ESPpump.com

esp pump Welcome to the ESP Pump website - a historical perspective of the oilfield electrical submersible pump industry, and viewpoints into ESP technology and business developments - past, present & future. In commemoration of the invention and original commercial development of the oilfield electric submersible pump by Mr. ARMAIS ARUTUNOFF, founder of Reda Pump. Based on interviews with retired artificial lift ESP professionals, press reports, government documentation, and industry analysts. If you would like to share historical information and your perspective, please send via the contact information provided. ... this page's latest update, Monday, Sept 17th, 2012. This esp website is updated often. It has received over 31,000 + views from around the world, and frequently receives input from readership. The web server shows that about 100 unique visitors (esp professionals) read the discussion every day. Please email your comments - contact.

Before the history section, --- a brief note and single paragraph about today's esp industry environment to help put the historical perspective in context. In the not too distant past, there were just a few esp suppliers. The recent trend has been a growing amount of new entry esp suppliers. Technology is increasingly being transferred to small esp start ups, and regional service providers - apart from the big names like Schlumberger and Baker Hughes. Also note that now GE and Halliburton have entered this market in the past year 2011. Another large cap Weatherford is a recent player. And Russian esp manufacturers are also entering new markets, and this includes the USA such as Borets. So the landscape continues to change fast. It's an interesting business study also, as technology transfer takes affect around the world. The good news is that as of early 2012, we remain in a very strong secular business uptrend. But how will the big companies react to margin compression should there be a downturn? Etc. Please continue to email your input, questions and comments. Email address is at the bottom of the page.

Some brief history of Arutunoff's invention, and the ESP industry.
the inventor of the ESP pumpthe #1 ESP pump company in the worldBackground : Armais Arutunoff was born June 21, 1893 in Tiflis, Georgia - a town with a rich history dating back to the 5th Century, located in the Caucasus Mountains between the Caspian and Black Sea. Born to an Armenian family, his father was a soap manufacturer, and his grandfather a fur trader. In his youth, Armais lived in Erivan (now Yerevan, Armenia). Armais Artunoff passed away February 1978, in Oklahoma.

Arutunoff's study of power transmission showed that electrical transmission of power can be efficiently applied at nearly all conditions. His ambition was to apply the results of his study to oil drilling and improve the antiquated methods he saw in use in the early 1900's in Russia.

To do this, a small, yet high horsepower electric motor was needed. The limitation imposed by available casing sizes made it necessary that the motor be relatively small in diameter. The existing state of the art and design laws at the time indicated that a motor of small diameter would necessarily be quite low in horsepower. Such a motor would be inadequate for the job he had in mind so he studied the fundamental laws of electricity to find the basis for the answer to the question of how to build a higher horsepower motor exceedingly small in diameter.

How Arutunoff developed the ESP. In 1916, Arutunoff was redesigning a centrifugal pump to be coupled to the motor for dewatering mines and ships. To develop sufficient power it was necessary that the motor operate at high speeds. For direct attachment to such a motor, thus permitting the simplest power transmission to be used, the pump needed to be a rotating device and operate at the same speed with the motor. The centrifugal pump met that specification but it had never been developed to operate against high discharge heads. Arutunoff therefore successfully undertook to design a centrifugal pump, small in diameter and with a multiplicity of stages to achieve high discharge pressure. In his design, the motor was ingeniously installed below the pump to cool the motor with flow moving up the oil well casing, and the entire unit was suspended in the well on the discharge pipe. The motor was sealed from the well fluid and operated in an oil bath.




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non-esp competitor from the 1920's
EPCO Pump - 1920's era
the early days / production pump competition

Before the unit had completed testing, a fire broke out in the Briansk Steel Factory in the growing industrial city of Dnipropetrovsk, Ukraine (formerly, Ekaterinoslav) where Arutunoff was manufacturing in the original ESP workshop his pump and motor. The fire department could not catch the blaze which spread throughout the night, so one of Arutunoff's engineers hooked up the test unit in a surface horizontal position and it pumped a large volume of water and put the fire out. Indeed, it remains a surprise to many in the industry that the first functional use of an ESP was actually on surface in a horizontal configuration from the test bench used in designing the ESP. When Arutunoff awoke the next morning he was rather famous, for the pump was literally an overnight success. Arutunoff's early invention enjoyed wide application in Russia and later in Germany, for oil well pumping and dewatering mines and ships.

After developing in 1916 the electrical submergible motor and pump, Arutunoff emigrated to America in 1923. He eventually settled in Los Angeles seeking to sell his idea to American backers; everyone he approached turned him down, saying the unit was "impossible under the laws of electronics".

How the ESP industry in the early days was relocated to the State of Oklahoma. Skeptics thought the ESP was impossible and would never work, but Mr Clyde Alexander (namesake of Clyde Lake, Oklahoma), then vice president and general manager of Phillips Petroleum Company, heard about Arutunoff's invention and saw what this could do for the petroleum industry. Soon thereafter, a deal was negotiated with Phillips Petroleum Company for testing the equipment, and in 1928 Arutunoff moved to Bartlesville and formed, with the backing of Phillips Petroleum Company, the Bart Manufacturing Company.

