The cost of electricity is one of the single largest items associated with oil and gas production. This cost however tends to be overlooked relative to other production costs, due to the regulated nature of the utilities combined with its specialized and non-core technical requirements. In spite of this, several studies and strategies over the years have looked at ways of reducing this cost component with meaningful results. Many of these strategies consist of structuring loads and designing equipment to take advantage of the utilities regulated rate structure. As the electricity industry in the US moves towards deregulation, these rate structures will no longer exist and in their place will be contracts negotiated on a free market basis between the user and supplier(s) of electricity.

In the upcoming deregulated electricity market, three key strategies are available to effectively manage oilfield power costs; 1) real time monitoring and control of the electrical load 2) in-field generation of electricity and 3) negotiation of an integrated power supply agreement. Because electricity is the ultimate just-in-time product, prices vary greatly depending upon when the power is consumed. The strategies listed above allow for the user to proactively structure their power supply systems to address the fundamental volatility of the real price of electricity. The effect is to strip out the historic premium that is paid to the utility to handle the natural volatility of electricity prices by blending load shifting, internal generation and market purchases.

This paper examines different scenarios where the above strategies are proposed and makes estimates for potential cost savings. These solutions utilize existing technology applied to the changing market environment and therefore focus on economic justification as opposed to technology verification. In one such case the pumping intervals for a collection of wells is adjusted using real time power prices combined with remote operations. This has the effect of reducing the total cost of the electricity consumed per barrel of production while only marginally reducing the actual number of barrels produced.

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