Taking Advantage of Utility Rate Structures to Reduce Artificial-Lift Energy Costs

by Russ Tennessen oil and gas account manager

Most utility districts offer some type of time-of-use rate structure to encourage a more efficient use of their energy-delivery system. Those rate structures are designed to shift demand from periods of high peak load to periods of light loads. Southern states, in particular, experience heavy midday loads from air conditioning that, at their worst, can cause brownouts. In those areas, there can be as much as a three-to-one difference between on-peak and off-peak energy costs. Oil and gas producers with these types of rate structures can dramatically reduce their energy costs by reducing artificial-lift operations during on-peak periods.

Since on-peak periods are only a few hours of each normal workday, little productive capacity is lost by stopping operations during those periods. The following example is based on a 50 hp pump jack operating on the
E-37 Oil and Gas utility rates of Pacific Gas and Electric (PG&E).

Summer and Winter Utility Rates (PG&E)
E-37 Oil and Gas Extraction

Distribution of Utility Cost vs. Production Hours

In this case, the operator could give up 762 hours of peak summer operation or 8.7% of the total available hours and save $4,692 per year or 24.2% of his utility bill.

Unico artificial-lift drives incorporate a time-of-use control that facilitates these kinds of savings. For more information, please contact us.