gas production, often require artificial lift systems to optimize production as natural pressure declines. The depletion of conventional resources and the increasing energy demand have led to a shift towards developing unconventional reserves such as shale oil and gas, natural gas, and tight oil. This exploration of unconventional reserves further fuels the demand for artificial lift systems to maximize production and offset natural decline rates.

The market for artificial lift systems is expected to witness significant growth as efforts to increase production from mature fields and the exploration of unconventional reserves continue. Contracts, agreements, investments, and expansions in the industry offer lucrative opportunities for market players. The continuous production of heavy oil in countries like Canada, Venezuela, Mexico, China, and Colombia contributes to the growth of the artificial lift market in these regions.

Constraints in Artificial Lift Market

Decreased capital expenditures (CAPEX) by oilfield operators and upstream service providers pose challenges to the artificial lift market. The demand for artificial lift systems is heavily influenced by activities like upstream exploration, development, and production, as well as the investments made by oil and gas companies. These activities are susceptible to fluctuations in oil and gas prices, which are impacted by factors such as supply and demand dynamics, government regulations, weather conditions, and natural disasters. In response to prolonged periods of low oil and natural gas prices, oil and gas companies may opt to reduce or delay major expenditures, particularly for long-term development projects. This cautious approach driven by expectations of sustained low prices can hinder the growth of the artificial lift market.

Moreover, the market's growth is directly affected by the decline in capital expenditures by oilfield operators and service providers, which leads to a decrease in the demand for artificial lift systems. The COVID-19 pandemic has caused disruptions in upstream oil and gas operations, including exploration and production. Geopolitical events, coupled with the pandemic's impact, resulted in an oversupply of low-priced oil in the market while the demand significantly declined. The rapid accumulation of oil stocks has even led to storage capacity saturation in some regions, exacerbating price volatility and creating challenging market conditions for artificial lift systems.

Opportunities in Artificial Lift: Embracing Digitalization and Automation

Digitalization and automation present significant opportunities in the field of artificial lift, enabling oil and gas companies to address well-related challenges and enhance operational efficiency. As aging fields and complex wells contribute to an increase in well integrity issues, the industry has recognized the importance of safety and is leveraging digital strategies to restructure operations, analyze well conditions more effectively, and reduce operational costs.

Oilfield service providers are actively developing innovative oil recovery solutions to cater to the growing demand for completion and intervention services from upstream operators in the artificial lift market. Companies like Schlumberger and Halliburton are capitalizing on their capabilities by embracing digitalization and automation, enhancing their portfolios, and improving operational efficiency.

Many oil fields worldwide are nearing the end of their productive life, and artificial lift techniques offer a way to extend their lifespan by maintaining production levels. Shale oil and gas wells, in particular, experience steep decline rates, leading to a rapid drop in production after initial drilling. Artificial lift methods can help mitigate this decline and optimize the economics of shale oil and gas operations.

Offshore oil production poses unique challenges due to harsh environments and high operational costs. Artificial lift technologies offer the potential to minimize well interventions, improving safety and reducing expenses. With the increasing adoption of digital technologies in the oil and gas industry, artificial lift providers have the opportunity to offer advanced monitoring and control systems. Real-time data analytics, for instance, enable optimization of artificial lift operations and enhance production efficiency.

In summary, the digitalization and automation of artificial lift operations open up new avenues for the industry. By leveraging these technologies, oil and gas companies can better analyze well conditions, improve safety measures, extend the lifespan of aging fields, and optimize production efficiency. Embracing digitalization and automation allows artificial lift providers to meet the evolving demands of the industry and contribute to the sustainable extraction of oil and gas resources.

Challenges in Artificial Lift Market

The application of Artificial Lift Methods (ALMs) in horizontal wells presents unique challenges for artificial lift service providers. While most existing oil and gas wells were vertically drilled, the increasing popularity of horizontal drilling requires the adaptation of ALMs for these types of wells. Shale assets with deep and long horizontal sections pose particular challenges for ALMs. Most ALMs are designed for vertical well sections, so methods must be developed to effectively sweep and lift fluids from the deviated and horizontal portions of the well.

