Posted on 10/07/2014 5:31:22 AM PDT by thackney
Drilling companies in the booming Permian Basin may soon have an option to power their heavy-duty equipment with the same stuff they’re pumping from the ground.
Stabilis Energy, a Beaumont-based company that has been marketing liquefied natural gas to oil field companies, plans to partner with Flint Hills Resources to build a LNG plant in Odessa tailored toward providing fuel for high horsepower engines in drilling rigs and pressure pumpers.
The companies did not disclose the cost of the project, which is expected to have a capacity of about 100,000 gallons of LNG per day. Pending final approval by the companies, construction could begin early next year with production starting in 2016.
“It’s an excellent location from which to serve customers in the Permian Basin and the property allows for future growth,” Darren Tiemstra, general manager of LNG for Flint Hills Resources said in a statement.
Stabilis has been pushing LNG as a clean fuel source for heavy duty oil field equipment, arguing that it reduces costs and improves environmental performance.
The shale boom unlocked a glut of cheap natural gas, making it an attractive replacement for diesel, but companies that want to power their equipment with natural gas have to pay to have it trucked in from plants sometimes hundreds of miles away.
Installing LNG plants in active shale plays reduces the need to transport the supercooled gas to the oil patch and saves drillers money, Jim Reddinger, chief financial officer and chief operating officer of Stabilis Energy said in an interview with Fuel Fix.
“To have efficient operations, these facilities need to be where the drillers are,” Reddinger said.
The Odessa plant would be the latest by the privately held company, which has been supplying LNG to oil field companies working in the Eagle Ford, Permian, DJ Basin, Utica and Marcellus shale plays.
A similar plant is under construction in the Eagle Ford Shale. Stabilis Energy last week installed storage tanks and a cold box at the George West plant and is expected to begin operations in January, the company announced Monday.
The facility will have the ability to liquefy about 100,000 gallons per day. The George West plant is the first of five natural gas liquefiers proposed for construction by the joint venture between Stabilis and Flint Hills.
LNG produced and supplied by a reliable source.
http://www.stabilisenergy.com/
The foundation of our full-service offering is fuel. Stabilis provides high-quality LNG needed for the high-horsepower equipment that drives drilling and fracturing operations. We are building LNG production plants in the major shale plays that will each produce 100,000 to 250,000 gallons per day.
Plus we have current partnerships with multiple supply sources to ensure you get the LNG you need now with no interruptions in supply and no compromises in quality. We can provide fuel throughout the Eagle Ford Shale play as well as other parts of Texas, and we will soon deliver in North Dakota.
Operators who decide to go with LNG are seeing up to 40% cost savings over diesel. They’re recouping their conversion costs quickly. They’re burning much cleaner. And with Stabilis, they’re running LNG with complete assurance.
To borrow a phrase...Cool!!! :-)
Lots to like here, especially the innovation and investment to deliver a significant operational improvement. This seems to be a natural extension of what has been long-observed in the oil field to make the best use of the resources at hand. From the days of natural gasoline to using field gas to run pumping units to the development of LNG as a viable fuel, it’s a great story.
Seems like, to me at least, they could generate power with the gases they ‘flare off’ at the sites where the rigs are so that the stuff isn’t wasted.....................
To run the hydraulic fracturing rig, the well isn’t in production yet. Nor is enough gas typically produced afterwards and the gas has a lot of impurities at that point.
The flaring was a bigger issue in the Bakken, where there wasn’t sufficient infrastructure to gather the natural gas. This is less of an issue in the Permian, where oil and gas in the general area has been produced for decades. New wells still have to be tied in, but there is much less for the total build out.
In Texas, where is plant is being built, the Commission’s Statewide Rule 32 allows an operator to flare gas while drilling a well and for up to 10 days after a well’s completion for operators to conduct well potential testing. The majority of flaring permit requests received by the Commission are for flaring cashinghead gas from oil wells. Permits to flare from gas wells are not typically issued as natural gas is the main product of a gas well.
http://www.rrc.state.tx.us/about-us/resource-center/faqs/oil-gas-faqs/faq-flaring-regulation/
Sounds like a business opportunity for someone with the proper technical background to make something that could generate local industrial level power on a small scale from wasted gas, impurities and all.................
As the link I provided states, those flares don’t normally last long. It gets tied into local gathering systems and goes to gas treatment plants.
What about something like a ‘refinery-in-a-box’ or on a tractor trailer, that could take a very small portion of the crude being pumped to generate power? Then pump the unused portion back into the pipeline. Not cost effective?.........
So what would be the power source for the mini-refinery?
Remember, we are talking about a need for fuel before the well is flowing. Hydraulic Fracturing, Drilling, etc, occur first, then production comes online.
Second point, EPA requirements for off-road diesel have also gone to Low Sulfur requirements. The simple little topping plant from decades past won’t provide acceptable fuel.
http://www.clean-diesel.org/nonroad.html
Solar and wind of course! Gotta be GREEN!...........Oh well, it was just a early morning thought..............
Damn the EPA!
E - Every
P - Possible
A - A-hole.............
There is a refinery near that part of the state. It would be tough for a tiny mobile unit to be cost effective compared to it.
that could take a very small portion of the crude being pumped to generate power? Then pump the unused portion back into the pipeline.
By the way, that is how the refinery in mid-state Alaska operated before it closed down. It used diesel it produced for its own fuel. It could not compete with refineries in other locations that used Natural Gas for fuel and eventually shut down.
“that could take a very small portion of the crude being pumped to generate power? Then pump the unused portion back into the pipeline.’
That is also how the energy-intensive process of steamflooding initiated, by burning a part of the crude that was pumped to generate steam to pump downhole. I recall in the early days of Duri field Caltex was burning 60,000 bopd that way.
Another point to be made is that there exists a high incentive to use gas produced from other wells on the lease because it is exempt from royalty. If it was otherwise flared, it is considered free fuel to the rig.
Diesel costs on a typical drilling rig are several thousands of dollars per day. That’s a lot of savings on a well cost if one uses natural gas. Rigs in North Dakota designed to burn gas instead of diesel are now much more common.
And here I thought I had a ‘new’ idea....................
The Alaska pipeline had a bonus from that as well. The “leftovers” injected back into the pipeline at that point were hot and the heat helped the whole pipeline flow with less energy required.
In my opinion (as a hopeful lease holder) that is wrong. If the gas is not produced and not returned to the reservoir for maintaining pressure, royalties should be paid to the mineral owners. Alaska made this change years ago and cut down on the uneconomic flaring.
that is only more common on new leasehold agreements.
Most leases in effect do not pay royalties on flared gas or gas used as fuel for operations on the leasehold. Language contains clause that allows company to utilize.
Understood. It changed now that the gas has more value, and some governments decided to apply production tax to it.
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