ESP Pump http://esppump.

com/

ESPpump.com

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 -
.

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.

Background :
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.

1 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

Please support our sponsors. To advertise, :

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
EPCO Pump - 1920's era about Arutunoff's invention and saw what this could do for the petroleum
the early days / production pump competition
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

2 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

head at the bottom of a well and kicks oil to the surface with its feet."

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.
ESP install #1. Phillips Petroleum lease, near Burns, Kansas, 1928. Arutunoff is
third from right, shown with the original Reda employees.
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. 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. 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
Vintage Reda Pump a division of Camco Inc. Ten years later, on June 19, 1998, Schlumberger announced
advertisement, 1951 that it purchased Camco in a stock swap- and its ESP division became known as
"Submergible Electrical
Centrifugal"
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).

3 of 13 12/26/2017, 10:11 AM
ESP Pump
Please support our sponsors. To advertise, :
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
4 of 13
http://esppump.com/
ESP Cable and
In the beginning there was Reda, and from the
inventor and leader Reda, others followed:
MLE
• 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. A
lawsuit was prepared
to be filed against
Centrilift and the ex-
Reda employees who
Byron Jackson founded Centrilift,
California rescue resulting in a
Centrilift business startup settlement with
damages paid by Centrilift to Reda. During this time in
Production consequences
1957, Centrilift was located in California and was trying Low cost Cable & Motor
to put together a pump system and find an operator to Lead Extension
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. 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
BakerLift merged with
Centrilift following Dept of
due to Anti-Trust concerns. Subsequently, Baker
Justice Antitrust clearance Hughes replaced the leadership of Mr Joe Cox who
following the merger of opted against employee layoffs mandated by the Baker
Baker Oil Tools & Hughes
Hughes management in Houston, with Mr Joe Brady (ex
Tool
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. 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
12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

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.
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.
Throughout the 1990's,
Centrlift was able to attract
many experienced industry
professionals, owing to this
Baker acquired FMC's Oiline
Submersible Pump Co.,circa 1978.
success. Subsequent to Mr
Kobe took over and about 4 years Brady's retirement, changes
later it was changed to Baker Lift.
in management philosophy
Mr Joe Brady left Kobe as Eng. VP
and became President of Baker Lift,
and reversals occured.
prior to a move to & quick Baker Hughes appointed
downsizing of Baker CAC, only then successive Presidents to
to transfer back to the consolidated
Centrilift from their Hughes
Centrilift + (Bakerlift and Kobe)
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

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.”

• 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

5 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

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.
Oil Dynamics So rattled was Joe Carlyle, that he was eager to leave Centrilift and start up
logo another ESP venture with the Drake brothers to avoid being involved with
Source: Link to
PT ODI website
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. So effective was this new technology that Centrilift

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.

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.

6 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

• SOS and ESPI, lead by entrepreneur extraordinaire Mr Ray

Johnson during the difficult economic times of the 1980's.
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 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.

Examples of field-proven technology

introduced to the oil & gas production
artificial lift industry:
Novomet engineers, manufactures & packages several types of Variable Speed Drives:
•Permanent Magnetic Motors (PMM) - Novomet Elekton - 05 Variable Speed Drive
most efficient in the ESP industry - Novomet - 03 Variable Speed Drive for Induction and Permanent Magnet Motors
Novomet 12-Pulse Variable Speed Drive.
constant 90% over load range ~ versus
Custom manufactured skid mounted and building enclosed drive packages are just some of
an industry average of about 83% with their special capabilities.
various degradations under less than
full design load, - improved reliability,
& - smaller in size and weight.

• Advanced proprietary VSD engineering designs - see foto captions.

7 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

• 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™.
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.

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
Global Energy Services Artificial Lift technology Lift Pump Motor
Dateline: Dec 2011. Global Artificial Lift Seal Section
(GAL) was until recently privately owned, having entered the ESP business segment only Artificial Lift ESP
a couple of years before. Halliburton acquired GAL in late 2011. This marks the long elements
awaited entry of Halliburton into the artificial lift market segment. It'll be interesting to Source: link to Global
Oilfield Services
see how SLB, BHI, and GE react to the immense threat of Halliburton's distribution technology website
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.

8 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

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.

• Weatherford, 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..

• Karma 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. 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

9 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

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 Petroleum (AKP), through its ESP operating company WSP - 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.

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 An example of world class capabilities
content, which offer to operators a good and High spec, & high kVA skid mounted, ESP Variable Speed
Drive packages engineered & manufactured by Al Khorayef
competitive complete ESP package. Al Khorayef - WSP
engineering and Operations throughout Asia & the Middle East, Russia
manufacturing staff are (including Siberia), North Africa, and South America.
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.

• 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.

10 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

Industry 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.

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,

11 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

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

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.

.
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.

12 of 13 12/26/2017, 10:11 AM
ESP Pump http://esppump.com/

Email :
Or you may post your comments and suggestions here. Archive of previous readership comments may be found
by clicking here.

Regarding emails received from readership: viewpoints belong to the sender of the email, and are not the
viewpoints and opinion of esppump.com. A message board is provided on this website for general commentary.
However, if you send an email with your name and return email address, you may share directly your historical
views about the ESP industry.

13 of 13 12/26/2017, 10:11 AM