With three employees, Arutunoff built and installed the first ESP in an oil well in the El Dorado field near Burns, Kansas. News of its success created quite a stir in the oil patch. The New York Times send Arutunoff a telegram saying, "Please rush good pictures showing oil well motors that are upside down". An article in a 1936 Tulsa World newspaper described it as " An electric motor with the proportions of a slim fencepost which stands on its head at the bottom of a well and kicks oil to the surface with its feet."

255
ESP install #1. Phillips Petroleum lease, near Burns, Kansas, 1928. Arutunoff is third from right, shown with the original Reda employees.

The early days of Reda. The name REDA itself was the cable address of the company that Arutonoff had operated in Germany, namely the Russian Electrical Dynamo of Arutunoff. The first two employees to work for Arutunoff were Mr Scott C Beasley and Mr. S.N. VanWert. In fact, it was Mr. VanWert who was the actual promoter instrumental in proposing and negotiating the agreement with Mr. Clyde Alexander of Phillips Petroleum to move to Bartlesville. It would soon become a spectacular business. By 1938, it was estimated that two percent of all oil produced in the United States with artifical lift, was lifted by Reda Pumps. Reda continually expanded its manufacturing, operations and service. Many thousands of employees would share in the success of the Reda pump.

Great business success meant great wealth and the Arutunoff family lived in grand style in Bartlesville, neighbors with many of the oil tycoons of that generation. During the hot summer months and bitter winter days in northeastern Oklahoma, he and the family would live in their large rambling home in Beverly Hills, California (he would later sell the home to actor Vincent Price). Arutunoff was known to have a penchant for Hawaii, and would frequently treat friends for an all inclusive island vacation, flying first class and staying with the family at his favorite hotel, the Royal Hawaiian on Waikiki.

Arutunoff's ESP oilfield technology quickly had a significant impact on the oil business. patent His pump was crucial to the successful production over the years of hundreds of thousands of oil wells. Arutunoff was an ingenious and prolific inventor, who, among other odd practices, ensured the punctuality of Reda employees by furnishing his office with only three chairs, to be divided up for the entire day on a first-come first-served basis. Arutunoff would lead by example to become the first of many rather eccentric ESP professionals, who would go on in developing and further refining the ESP from his legacy. Arutunoff would obtain 90 patents with broad patent protection beginning in the 1920's (example: US Patent 1,701,468 applied for on April 15, 1927, titled- "Motor Protector"), unlike the "corporate patent mill" ESP patents of today with narrowly defined claims.
Reda advertisement 1951
Vintage Reda Pump advertisement, 1951
"Submergible Electrical Centrifugal"
In 1930 the company became REDA Pump, an acronym for Russian Electrical Dynamo of Arutunoff. It occupied the city's industrial park just northwest of downtown and the plant eventually grew to nine acres, or 30 times its original size, through 42 additions over the years. REDA merged with TRW (another acronym for Thompson, Ramo, and Woolridge) in 1969 and later TRW REDA acquired the Masonic Building that had been the headquarters of Cities Service. The entire REDA company including the REDA Oil Well Cable division, based in Lawrence, Kan., were sold by TRW in 1988 for about $300 million and became a division of Camco Inc. Ten years later, on June 19, 1998, Schlumberger announced that it purchased Camco in a stock swap- and its ESP division became known as Schumberger REDA Production Systems. In 2001 the city of Bartlesville, motivated by the need to retain the 500 jobs at REDA, announced an ambitious plan to rebuild the company's aging plant. The 16 different lease agreements for the land the plant occupied would be consolidated into one lease, and the plant would be rebuilt in phases resulting in a new city-owned and air-conditioned facility of over 300,000 square feet. But that plan was scrapped in early 2003 when Schlumberger announced it would not rebuild the facility, but instead only refurbish the existing structure. In 2004 Schlumberger sold the 170,000-square-foot nine-story Masonic Building to Rogers State University and ended any hopes to maintain Reda's presence at the iconic building.

View a Letters Patent forty years after Mr. Arutunoff's early patents, by clicking here (pdf).




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Schlumberger superior acquisition and growth to provide leading technology services
Analysts cite examples of Schlumberger Reda market leading investment in integrated technology solutions
archived news report HOUSTON--(BUSINESS WIRE)--May 14, 2002
"Combination of real-time monitoring and control, artificial lift systems and electrical engineering services enables clients to better connect with their reservoir."

Schlumberger Oilfield Services today announced it has acquired Canadian-based A. Comeau and Associates Limited (ACA), a leading provider of electrical engineering products and services for artificially lifted wells.

ACA is the latest addition to the Schlumberger Artificial Lift group, which provides full service capabilities in electrical submersible pumps, gas lift systems, hydraulic lifting, progressing cavity pumping (PCP) and real-time monitoring and control. "A. Comeau and Associates is an ideal complement to our vision of real-time production optimization and reservoir management," said Peter Goode, president of Schlumberger Well Completions and Productivity. "In addition to playing a key role in this vision, ACA's leading-edge capabilities in power management will offer immediate value to our submersible, progressing cavity and hydraulic pumping services." Technical solutions offered by ACA include electrical and automation engineering; power systems engineering, design and manufacturing of motor control products; power and control modules engineering; and design and fabrication for oilfield production and process systems. "We share the Schlumberger vision and believe that our combined organizations will provide opportunities to better support customers' needs and yield the industry's premier artificial lift solutions; we have the solutions, from downhole pump protection and monitoring to sophisticated electrical power installations, to insure maximum efficiencies in all pumping applications," said Alf Comeau, founder of ACA.