In horizontal wells, water is commonly used for well fracturing and is subsequently produced back from the formations to reduce backpressure and clear flow paths for gas and oil production. This process often results in the production of sand used in the fracturing process. Therefore, artificial lift systems must address the lifting of both water and sand from the wells.

Various artificial lift methods, including rod pumps, electric submersible pumps, and gas lifts, have been deployed in horizontal wells, with varying levels of success depending on the specific application. However, companies are leveraging their experiences with vertical and deviated wellbores to produce oil from horizontal wells. It is important to note that artificial lift can be costly, especially for unconventional oil and gas wells that require advanced technologies. The expense of artificial lift systems can pose a barrier to adoption, particularly for smaller operators.

Moreover, artificial lift systems can be complex and require regular maintenance to ensure optimal operation. Reliability issues can result in downtime and lost production. Additionally, the increased production of water in artificial lift operations can have environmental implications, especially in regions with limited water resources. Managing the disposal of produced water can be a challenge in such areas.

Artificial lift technologies also have limitations, particularly in wells with high gas-to-oil ratios (GOR), deep wells, and high-temperature environments. Selecting the most suitable artificial lift solution for a specific well, especially in complex reservoirs, can be a challenging task.

Overall, the application of ALMs in horizontal wells presents technical, cost-related, maintenance, environmental, and operational challenges that need to be carefully addressed to maximize production efficiency and overcome these limitations.

Ecosystem of Artificial Lift Market

Classification-wise, the rod lift type stands as the oldest form of artificial lift systems employed for crude oil extraction. With a substantial contribution of 35% to the total revenue in the previous year, this segment is projected to experience notable growth throughout the forecast period. The upward trajectory can be attributed to the various advantages associated with rod lift systems, including their cost-effectiveness and efficiency in extracting hydrocarbons. Notably, rod lifts exhibit remarkable capabilities in handling heavy, viscous crude oil at elevated temperatures, resulting in lower operational expenses. Often referred to as beam pumps, rod lifts utilize a pump jack at the surface, powered by gas or electricity, to serve as an artificial lift solution. By employing sucker rod strings and pumps, these pump jacks pressurize the well downhole, facilitating the transportation of oil and gas to the surface through piping and equipment. The segment's growth is driven by its superior qualities, such as high system efficiency, optimized controls, positive displacement, wide flexibility, and its applicability in wells with depths of up to 16,000 feet, which have contributed to increased sales and production.

On the other hand, electrical submersible pumps (ESP) claimed the largest share of the revenue last year, and the segment is anticipated to experience robust growth during the forecast period. These pumps are widely employed in the oil and gas industry to effectively push fluids from wells with low bottom hole pressure. Their popularity stems from their space-saving nature, minimal maintenance requirements, and higher efficiency, making them an ideal choice for oil and gas operations. Furthermore, the simplicity of their design allows for easy operation by field workers, and they can effectively function in wells with deviations or irregularities. Due to their low operational costs and high extraction rates, electrical submersible pumps (ESPs) are expected to witness increased adoption in the coming years.

The artificial lift market can be segmented based on the mechanism into pump-assisted and gas-assisted methods. During the forecast period, the gas-assisted segment holds the largest market share. This growth is primarily attributed to the lower maintenance requirements of gas lifts compared to pump lifts. Gas lifts are also cost-effective and widely used across various industries such as mining, oil & gas, and others.

The pump-assisted segment is expected to be the fastest-growing during the forecast period, incorporating positive and dynamic displacement pumps. This growth is driven by the increasing adoption of electric submersible and progressive cavity pumps. Technological advancements in these pumps further contribute to the positive growth of the pump-assisted mechanism segment.

In terms of well type, horizontal wells dominate the market share and are projected to experience the fastest growth during the forecast period. The significant discoveries of shale gas reserves in the North American region contribute to the growth of this segment. The abundance of shale gas reserves in North America, along with high growth expectations, fuels the market's expansion.

