Lease Pumper's Handbook Published by the Commission on Marginally Producing Oil and Gas Wells of Oklahoma, First Edition 2003 Written by Leslie V. Langston Table of Contents Introductions A. Cover Sheet Book Title B. Publishing Information First Edition, 2003

The Lease Pumper's Handbook

Published by the Commission on Marginally Producing Oil and Gas Wells of Oklahoma, First Edition 2003 Written by Leslie V. Langston Table of Contents Introductions A. Cover Sheet Book Title B. Publishing Information First Edition, 2003


Written by Leslie V. Langston


Publishing Information. First Edition, 2003. C. Foreword. Rick Chapman, Executive Director (1996-2000) Commission on Marginally Producing Oil and Gas Wells, State of Oklahoma. D. Dedication. John A. Taylor, Chairman (1992-1998) Commission on Marginally Producing Oil And Gas Wells, State of Oklahoma. E. Author’s Introduction. Leslie V. Langston, Author, First Edition F. Commission Introduction. Liz Fajen, Executive Director, Commission on Marginally Producing Oil and Gas Wells, State of Oklahoma.


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 The Lease Pumper’s Handbook Chapter 19 Record-keeping: Section D MATERIALS RECORDS D-1. Materials Control. Keeping a record of every piece of equipment on the lease that has either been installed or is in reserve for future use is an important function within the petroleum industry. All of the varied items stored on the lease are usually referred to as materials. Maintaining accurate records of this material is a necessary part of the job. When equipment or supplies are needed, these records will indicate if it is on hand, can be moved from another location, or must be acquired. As material is acquired, the tendency is to store it on the lease, even if the lease operator office is in a nearby town. If stored within city or town limits, material may be subject to additional property taxes. Being easily available to meet lease needs is also an important consideration. Oilfield equipment is very expensive to purchase and transport and represents a large lease operator investment. The pumper will almost always have a certain amount of materials on hand available for immediate use. The lease pumper is often in charge of overseeing the storage and welfare of this equipment, and this means that the pumper has responsibility and accountability for everything on the lease. When equipment or materials are missing without the pumper’s knowledge of where it went, the employer must be notified immediately. Theft. Prevention of theft of oilfield pipe and equipment is an important part of the lease pumper’s job. Lease equipment can be protected from theft or loss to a large degree by following good practices. The petroleum operator, because theft is such a common problem in the oil field, usually has a low tolerance for theft and will prosecute to the limit of the law. Theft by employees. A large part of theft in the oilfields is a result of actions or permissiveness by the lease pumper. If anything is missing when needed, the pumper usually comes under close scrutiny by company management. Sometimes the pumper knows who may have stolen the missing items, even if the pumper is innocent. Suspicious activities or visitors on the lease should be noted and reported, and the pumper must never assume they have the owner’s permission to remove anything from the lease without prior approval. The pumper should also discourage visits by people who are suspected of surveying the lease for what they can return after hours to steal. D-2. Controlled Lease Equipment Storage. Controlled lease security is common practice. Often equipment is temporarily left on a lease location, but for many reasons 19D-2 (such as the appearance of the lease) may be moved to one central area of controlled storage. Some of the replacement equipment, repair parts, and supplies usually on hand on the lease are: · Rods and tubing for well repairs. · A small assortment of pony rods and tubing subs. · Fuses. · Electric motors. · Steel and plastic pipe. · Fittings and leak clamps · Barrels of several types of chemical. · Equipment that has been pulled out of service. · Equipment waiting to be installed. · Damaged and surplus equipment. · Joint venture equipment. · Walkways, ladders, and vessels. · Junked equipment being retained for spare parts to repair similar equipment. · Scrap equipment whose value is only in the weight of the material. · A host of other repair and maintenance materials such as motors, vessels, and walkways. Location of a storage area. The operator will usually secure landowner permission to use a small area as a controlled storage area. It may be an abandoned well site or require setting up a special controlled area or yard. Usually, the first thing considered is a security gate. It can be a simple locked gate across the road with cable wings extended to the sides, or a specially designed storage yard with a Private Road sign. Security fencing. Security fencing— usually cyclone fencing—is the first step to setting up a secure storage area. Occasionally this secure area will also include a dog house for storage of materials needing weatherproof storage and a place to fill out production records. This fenced area should be large enough to allow trucks to enter, turn, load, and unload equipment. Weed and mud control. Crushed rock or a similar material is usually placed on the location, especially on roads and on the equipment storage areas to reduce maintenance problems caused by vegetation growth and control of mud. The yard should be placed where maintenance will not become a burden. D-3. Pipe Storage. A minimum number of joints of pipe and sucker