ACA, which was founded in 1976 and now boasts 90 employees, will continue its operations in Edmonton, Alberta.

New Schlumberger Group Optimizes Artificial Lift Operations
The benefits of combining technologies and solutions to form the Schlumberger Artificial Lift group, which in addition to ACA includes recently acquired Phoenix Petroleum Services, has already been demonstrated in the field. For example, field-proven Schlumberger artificial lift operations have resulted in a production increase of more than 20 percent from a field in South America; stabilization of gas injection rates, decreased gas consumption and increased production by 73 percent in a North Sea well; and installation of the world's first dual electric submersible pump, allowing for simultaneous, but separate, production streams in a well. "As higher off-takes are sought from maturing and new assets alike, the historical under-investment in artificial lift technology is proving a limitation," said Goode. "Recognizing the enormous benefits this technology can bring our customers, Schlumberger has substantially increased its investment in this area." The integration of Phoenix and the addition of ACA further enhance the artificial lift capabilities of Schlumberger. Dramatic improvement to the recovery and management of oil and gas assets is the inherent benefit to the industry. Additional information on Schlumberger Artificial Lift is available at http://www.connect.slb.com/Artificial_Lift_Systems.

ESP Cable and MLE
Production consequences
Low cost Cable & Motor Lead Extension



In the beginning there was Reda, and from the inventor and leader Reda, others followed:
• The birth of Centrilift. In the late 1950's, started allegedly by using stolen proprietary drawings taken from Reda pump. Arutunoff was disappointed and understandably furious at the poor showing of professional ethics by his once trusted ex-employees eager to start up their own ESP business in this way.
Byron Jackson & the early days
Byron Jackson
California rescue
Centrilift business startup
A lawsuit was prepared to be filed against Centrilift and the ex-Reda employees who founded Centrilift, resulting in a settlement with damages paid by Centrilift to Reda. During this time in 1957, Centrilift was located in California and was trying to put together a pump system and find an operator to install their product. Byron Jackson Pumps in 1959 purchased Centrilift and moved the Centrilift people to Tulsa. The company was subsequently sold to Hughes Tool in 1980, and a new facility built in the town of Claremore, Oklahoma paving over the historic Claremore airport landsite used by Wiley Post and Will Rogers, in order to secure a low cost employee base and allow room for expansion.
Bakerlift and Centrilift merger - Hughes Tool and Baker Oil Tools
BakerLift merged with Centrilift following Dept of Justice Antitrust clearance following the merger of Baker Oil Tools & Hughes Tool
Following a merger of Baker Oil Tools and Hughes Tool in the late 1980's during the oilfield depression, a careful lawful orchestration of the businesses between Centrlift, BakerLift, and Kobe Pump of Argentina was handled due to Anti-Trust concerns. Subsequently, Baker Hughes replaced the leadership of Mr Joe Cox who opted against employee layoffs mandated by the Baker Hughes management in Houston, with Mr Joe Brady (ex BakerLift and fresh from a quick, and large downsizing of the Baker Hughes CAC division operations in Belle Chasse, Louisiana) to similarly streamline the Centrlift division. Thereafter, under Mr. Brady's management, Centrilift became one of the larger and more profitable ESP manufacturers. This time period laid the foundation to Centrilift's growth. Centrilift built a distribution network in Latin America - having acquired Kobe facilities in Argentina, and Europe and secured sizable orders in the ex-Soviet oilfields primarily through the exemplary efforts of Mr. John Arrott, Business Manager - Russia, during the early 1990's.
Kobe was the foundation for Latin America expansion for Centrilift - Oiline Kobe
Baker acquired FMC's Oiline Submersible Pump Co.,circa 1978. Kobe took over and about 4 years later it was changed to Baker Lift. Mr Joe Brady left Kobe as Eng. VP and became President of Baker Lift, prior to a move to & quick downsizing of Baker CAC, only then to transfer back to the consolidated Centrilift + (Bakerlift and Kobe)
early Kobe Pump business Centrilift under Mr. Brady's leadership was able to achieve consistent quarterly revenue and profit growth, and was rumoured to catch the envy of many other Baker Hughes division chiefs owing to Centrilift's top standing in business performance within the parent company. Throughout the 1990's, Centrlift was able to attract many experienced industry professionals, owing to this success. Subsequent to Mr Brady's retirement, changes in management philosophy and reversals occured. Baker Hughes appointed successive Presidents to Centrilift from their Hughes Christensen drilling bit division. Information received from an affected Centrilift executive relates that Baker Hughes abruptly dealt with the termination of employment of Centrilift CEO Mr. Charlie Wolley in late 2007, together with a divisional Vice President and law staff primarily over handling of certain agency business dealings in Russia. Baker Hughes corporate management remain cognizant to $44.1 million dollars of penalties related to recent felony convictions levied against Baker Hughes by the U.S. Department of Justice for bribery. Additional reference support regarding Baker Hughes ethics, and public statements by Baker Hughes CEO Mr Chad Deaton, can be found by clicking here. Analysts remark that more stringent business controls and competition in large geographical growth markets such as Russia are causing Centrilft to consider non-traditional markets for future growth and profit, by developing technology to be tested in high profile and intervention cost market segments such as subsea applications - a technology first introduced in relatively lower pump thrust and conservative motor hp sizes by industry market share leader Schlumberger Reda in Asia 10 years prior. (Reda has successfully operated over 30 subsea pump systems in more conservative applications) . Having received reliability assurances from Centrilift for these high thrust & high motor horsepower (1200-1500 hp) first-article pump systems, oil & gas operators are expecting long runlifes of 5 years. New sales of these deep well, high flowrate applications may be dependent on commitments to 10 year runs without pulls in these high intervention cost subsea applications. Other major ESP manufacturers are in wait and see mode, before plunging into this new and risky esp market segment. The verdict is still out, and understandably will be for at least the next few years as the industry hopes for success during these subsea trial early operations offshore Brazil and in the Gulf of Mexico.