The offshore segment holds the largest market share due to the increasing upstream activities in deep-water and ultra-deep-water fields. Various artificial lift methods, such as electrical submersible pumps, progressing cavity pumps, rod lifts, and others, are commonly used in offshore oil wells. As there are vast unexplored reserves in offshore areas, companies are actively exploring these regions for oil development.

The Gulf of Mexico and the North Sea are particularly known for their shallow fields. The growing number of mature fields in the industry is expected to drive the demand for onshore electric submersible pumps. Additionally, the importance of heavy oil reservoirs and the demand for Electric Submersible Pump (ESP) systems in shale reservoirs contribute to overall market growth.

In conclusion, the artificial lift market exhibits various segments and growth factors. The gas-assisted mechanism segment dominates the market, while the pump-assisted segment shows promising growth. Horizontal wells and offshore activities contribute significantly to market share, driven by the discovery of shale gas reserves and increasing upstream activities. The demand for different artificial lift methods varies depending on the characteristics of the wells and the specific needs of the industry.

Regional Insights

North America dominates the global artificial lift market, holding the largest market share and exhibiting the fastest growth during the forecast period. This growth is primarily attributed to the increasing use of horizontal drilling techniques, especially for unconventional reserves such as tight oil and shale gas. The region benefits from the availability of aged and horizontal wells, along with significant potential across offshore areas, which drives the demand for artificial lift systems.

Europe is expected to be the second-largest growing region in the artificial lift market. The region is experiencing an increasing number of mature fields and volatile price changes, creating favorable conditions for company development. Additionally, the rising demand for gas from Eastern Europe has led to the exploration of previously untapped subsea sources, primarily in the United Kingdom. Despite stringent emission standards, concerns about domestic energy security have prompted nations to grant licenses for E&P corporations, further supporting market growth.

Asia Pacific is anticipated to witness substantial gains in the artificial lift market, registering a compound annual growth rate of 6.3% during the forecast period. The region's growth is driven by factors such as rising commercial activities and increased budget allocation for infrastructure development. The growing population in countries like India and China fuels the demand for energy, leading to increased exploration activities and a higher requirement for petroleum products. This surge in demand elevates the regional demand for artificial lift systems.

The Middle East and Africa also present attractive growth prospects in the artificial lift systems industry. The region shows high acceptance of wireline services and tools and features rapidly maturing oil fields due to continuous extraction. These factors contribute to the increasing demand for artificial lift systems in the region over the forecast period.

In terms of specific regions within the mentioned continents, Europe widely utilizes artificial lift methods in oil production, with electric submersible pumps (ESPs) being the most commonly employed method, accounting for 60% of all artificial lift installations. In North America, the majority of oil wells require some form of artificial lift, with the market projected to reach USD 13.54 billion during the forecast period, growing at a CAGR of 5.3%. In South America, Brazil leads the artificial lift market, with ESPs also being the dominant method, accounting for 45% of installations. Africa's artificial lift market is influenced by the maturity of oil fields and the type of reservoir, with a projected growth rate of 4.7% during the forecast period. Finally, China holds the largest market share in the APAC region, accounting for 35% of the total market, with ESPs being the most commonly used artificial lift method, making up 45% of installations.

Dominating Companies in Artificial Lift Market

• WEATHERFORD
• BAKER HUGHES COMPANY
• HALLIBURTON
• NOV INC.
• EBARA CORPORATION
• TENARIS
• DISTRIBUTIONNOW
• CHAMPIONX
• BORETS
• OILSERV
• NOVOMET
• JJ TECH
• CAMCO
• RIMERA GROUP
• MRC GLOBAL INC.
• ALKHORAYEF PETROLEUM
• CAIRN OIL & GAS
• ACCESSESP
• VALIANT ARTIFICIAL LIFT SOLUTIONS
• Ariel Corporation
• Atlas Copco Energas GmbH
• Burckhardt Compression Holding AG
• Dover Corporation
• Flotek Industries Inc.
• GE Oil & Gas
• Hitachi
• John Crane Group
• Man Diesel & Turbo SE
• Mitsubishi Heavy Industries Compressor Corporation
• National Oilwell Varco, Inc.
• Neuman & Esser Group
• Schlumberger
• Solar Turbine Inc.

