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Oil Patch LNG Venture Picks Eagle Ford for First Project

Stabilis Energy and Koch Industries unit Flint Hills Resources LLC plan to build up to five liquefied natural gas (LNG) liquefiers to serve oilfield fuel consumers. Their first project is slated for the Eagle Ford Shale.

The venture partners expect to open the first LNG production facility in January 2015 in George West, TX. The facility will produce LNG for high-horsepower oilfield fuel applications throughout the Eagle Ford Shale. Planned production capacity is 100,000 gallons per day. Stabilis said it is now taking orders for LNG supply.

The partners are also finalizing land procurement in North Dakota and West Texas for facilities that are scheduled to begin production in 2015 and 2016. Other LNG production facilities will be located to meet customer demand and are scheduled to begin production in 2016 and 2017.

"We believe this venture will allow Stabilis to rapidly deploy LNG liquefiers across all of the major oil and gas shale plays in North America," said Stabilis CEO Casey Crenshaw. "Stabilis will provide our oilfield customers with a reliable source of LNG fuel that will help them reduce operating costs using a reliable domestic fuel source."

Stabilis will provide LNG transportation, logistics and field service support through its subsidiary Stabilis LNG Transportation and Field Service. Stabilis is working with oilfield customers to plan dual-fuel engine conversions. Among the prospective Eagle Ford customers are companies currently supplying crude oil to Flint Hills' refinery in Corpus Christi, TX, said Jeremy Bezdek, managing director of innovation for Flint Hills.

Stabilis Energy awarded Chart Energy & Chemicals Inc. a contract to provide its standard C100N liquefaction plant for its Eagle Ford facility. Chart will provide technical support during construction and start-up activities. In addition, Stabilis has reserved production slots with Chart for an additional four LNG liquefaction facilities. These future projects will be able to produce either 100,000 or 250,000 gallons per day. Stabilis also contracted with San Dimas, CA-based hydrocarbon process engineering company OnQuest Inc. to begin work on turnkey engineering, procurement and construction services.

In August, Prometheus Energy Group Inc. said it had signed a multi-year agreement to supply Antero Resources with enough LNG to power "a significant portion" of Antero's natural gas-fueled drilling rigs in the Marcellus and Utica shales (see Shale DailyAug. 20). And in May, Cabot Oil & Gas Corp., whose central operations are in the Marcellus Shale, said it plans to use natural gas to power hydraulic fracturing equipment in northeastern Pennsylvania (see Shale DailyMay 21).

 Onshore operators have been using natural gas for several years to power drilling rigs and other infrastructure. Encana Corp. was one of the first to power some of its drilling rigs using natural gas (see Shale Daily, Nov. 8, 2011). It has compressed natural gas (CNG)/LNG stations for fleets and other types of power for its Haynesville Shale acreage, as well as in Wyoming, Colorado and in Western Canada (see Shale Daily, April 6, 2011). Apache Corp. is another that is powering some of its North American fleet with CNG/LNG (see Shale Daily, April 4, 2011).

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