Parent company Baker Hughes announced in late 2009 and into 2010 that the Centrilift product line would be folded into their corporate wide centralized shared services scheme, further eroding automony. Eye on revenue goal - $3 billion by 2020, versus ~$ 1B/2010.

In late 2011, Baker Hughes announced a significant investment in R&D - $36 million for their Claremore Oklahoma plant. Observers view this as a very positive development, and a strategic counter to GE's entry into the marketplace. It shows that Baker Hughes sees that technology investment will be key to their keeping a strong market share position. It's also noted that Baker seems to be effective in "phasing out" the old name 'Centrilift', as Baker Hughes Artificial Lift appears to be the moniker they now often use to identify themselves in the marketplace.

Baker Hughes highlights, 2011. The company is taking on riskier offshore projects to satisfy business growth revenue and profit margin requirements, as traditional markets take on new and growing competition. An example of such a project in 2011 was on Big Foot in the Gulf of Mexico, accepting the purchase order for high intervention cost 1200 hp esp assemblies for Chevron - installed at 12,000 ft depth. Terms of the P.O. are not public information. More information, click here. It's noteworthy that Schlumberger may have opted out.

This risk profile and need to gain better profit margins can be read between the lines of Baker Hughes corporate news announcements following accepting the purchase order. “Longer-term, the experience and knowledge gained from Big Foot can potentially be applied to other developments in the deepwater market to extend field productivity,” says Richard Williams, president of the Gulf of Mexico for Baker Hughes. “We are happy to be working with Chevron on this groundbreaking project to extend the application of ESP technology in the deepwater environment.”

ODI complete product line




Oil Dynamics ESP
Oil Dynamics logo
Source: Link to PT ODI website
Oil Dynamics, formed in 1967 and lead by a new management team comprising Mssrs Joe and Eldon Drake and Joe Carle, eager to stake out their claim with their own ESP business. Joe Carle was also one of the founders and president of Centrilift (previously employed by Reda), and it is said that Mr Arutunoff was preparing yet another lawsuit against Centrilift and Joe Carle for a new patent infringement case in 1967 during the time that the business deal was being put together to form ODI. So rattled was Joe Carlyle, that he was eager to leave Centrilift and start up another ESP venture with the Drake brothers to avoid being involved with another lawsuit with Mr. Arutunoff for stealing proprietary technology from Reda. As a side note, Eldon Drake would later start up another ESP company by the name of Westech, which was subsequently sold to Centerlift. ODI was capitalized and originally jointly owned by Franklin Electric and Goulds Pumps of Seneca Falls, New York. Later Goulds (ITT) sold to Franklin in the last three years of ODI's existence and lead by Mr. William H. (Bill) Lawson, CEO of Franklin Electric. Mr. Tom Brennan was President after Mr Joe Drake retired. ODI was best known for their quirky, yet brilliant, research and development. In fact ODI was the innovative leader of many state of the art manufacturing processes and the holder of patents in the state of the art abrasion resistant (AR) tungsten carbide bearing elements. ODI successfully marketed their 1-X AR and modular AR pump systems for longer runs, pump thrust wear resistance, and for use in sandy abrasive critical service downhole conditions, together with their Super Sand Pump patented technology which became the leading ESP technology used for tough sandy applications in the oilwells throughout Southeast Asia.
Modular Pump Support, AR Abrasive Resistant  Tungsten Carbide bearing ESP
ODI was known for their leading ESP technology
US Patent 4,872,808 Application Date June 22, 1987, by Mr. Brown Lyle Wilson of ODI
Centrifugal Pump Modular Bearing Support for Pumping Fluids Containing Abrasive Particles
Besides his brilliant research in advanced bearing support for pumps, Mr. Wilson was also the preeminent expert in gas handling and the ESP.
For copying ODI patented design, sources say that Centrilift was forced to settle with ODI for patent infringement. Centrilift paid handsomely to settle the lawsuit and for any future royalties. ODI was subsequently acquired by Centrilift a decade later in 1997.