Recent Developments in Artificial Lift Market

• Baker Hughes and General Electric (GE) Partnership (2021): Baker Hughes, a leading oilfield services company, formed a partnership with General Electric (GE) to create a new company called "Baker Hughes, a GE Company" (BHGE). This merger combined the oilfield services expertise of Baker Hughes with the digital industrial capabilities of GE to provide integrated artificial lift solutions for the oil and gas industry.
• Schlumberger's Acquisition of Weatherford's Artificial Lift Business (2019): Schlumberger, one of the world's largest oilfield services companies, acquired the artificial lift business of Weatherford International. This acquisition strengthened Schlumberger's portfolio of artificial lift technologies and expanded its capabilities in production optimization and efficiency.
• Halliburton's Acquisition of Athlon Solutions (2018): Halliburton, a prominent oilfield services company, acquired Athlon Solutions, a provider of specialty water and process treatment chemicals. This acquisition allowed Halliburton to enhance its artificial lift solutions by integrating Athlon Solutions' chemical technologies for optimizing production and extending the life of oil and gas wells.
• NOV's Acquisition of Schlumberger's Artificial Lift Business (2018): National Oilwell Varco (NOV), a leading provider of equipment and services to the oil and gas industry, acquired the artificial lift business of Schlumberger. This acquisition expanded NOV's artificial lift offerings and strengthened its position in the global market.
• Apergy Corporation's Acquisition of ChampionX's U.S. Rod Lift Business (2018): Apergy Corporation, a provider of artificial lift technologies and solutions, acquired the U.S. rod lift business of ChampionX. This acquisition enhanced Apergy's rod lift product portfolio and expanded its customer base in the United States.
• Schlumberger's Partnership with Rockwell Automation (2021): Schlumberger entered into a partnership with Rockwell Automation, a leading industrial automation company, to create a new joint venture called Sensia. This partnership combines Schlumberger's oilfield expertise with Rockwell Automation's industrial automation technology to provide advanced digital solutions for the oil and gas industry, including artificial lift systems.
• Dover's Acquisition of Accelerated Companies (2020): Dover Corporation, a diversified global manufacturer, acquired Accelerated Companies, a provider of artificial lift systems and related services. This acquisition expanded Dover's presence in the artificial lift market and complemented its existing production optimization offerings.
• Weatherford's Collaboration with InteliWISE (2020): Weatherford, an oilfield services company, collaborated with InteliWISE, an artificial intelligence (AI) technology company. This collaboration aimed to develop AI-powered solutions for artificial lift systems, enabling real-time monitoring, predictive analytics, and optimization to enhance production efficiency.
• National Oilwell Varco's Acquisition of ChampionX's Specialty Chemicals Business (2019): National Oilwell Varco (NOV) acquired the specialty chemicals business of ChampionX, formerly known as Apergy Corporation. This acquisition strengthened NOV's capabilities in providing chemical solutions for artificial lift applications, including corrosion inhibitors, scale inhibitors, and other production optimization chemicals.
• Schlumberger's Collaboration with IBM (2019): Schlumberger collaborated with IBM to develop the industry's first cognitive reservoir performance system. This collaboration aimed to combine Schlumberger's domain expertise in oil and gas with IBM's advanced AI and cloud computing technologies to optimize artificial lift operations and improve production performance.

Artificial lift technologies play a crucial role in optimizing oil and gas production from wells with declining natural reservoir pressure. With various techniques available, such as electric submersible pumps, rod pumping, and gas lift, artificial lift enables sustained and efficient extraction of hydrocarbons. By considering reservoir characteristics, wellbore conditions, and fluid properties, operators can select the most suitable artificial lift method to enhance production rates.