rods are stored on most locations for replacement purposes. Due to the cost of labor and short notice delivery requests, it is more practical to have a few joints available nearby to reduce downtime and hauling expenses. Major centralized storage areas may have more extensive stocks of materials for the area or several leases. Pipe and rod storage areas and magnetic orientation. Many companies demand that their pipe be stored in alignment with the magnetic pull of the earth—that is, north and south. This may reduce crystallization from occurring while the pipe is in storage. Many commercial storage companies carefully align their pipe storage racks with this in mind. Classifying used pipe. Pipe is classified by the composition of the steel and the depth that it may be run, such as H-40, J-55, and N-80. Although pipe is lightly stamped to show this classification, used pipe is usually lowered one rating number when it is moved 19D-3 to the storage area as used. As an illustration, J-55 pipe may be reclassified as H-40. This is normal practice just to be certain that the pipe will perform satisfactorily when returned to service. For this reason, the pumper must accept the pipe book or office classification, even if the number on the pipe indicates that it is of higher quality. Pipe rack design and numbering systems. The pipe rack needs to be well designed and strong enough to support the amount of pipe to be stored. It needs to be high enough to allow for easy rolling of the pipe off or onto the rack and onto the truck trailer. A sign on the rack identifies the rack and sometimes what is stored on it (Figure 1). This identification may also identify the number of joints, size, and quality. Figure 1. Pipe stored on site and labeled for location and classification. Pipe range. Casing may also be identified by length. This length is usually on the storage record. The longer the joint, the fewer connections that have to be made up when running it. Range numbers include: 30 to 35 foot pipe is Range 1 35 to 40 foot pipe is Range 2 40 to 45 foot pipe is Range 3 Pipe collaring and condition. Pipe is always neatly aligned and collared when it is placed on the rack. The threads should be cleaned and lubricated and, if thread protectors are available, they are screwed onto the pipe. Pipe separation and layering. When several layers of pipe or sucker rods are stored on a rack, lumber is used to separate the layers. This allows the pipe to be easily rolled and placed in neat order. The thickness of the lumber is selected according to the weight of the pipe. A scotch or block is nailed on the board, next to the pipe at the ends to prevent the joints from rolling off. The stripping lumber that separates pipe layers is valuable company property. This material should be handled and stored with care because it will be used again and again when the next loads of pipe are hauled to the yard. Unauthorized removal of stripping material from the lease is theft. D-4. Storage of Other Materials. Crushed rock pads, as well as 8x10-inch sills, may be needed when storing heavy equipment. Equipment be stored leveled, balanced, and off the ground. Arrangement, pads, docks, and weather protection. Some space should be available in the secure area for delicate equipment and supply storage where protection may be essential. Timber-covered pads may be needed for small equipment, and a truck height dock with a roof is of great value when off-the-ground storage is needed. A plat or drawing of the storage area should be made, designating all areas by some numbering system. Pipe racks also need sub-numbering systems indicating east to west or another appropriate numbering 19D-4 system preference. Several sizes and classifications of pipe will occasionally be stored on the same rack, and the number count must be included on the working list. Unlisted materials seem to disappear. Junk and scrap designations. When equipment has been pulled out of service, it may be classified as junk or scrap. Junk is valuable material because it has many parts that may be salvaged for re-use. When material is classified as scrap, it has been no longer usable, is not reparable, or has become obsolete. When selling these items by bid, junk brings a much higher price than scrap because much of it will be salvaged and re-sold. Many times a junked item is too valuable to sell because other similar units are running in the field, and salvage parts can be used to repair other equipment. Materials going to junk or scrap usually have a weight estimate. When this scrap or junk is sold, the weights should basically agree with the amount shown on the records. Even scrap has a value. Chemical and drum storage, content marking, and accounting. All 55-gallon drums should be stored in neat order and separated by content. Content and generally the date received should be identified by use of a paint marking. Figure 2. Chemicals should be properly stored and only kept if required. The lease pumper should maintain a chemical inventory to know when the chemical supply on hand is low and more should be ordered. Proper determination of the actual contents and correct disposition of abandoned barrels of chemical left on the lease can cost hundreds of dollars per barrel, so no chemical should be allowed to stay on the lease if it does not serve a purpose. Winterizing and deterioration control. When engines and specialized equipment are moved into storage, they should be winterized—that is, the water removed and all openings sealed. When a piece of equipment is received, the pumper should make a notation on the to-do list and check it as early as possible for proper storage. Valves in