So effective was this new technology that Centrilift attempted to design their own AR pump system; subsequently however was forced to settle with ODI for damages because of patent infringement. Unfortuneatley for ODI management and employees, the company was not known for their financial prowess, as ODI was always under the brow of Goulds Pumps and later Franklin Electric. It is said that both parent companies kept the lid on capital and cash flow, thereby limiting ODI Pump from properly executing expansion into emerging international markets - much to the benefit of competitors Reda and Centrilift. Eager to exit the ESP market, Franklin contacted Centrlift management and eventually sold to Centrilift in October of 1997, for $31.5 million in cash, a pittance of its real value given sales over $40 million, strong EBTIA and its advanced technology standing in the industry. The ODI operation was promptly downsized by Centrilift, and consolidation of remaining employees, plant, equipment and technology.










SOS Mr. Ray Johnson, Midland - Odessa Texas, ESPSOS and ESPI, lead by entrepreneur extraordinaire Mr Ray Johnson during the difficult economic times of the 1980's. Ray Johnson, shown @ left, with a fellow team of pump engineering specialists - click here to enlarge Contracted as a consultant to Centrilift during the early 1980's following purchase by Centrilift of Ray Johnson's and partners'( Mr. Tommy Vineyard and Mr. David Divine) SOS variable speed drive innovations and technology, Mr Johnson discovered how to profit from the achilles heel of the ESP industry - service and integrity. Mr Johnson's forthrightness in bringing to industry attention many of the deficiencies of the ESP industry of that time resulted in oil and gas operators insisting on an industry standard, thereby creating the Recommended Practice (API RP-11) during the mid 1980's and still used today. Mr Johnson and his own new company ESP Inc. - ie. "ESPI" - was subsequently able to build a strong and loyal customer base providing pumps that met specification and industry leading service, thereby quickly becoming the #3 market share leader in the industry behind Reda and Centrilift. Veterans cite this success as exemplary given the capital restrictions and competitive pressures in the esp oilfield environment. It's well known that Mr Johnson always recognized that clients expect great service, honesty and pumps that meet specification, delivered promptly, properly installed and run correctly. About the successes through the years, Mr Johnson comments, "... as everything I have done has been by surrounding myself with good hard working smart people. They help make us successful in all three pump companies we started and built.". Results? Oil and gas operators rewarded him with their business. Later to be sold to the U.K. Wood Group and managed by ex-Centrilift Mr Joe Brady and his tutelage management team of many ex Centrilift employees eager to part ways from Baker Hughes and Claremore.




Novomet VSD skid system

Novomet engineers, manufactures & packages several types of Variable Speed Drives:
Novomet Elekton - 05 Variable Speed Drive
Novomet - 03 Variable Speed Drive for Induction and Permanent Magnet Motors
Novomet 12-Pulse Variable Speed Drive.
Custom manufactured skid mounted and building enclosed drive packages are just some of their special capabilities.



Novomet ESP technology

Novomet is now recognized as among the most technically advanced ESP companies in the world. Evidence of their success? In Russia alone, Novomet Artificial Lift Solutions has just in recent years installed approx 20,000 ESP systems in demanding downhole and environmental conditions. Clients include the major oil companies such as Lukoil and affiliates of BP and Shell Oil. The company is an innovative technology provider, with proven service capabilities.

powder metal esp impellers

Impellers made from powder metallurgy allow more advanced centrifugal flow characteristics to be designed and constructed. Results? Major gains in improved efficiency. Better handling of tough fluid applications - sand, corrosion, etc.

Examples of field-proven technology introduced to the oil & gas production artificial lift industry:
•Permanent Magnetic Motors (PMM) - most efficient in the ESP industry - constant 90% over load range ~ versus an industry average of about 83% with various degradations under less than full design load, - improved reliability, & - smaller in size and weight.

• Advanced proprietary VSD engineering designs - see foto captions.
• Powder Metallurgy Stage Construction
    1. Pump stages can be made of more corrosion or abrasive materials
    2.Machining requirements are substantially reduced
    3.Stages are more efficient - OPEX operator $ savings
    4.Advanced impeller designs for abrasive and corrosive media applications that are not possible with casting technology.
• Novomet engineered reliability and optimization database and ESP sizing software tools - NovmetStat-Pro™ & NovometSel-Pro™.

Novomet is based in Perm. Product and service capabilities are expanding worldwide in critical well applications. Distribution and direct sales and service investment: Southeast Asia, Middle East GCC, Europe and North Africa, & the Indian sub-continent.





Global Artificial Lift Pump Motor Seal Section
Artificial Lift ESP elements
Source: link to Global Oilfield Services technology website



Global Energy Services Artificial Lift technology

Dateline: Dec 2011. Global Artificial Lift (GAL) was until recently privately owned, having entered the ESP business segment only a couple of years before. Halliburton acquired GAL in late 2011. This marks the long awaited entry of Halliburton into the artificial lift market segment. It'll be interesting to see how SLB, BHI, and GE react to the immense threat of Halliburton's distribution network and service base into their 1-2-3 market share.

