Look Out For LNG
Natural gas produced from the Bakken or Three Forks shale formations might never leave the Williston Basin. In fact, it might be a critical component of future oil and gas retrieval. Multiple companies, acting alone or through joint ventures, are currently working to transform natural gas into liquefied natural gas (LNG) for use in high-horsepower engines, including pumping units, drilling rigs and trucks. Considering the numbers presented from a recent Bentek Energy Study on the U.S. natural gas markets over the next decade, efforts to use shale gas to power high-horsepower operations makes sense. Over the next decade, natural gas demand in the U.S. will rise 27 percent, the study indicates. Supply will increase by 38 percent.
Shale formations such as the Williston Basin or some in Texas will contribute roughly 44 percent of the expected natural gas supply growth during that 10-year period. “These plays hold tremendous potential, and growth from these areas could exceed current expectations,” the report, adding that in the next 10 years, the U.S. will increase natural gas production to 9.1 billion cubic feet per day.
Stabilis Energy, a natural gas liquids (NGL) supplier, and Flint Hills Resources, a petroleum and biofuels refiner, have partnered to bring five liquefaction facilities to oilfields in regions that include Texas and North Dakota. Stabilis will build its first facility in Texas by early 2014. The joint venture is finalizing land procurement in North Dakota for facilities that could come online in 2015 or 2016. The Texas facility will feature a production capacity of 100,000 gallons per day. “We believe this venture will allow Stabilis to rapidly deploy LNG liquifiers across all of the major oil and gas shale plays in North America,” said Casey Crenshaw, president and CEO of Stabilis Energy.
Through the joint venture agreement, Stabilis will provide LNG transportation, logistics and field services. The company is currently working with oilfield customers to plan dual fuel engine conversions.
Eagle LNG Partners, a consortium of Clean Energy Fuels Corp., Ferus Natural Gas Fuels, GE Ventures and GE Energy Financial Services, is also working to get into the LNG industry. Through Eagle LNG Partners, the consortium is looking to develop, own and operate LNG production facilities that can supply fuel for long-haul trucking, rail, mining, marine and oil and gas services. “Natural gas is revolutionizing the fueling of long-haul trucking and other high-horsepower applications,” according to John Shepard, managing director at GE Energy Financial Services. “With massive amounts of domestic reserves, America is facing a generational opportunity to move to a more secure, less expensive and cleaner-burning fuel.”
The consortium is considering projects in North Dakota, Ohio, Texas, Florida, Washington and Colorado. Clean Energy Fuels is experienced in developing, constructing and operating micro-LNG plants, and Ferus Natural Gas Fuels has expertise in cryogenic and micro-LNG plants along with cryogenic logistics.
Dick Brown, CEO of Ferus Natural Gas Fuels, said the company has learned from customers that LNG needs to be delivered to the point of consumption at a predictable price, with certainty and redundancy of availability. “They want someone who has been in the business of owning and operating these plants, with the experience to facilitate the switch to natural gas, and who can deliver and dispense LNG safely and reliably without any disruption to operations.”
For natural gas producers, the price fluctuations of its product is nothing to worry about, according to the Bentek Energy study. “With a large amount of oil and NGLs in the production stream, producers can earn high rates of return regardless of gas price direction.”