Optimism seems to be slowly creeping into view with stabilizing and increasing energy prices and a potential finality to the pandemic, this could shape up to be the best spring/summer season for the oilpatch in quite some time. Producers begin to consider getting off their wallet and long-shelved programs get new life breathed into them. It’s also the time to develop strategy, maximize efficiency and build off what already exists.
With property, people and cash – the planning is complex but all those utilities produce an expected outcome and just need some organizational discipline and competence. For equipment, it is entirely a different story and that is where we have the surplus equipment dilemma.
With the severely reduced activity, boneyards everywhere are overflowing with all sorts of equipment. It could be serviceable or quite usable, but the overlooked factor many fall afoul to is ‘is it fit for purpose.’
The temptation to dust off what you have in your own backyard is obvious, but it could end up costing thousands in lost production time, inefficient production or service bills. Sizing issues and unknown condition are typically the major causes of losses due to the utilization of surplus equipment. Regardless, pressure is brought from all directions to try to use assets already owned.
Chris Grabill, president of Ecoquip Artificial Lift, an Alberta-based hydraulic pump jack manufacturer says “We deal a lot in the rental or rent-to-own of pump jacks to help companies out. We take responsibility for uptime, we have extremely low mobilization/demobilization costs and we have the ability to change stroke parameters with the push of the button to ensure efficient production in uncertain wells. Even on marginal wells, the wrong jack can cause problems for efficiency and sunk costs for mobilization, site-prep, etc.”
For processing equipment, tanks, compressors and the like – what’s ‘on hand’ may work or may not. That’s why the cyclical world of equipment brokers bring in a great advantage.
Marlon Ellerby of Energy Auctions explains, “We are constantly adding equipment to our list and getting it recertified and field ready – this ensures that with proper sourcing you will have a successful operation. And your boneyard equipment maybe shouldn’t be used by you, but brokering it can reclaim costs and ensure you get the appropriate items you need for minimal cash outlay. We are also developing leasing option to help cash flow as projects start to get developed.”
So the lesson to be taken is that even if equipment is right in your eye line some due diligence in reaching out to see what is available may help cash flow and the success of your well. In these encouraging but still challenging times, optimization, efficiency and reliability will be paramount.