Side note: Since this acquisition by Halliburton, we receive emails from readership about GE. Should we be surprised at this early stage that some ex-WG ESP customers question GE progress to roll out any significant technology and service improvements??? So, please feel free to forward on by email to us any press releases and news about evidence of ground breaking technology integration between GE and WG ESP that has evolved since the acquisition early 2011. Or for that matter accomplishments regarding synergies either in distribution or management. If you're an oil & gas operator using GE product and services, tell us the improvement you're seeing. This type of good news can be shared this way. .... GE direct input and comments are also welcome on this topic and to be shared. For certain, at least the business landscape is surely changing.

For the BIG BOX service companies, the next cyclical downturn in the industry will demonstrate strength of capital commitment, management capability, efficiencies, pricing power and the ability to carry out a streamlining strategic plan without affecting customer service and product integrity. All of this may result in a re-shuffling of the market share pecking order. Or perhaps consolidation/divestiture by one of the Big Box 4 (5 if you count WFT).

Pre HAL acquisition: Key components of Global's ESP product had been sourced from Tianjin ( same location as 13 other manufacturers including the market share leaders). Global Artificial Lift also provided the associated surface package for power, control and monitoring.

Locations: North America ( West Texas and Oklahoma) and South America (Colombia). With Halliburton's acquisition, look for strategic expansion into Halliburton area strengths ( especially Iraq).

Global during its startup days brought on experienced esp veterans to help operators reduce daily operating expenses, and improve production through the use of integrated technology. If you had driven to operating locations in Oklahoma in 20010-2011, you'd have noticed that Global was giving Centrilift, Reda and WG ESP (now GE) a run for their money. More of the same conintued in West Texas as they encroached on this market by exploiting service gaps left behind by the Big 3.

Global's core ESP product line and ESP service capabilities were highlighted by their recent acquisition of Green Country Pump, reportedly beating out Baker Hughes Centrilift who had also shown investment interest prior to Global's successful acquisition. Houston-based Global Artificial Lift has also acquired the assets of Midland based SOS. Recent technology acquisitions and innovations include their proprietary Linear Lift System (LLS).

Global in 2010 also acquired the assets of International Tool & Supply.

This section will be left open for near term developments with Halliburton and GAL. Halliburton is welcome to send comments to update readership. Any GE technology developments can be posted on the GE section.





Artificial Lift services and technology

 


OilGas.pro is a privately-owned growth company, making a name for itself through its specialty services - particularly in esp technology. It is a production artificial lift contract services provider to oil & gas operators worldwide.

The company offers speciality tooling solutions and innovative value-add wellsite and remote optimization services.

Major works & contracts to date have been in Latin America, Europe, the Middle East and the remainder of Asia. Expansion into Australia is reportedly also in line from their SE Asian base to support regional CBM projects.

Ray Johnson is in association with the company, and consults exclusively for services and tools outside of the USA. Leadership team handling North American and international operations includes two previous Baker Hughes management, Arif Jaffer and David Davidson as principals.



photo outside of the Midland service officeWeatherford, a traditional leader in gas lift and rod pump artificial lift market segments, looking to include ESP capabilities thereby augmenting their artificial lift portfolio as a supplier and service company.

In 2004, through business agreement with Mr Ray Johnson, a recently formed company again named SOS was sold to Weatherford. Mr Johnson was contracted for three years to help grow it. Weatherford purchased 30% of Borets in June of 2007, then a few months later Borets proposed to Weatherford to take over the Weatherford ESP business.

To know Mr Johnson is to recognize his extensive ESP experience and business networks worldwide. Having been a pioneer to help develop the Russian oilfields in Siberia in the 1980's and 1990's with Western technology, Ray Johnson was well known and highly regarded in the Russian oil industry. Borets contacted Mr Johnson following up some of the work he and his associates had done for Borets in the year 2000, helping to install motor technology. Accordingly, Mr Johnson agreed to return and manage the Borets Weatherford business outside of Russia. Following completion of his contract, Mr Johnson moved on in November 2008 having satisfactorily completed another successful business venture with Borets and in agreement with the owners.

Today, Borets operates sales, service and manufacturing in the United States, with an eye on global expansion, having leveraged Weatherford's artificial lift brnad, service and sales distribution base worldwide. Industry analysts cite Weatherford's long standing attempt to try and claim a #1 or #2 market share position in the ESP market segment. Analysts question Weatherford's ability to gain organically any type of dominant market share position in the ESP segment, except through acquisition. Industry analysts in 2012 conjecture a GE Weatherford combination..





Artificial Lift ESP IraqKarma Artificial Lift is the premier ESP manufacturing and service repair facility planned to grow and expand into the massive Iraq oilfield redevelopment efforts that are now underway. location in Basra Manufacturing and service facilities were to be completed in 2011; however political and business delays have prevented. Electric submersible pumps are to be purpose designed for the high water cut & high temperature, H2S, and sand fines to be produced. Location is planned in the proximity of the southern Iraqi industrial city of Al Basrah nearby production wellsites operated by BP and Exxon Mobil.

Karma is expected to offer complete quality parts and 24/7 service, capable to repair pump assemblies of any brand manufacturer. Service package is also to include complete commissioning of remote COM telemetry production optimisation capabilities, tieing in production data for operators to manage critical data.

