Normally, a lot of diesel fuel goes into the controversial process known as “fracking.”
Fracking has been a crucial driver of the North American shale revolution, and it has been key to the successful operations presently in progress at places like the Eagle Ford shale in Texas, the Marcellus Shale, and the Utica Shale. However, it has also drawn plenty of criticism from environmentally-concerned entities due to how “dirty” the whole process is.
Now, Cabot Oil & Gas Corp. (NYSE: COG) recently indicated that it has started to use natural gas generated at the Marcellus Shale to drive fracking operations in that same area. In short, this means nearly 70 percent of the diesel usage is now offset, making the overall operation a lot cleaner and greener.
FuelFix reports that this two-pronged project using diesel and natural gas was conceived alongside FTS International and Caterpillar Global Petroleum. It’s also the first project of its kind in that area.
This isn’t the first time such a project has been pulled off, though. Apache Corp. (NYSE: APA) got things going earlier in 2013 when it used natural gas to power an entire fracking project. It resulted in fuel costs falling by nearly 40 percent. That project involved Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB), as well as Caterpillar (NYSE: CAT).
Big for Both Sides
This should be pretty big news for the oil and gas sector, as well as environmental watchdogs. The implications of this cannot be overstated. Natural gas prices continue to remain extremely low, meaning oil and gas operators can make use of this cleaner fuel without cutting into their bottom line.
The results of the switchover would involve dramatic cuts to emissions at oil and gas development sites. Moreover, road traffic (trucks, mostly) would be reduced sharply due to the lowered demand for diesel supply. And overall, oil and gas operators could actually gain from switching over to natural gas either wholly or in part, since natural gas is cheaper than diesel.
From the Oil and Gas Journal:
“Cabot is continually searching for ways to utilize cutting-edge, environmentally friendly technology during our operations,” said Dan O. Dinges, Cabot chairman, president, and chief executive officer. “We are already converting our vehicle fleet and currently have a drilling rig using natural gas as well, so the next step is to utilize the technology on a hydraulic fracturing site.”
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A Growing Trend
Clearly, oil and gas companies are taking notice of these developments and their implications. FuelFix reports that the American Power Group has seen its conversion orders – requests to convert standard drilling rigs to natural gas-compatible ones – increase tenfold in just a year from 2011 to 2012.
Really, oil and gas companies should be quite cheerful about their prospects with this dual-fuel option. It allows them added flexibility, while also offering significant savings in terms of hard dollars, gas emissions, and gains in environmental credibility.
American Power Group provides a range of supplies that can convert existing diesel engines and oil field equipment to become compatible with natural gas.
Coincidentally (or perhaps not?), oil and gas operators have also been considering the use of solar systems to generate steam that can then be used for geothermal injections. GlassPoint Solar recently made a splash over in Oman, where it is using a solar array of focused mirrors to help generate steam for Oman’s oil injection operations.
And the company also has a similar project going on a smaller scale in Kern County, California. The use of such cleaner energy sources in what is traditionally seen as a polluting and dirty energy generation process is bound to go over well across the board.
With diesel usage at a single rig as high as around 16,000 gallons per day, any reduction is good news – and natural gas can bring it down by nearly half. With costs of natural gas remaining at rock-bottom levels, it’s to the advantage of oil and gas companies to make use of the cheaper, cleaner fuel for their operations.
This could also have consequences for the flaring problem that currently presents a major headache for oil and gas companies. So much gas is being produced that there’s no way it can all be harvested; as a result, flaring stacks simply burn off excess gas. This innovation promises to make use of more natural gas, thus reducing the need for flaring.
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