engines can be damaged if rain is allowed to enter through an exhaust opening. D-5. Joint Venture Inventory and Accounting. Occasionally a lease is a part of a joint venture. This means that the lease has two or more owners, and all equipment and materials brought into storage are part of this project. They must not be mixed with the stock fully owned by the company. Some simple system, such as an X in front of all inventory numbers and stamped on the equipment, can identify it as joint venture equipment at a glance. This equipment is restricted and cannot be used without proper management approval. D-6. Transfer Forms and Procedures. As a project in the field begins, all materials that arrive on the location have been transferred and appropriate records placed in the lease operator’s office. When 19D-5 materials such as pipe are shipped, a small extra amount is added to allow for changes and to prevent construction shortages. After the project has been completed, this extra material must be transferred into appropriate storage or to another location or project. These transfers are important, so information needs to be accurate and complete. A typical type of transfer form is illustrated in Appendix A-11. When transferring pipe out of storage, a pipe tally sheet must accompany the transfer sheet. A typical pipe tally sheet is illustrated in Appendix A-12. Common sense must be used when filling out this form. It will not meet all needs, so if it does not contain the specifically needed information space, the pumper should use the back side of the form to write additional notes. The word OVER should be used on the front to indicate that more information is written on the back of the form. The location of all pipe and equipment on the lease is listed on company records. Pipe is either in use as a part of an installation or is in storage. If it is in storage, the exact location should be noted on the materials transfer form. Except with pipe transfers, a separate form should be avoided because they can become separated. Some companies request a drawing on the back if it includes the laying of a pipeline. Materials transferred out of storage. A materials transfer form is usually written every time material is transferred. Material includes all forms of pipe and equipment, but usually excludes supplies unless they are very expensive. Only the spaces that apply to that particular item are utilized. A simplified version without prices may be developed for field use. When transferring pipe out of storage, more pipe than is needed is usually transferred, just to be sure enough is on location to complete the job. Whatever is left over must be accounted for after the job has been completed. A specific destination is included on the transfer, and some type of correspondence should be sent to the warehouse materials inventory person to indicate that the project has been completed. Materials transferred into storage. When materials are transferred into storage (if the storage area is comprehensive), a notation must be made showing where it is stored. If pipe has been downgraded, this must be indicated on the transfer as it is unloaded. Identification marks may be needed. If the material is part of a joint venture, this must also be noted. Materials being transferred from one lease to another. When material is being transferred from one lease to another, a full explanation may be needed. Occasionally, special notations must be made on the back explaining the project. The office personnel should not have to guess why the material was needed or for what it was used. D-7. Identification of All Chemicals Used or Stored on the Lease. The lease records book should have a record of every chemical used or stored on the lease. This is extremely important. Identifying chemicals and marking barrels. Because barrel markings may fade, a paint stick should be used so that every barrel can be identified. Regulations require that the contents of every chemical barrel be identified before it can be properly disposed. 19D-6 The identification and disposal can cost several hundred dollars for each barrel if its contents are not known. Identification numbers on barrels should be a minimum of 1 inch high or larger and easily read. A number system can be adopted to specify chemical purpose such as O for treating oil, B for bottom breaker, S for paraffin solvent, F for stabilizing formations, P for cathodic protection, and so forth. Barrels should also be grouped according to content to aid in end of the month inventory and to know when to notify the office that supply is low. It may also be useful to identify the supplier. Other information that must be noted includes the following: · Date of purchase. · Name of the chemical. · Purpose of the chemical. · Chemical mixing ration. · Where used. · How it is used. · How often is it used. · Storage life. · Other pertinent information as needed. When a service crew leaves the lease after performing contract services, all barrels should leave with them and nothing left behind for the pumper to handle. D-8. End of the Month Chemical Inventory. At the end of every month, the pumper should inventory the chemical on hand and compare those quantities to what is posted in the lease records book. At this time, a projection can be made of how much chemical was used and when more will be needed. It is easy enough to develop a chemical accounting system. Measuring barrel content. As chemical on hand is inventoried, measuring the amount remaining in barrels is more difficult to transfer into a gallon accounting. A 55- gallon drum volume chart has been included in Appendix A-6 for convenience in making this estimate.