Prior to Halliburton's acquisition of GAL in late 2011, Karma had reportedly been in discussions to partner with at least one of the major ESP manufacturers.






al Khorayef logoAl Khorayef Petroleum (AKP), through its ESP operating company WSP - Western Submersible PumpWSP ESP Western Submersible Pump, are a growing regional leader in the ESP industry. Revenues (2009) in the mid $100MM. Strategic investments have resulted in a strong manufacturing, service and distribution base in the Middle East - unquestionably the #1 ESP manufacturing & service provider in the region.
World Class Engineering
An example of world class capabilities
High spec, & high kVA skid mounted, ESP Variable Speed Drive packages engineered & manufactured by Al Khorayef - WSP
Operations throughout Asia & the Middle East, Russia (including Siberia), North Africa, and South America.

Oil & gas operators throughout the world in places like Russia, Southeast Asia, and South America had taken notice and tested on trial AKP equipment technology offerings. Emails received note Al Khorayef has de-emphasized the Russian and Southeast Asian markets such as Indonesia, having pulled back resources. However, in early 2011 Al Khorayef is said to be eyeing the ESP market in Colombia and considering capitalizing a base.

AKP product line includes variable speed drive equipment of Yaskawa (larger kVA) and Unico content, which offer to operators a good and competitive complete ESP package. click here to enlarge, Al Khorayef is the leading ESP service provider & manufacuturer in the Middle EastAl Khorayef engineering and manufacturing staff are based out of Second Industrial City in the Eastern Province. The AKP manufacturing facility is world class, with modern processes. Oil & gas operators on their first visit and plant inspection are said to be quite impressed to discover such a world class facility, with service capabilities. In addition, AKP recently opened an ESP manufacturing plant in Libya, first of its kind in North Africa which includes complete repair facilities, laboratories, & testing, together with operator training classrooms.









LiftStar Artificial Lift • Significant revenue growth in the artificial lift industry has resulted in the first private placement of venture capital funds dedicated to artificial lift technologies, service, commissioning and manufacturing. LiftStar is managed by industry professionals with extensive mergers and acquisitions (M&A) experience. Texas based LiftStar Capital Resources are engaged as the premier industry venture capital firm, with initial private placement funding targeted specifically for direct investment in the artificial lift market sector. The fund focuses on partnering with regional investors to establish manufacturing and repair service centers close to production sites anywhere in the world.

In addition, the company is set to invest in innovations by individual professionals looking to develop and market their ideas to oil & gas operators.

Through a separate operating division, LiftStar administrates providing personnel on contract for oil service companies and oil & gas operators. Contract talent includes engineers, field service, VFD technicians, labor, managers, & shop personnel.




GE enters the ESP market by acquiring Wood Group WG ESP, Feb 2011Industry Commentary, click here.   • Welcome GE to the ESP. And with a 1-2 punch to slower moving & listless Halliburton, who industry observers note have been attempting to enter the ESP market sector for quite some time with a protracted study of a regional esp supplier in the Middle East. (after note: see Halliburton section - HAL subsequently made their first acquistion 4Q11) In early 2011, General Electric turned the lights on, and expedited the process in a big way.

A public announcement by Wood Group in early 2011 (click here for Reuters' press news on Feb 2, 2011) made it official that WG was exiting the market and shed its Production Division + the entire ESP manufacturing and service capabilities. A cast of prospective suitors were identified by industry pundits - GE, Halliburton, Cameron, FMC and others. Analysts estimated the valuation in the $1B - $2B area. On Feb 13th, 2011, GE announced in a public statement that GE had closed the offer, and expected to have all formalities completed by year end 2011.

Facts: GE acquired the John Wood Group Well Support Division Unit for $2.8 Billion, a significant premium to estimated market valuations. This now adds the ESP electric submersible pump to its oil- and gas-production product lines. Pending the formal shareholder approvals, this is expected to close no later than 2011. The Well Support division had sales of $947 million and earnings of $166 million before interest, taxes, depreciation and amortization last year. ESP's were less than half that amount.

GE Chief Executive Officer Jeffrey Immelt has lead the go ahead to invest about $5 billion in the latter part of 2010 thru early 2011 on purchases tied to the energy segment, primarily to expand its oil and gas unit, including Dresser Inc. and Wellstream Holdings Plc.

published GE esp news

Question? - under WG management, ESPI had been lagging in market position and with no light at the end of the tunnel. Does anyone believe GE will accept anything less than #1 or #2 ? Will there be other acquisitions in this market sector to get them there? And who will bite the market share bullet?

As of early 2012, the marketplace anticipates technology advancements through this apparently synergistic acquisition by GE. GE's own press release after acquisition emphasized this and cited tapping into their GE 'advanced materials' technologies as an example, amongst others. In view of Baker Hughes business announcement in late 2011 of a $36 million R&D investment in their esp franchise, observers are watching for GE's next move to try and keep technology pace.

We'll place weblinks at this spot for future exciting updates of major GE esp technology breakthroughs (drawing on GE's stellar "100 years experience etc" - see GE announcement right), and welcome GE input so we can share with our readership their success stories.

    • First GE technology "synergistic" rollout 2011/2012 - the GE "Apollo". Readership please feel free to email your user and professional commentary about this new box from GE. Is it advanced? What do you think about the HMI/MMI? Simplistic algorithms? Valuable I/O or ... ? Is this what you expected for GE technology breakthroughs? Email your thoughts.

Also welcome would be an announcement regarding GE's R&D budget commitment specific to the ESP industry - innovation will be a key to gain market share. Public company analysts can compare R&D outlays and make their own judgement as to value. Market place competitor BHI has recently been quite transparent about their strong esp R&D investment.





• ... with future chapters to be written about many of the new and aspiring ESP commercial ventures (for a complete list of ESP manufacturers, click here) Significant competitive developments in the industry have occurred just in the past five years - like the already re-acquired NE Oklahoma upstart Green Country Pump (acquired in June, 2009 by Global Oilfield Services from Chaparral Energy LLC for $26 million and then flipped to Halliburton late 2011), Canadian Advanced, Pacific Artificial Lift Ltd ( PAL) , Wyoming-based TREU ARTIFICIAL LIFT SOLUTIONS LLC, Zeitecs, and the May, 2011 entry of Summit ESP capitalized by Tulsa-based, Kaiser Francis Oil Company (already operating esps in their own fields). Also noted are the entry in the world market of experienced veteran Russian manufacturers Alnus, Borets, R&D leading Novomet, and the emergence of Chinese ESP factories in Tianjin supplying and servicing equipment directly in areas such as Oman, Iran, Indonesia and Sudan- newly minted suppliers to the Western ESP companies of most all their pump stages, parts for motors and cable and related tools. China ESP manufactuers already have a new vision to become leading direct Chinese enterprise global distribution and suppliers to oil & gas operators worldwide. Chinese ESP supply has already successfully supplied the Indonesian oilfieds in Sumatra, Java, and Kalimantan -Borneo, onshore and offshore, together with Canada, and other markets. Far down the road, analysts cite the propensity of future acquisition and investment by China enterprises in Western service companies for direct distribution, making the business case to leverage their low cost manufacturing base. As Western companies without artificial lift enterprises like Centrlift and Wood Group ESPI realize this, look for exclusive partnership and investments. But who will buy who, East or West?



ESP Technology development extreme heat , the esp motors are able to handle high downhole temperatures
The relatively low cost of ESP pumping elements allows this technology to reach into a number of new oil and gas industry pumping and lift requirements. Examples include coal bed methane dewatering in North America and other continents, high temperature applications. (see Reda innovations, by downloading pdf here) such as SAGD and extreme heat downhole conditions, better gassy well capabilities, and research & development of subsea higher volume production pump systems coupled with 1000+ horsepower esp motors and adjustable speed drive systems, requiring high 9's reliability. Note that technologies like PCPs, and disruptive technologies such as linear motion lift pumps offer alternatives to the esp in some of these types of applications such as lower horsepower CBM and low- volume, deep well lift.

Data and communications
Driven by operators' needs for better management of reliability, measurement, and optimization, the ESP industry future offerings will include more reliable gauge tools and measurement systems (both downhole ambient conditions and equipment operating data) , monitoring, wellsite to remote office communication and integrated PLC and HMI controls utiilizing advanced system algorithims. Analysts cite this as one of the keys for future success. Who's the future leader of such value add systems? The competitive advantages and synergies exist within the Weatherford and Schlumberger enterprises to offer leading turnkey systems, thereby adding real value to the ESP system and most able to differentiating themselves in the marketplace from competitors like ESPI and Centrilift. Analysts cite that it is catch up time for Baker Hughes Centrilift and Wood Group ESPI, without proven and substantial enterprise capabilities. Otherwise, their market share is expected to erode.

Artificial Lift ESP training for oil & gas operators
Looking for ESP technical training? ESP system introduction, sizing ESPs for your well, ESP sizing software training, production optimization, production theory involving ESPs, what you need to know about fluids and sand when pumping with an ESP, understanding and the use of Variable Speed Drives (VSD), Cable Splicing, ESP downhole monitoring, ESP reliability and runtime measurement, use of shrouds in an esp system, specifying the correct metallurgy for an esp pump and power cable, MLE connections, & strap, and ESP troubleshooting - best process to determine the root cause of failure and remedy. Two independent ESP training enterprises ( no manufacturer affiliation) are www.ArtificialLift.pro providing worldwide training at operator offices and wellsites, and also www.PetroSkills.com. See their websites for more information.Especially noteworthy, click here for their current white papers & topics of interest.

ESP parts - replacement and spare
Readers frequently inquire about suppliers of hard to find parts, and competitive OEM pricing. Sources: ESP Parts, click here. If you have good experience with other suppliers, please email so that they may be linked here.


Other industry resources: ESP community message board can be found at www.ESPlift.com. See below.
type www.esplift.com to access the esp message board forum.
Exxon Mobil also sponsors a perspectives blog, as does the Google-sponsored Artificial Lift blogspot - click here.


How to contact us. Your input, feedback, suggestions and editorial comment are welcomed. Your emails once received aren't deemed privileged and confidential, so if you want to tag that type of corporate legalese on the bottom of the page, then please don't send an email if you don't want your information posted. We use common sense, and do our best to respect privacy while still getting the message out. Also, we don't see emails as being copyrightable as they are only a personal communication. Copyrights are for published materials ( ie the words 'published' and 'public' are derived from same). Unless you publish it, it's not copyrighted.

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