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Expanded NatGas Use in Shale E&P Operations Takes Off

After decades of using costly diesel fuel in their exploration and production operations, some industry players are ramping up the use of their produced natural gas for U.S. shale play development, which is proving to be a cheaper and more environmentally friendly proposition.

Speaking to an audience at Shale Insight 2014 in Pittsburgh last week, representatives of Cabot Oil & Gas Corp. and General Electric Global Research explained how their companies are putting natural gas to work in the Marcellus and Bakken shales. In the Bakken, GE worked with Statoil ASA and Ferus Natural Gas Fuels (Ferus NGF) on a pilot project to power up to six drilling rigs and one hydraulic fracture fleet using flared gas from producing oil wells.

Following eight months of testing, the pilot proved successful, leading to full commercial adoption by Statoil of GE and Ferus NGF's Last Mile Fueling Solution (see Shale DailySept. 11). Utilizing compressed natural gas, or CNG In A Box technology, the partnership is now able to capture natural gas that would have otherwise been flared into the atmosphere due to the lack of gathering lines in the region.

"Right now in the Bakken, about a third of the natural gas volumes that are produced are flared," said Jay Albert, Outreach and Ecomagination manager of GE Global Research's Oil & Gas Technology Center. "We are currently working with our customers to help them monetize that product...by putting CNG in a box compressors out in the field. We capture what would otherwise be flared gas. drop out the liquids, and compress it into specially designed transportation vessels that Ferus Natural Gas uses to move compressed natural gas from the field location to the next drill site where Statoil has equipped it's rigs to run on natural gas.

"What this means is an 80% cost reduction of using natural gas over diesel," Albert added. "It also leaves  a more environmentally conscious footprint."

Over in the Marcellus Shale, Cabot has launched a transparent initiative to use more of its produced natural gas in its operations -- from fleet vehicles to drilling and completion tasks. In doing so publicly, the company says it hopes other producers and industrial companies can use Cabot's program as a blueprint in their own operations.

"Let's figure out how to utilize our own natural gas...our own drilling product and bring it to market and showcase the technology," said George Stark, director of External Affairs for Cabot. "If we can't showcase it ourselves, then we have a problem."

Stark noted that Cabot had to get over the hurdle of natural gas infrastructure in Susquehanna County, PA, which had almost none just a few years ago. In 2011, Cabot built a private CNG filling facility in the county, which now serves nearly 80 Cabot Ford and Chevrolet dual-fuel fleet vehicles, Stark said. "Since we built our facility, there have been several built in Northeast Pennsylvania."

Another way that Cabot is utilizing its natural gas production is through the use of gas-fired drilling rigs, which is a new technology that Cabot began researching six months ago, Stark said. "We want to encourage more operators to make that switch over to natural gas. We also have a year's worth of data from Cabot fracking using natural gas."

Instead of going the CNG In A Box route for drilling applications, Cabot has elected to use 1,000-gallon tube trailers to transport gas to remote drilling sites. "Once we were able to do this from a tube trailer standpoint, what we started to see was the drilling program beginning to fall back in on itself in the sense that we were drilling where we had already drilled prior," Stark told the Shale Insight audience.

"The drilling department said 'wait, there's a gathering line there, we don't have to worry about stretching a tube trailer out to that remote location, we've already run a line in this area, so let's get the drilling department to think about their next location.'

"Now we have four drilling rigs that are operating off of natural gas. Typically, what we want to do is plug the rig directly into the gathering line. That is the best bet for us. First off you've displaced 50% of the diesel you would have used, plus you've eliminated having to bring out the tube trailer."

From the completion standpoint, Stark said Cabot worked with Baker Hughes Inc., and the key was tying into an existing gathering line to fuel the fracking operation. In fracking 10 wells using natural gas as a fuel, Stark said Cabot realized up to a 70% substitution of diesel fuel. "The key is tapping directly into a gathering line, because a tube trailer would be empty in about four minutes," Stark said.

"Thus far, we've used more than 40,000 Mcf in our operation. That 40,000 Mcf would equate to a 285,000 gallons of diesel displaced. I'm not trucking the diesel and I'm not burning the diesel, and at the same time I'm realizing $1.2 million in savings from not having to buy 285,000 gallons of diesel. We have also seen a 50% reduction in NOX [nitrogen oxide], a 70% reduction in particulate matter and a 100% reduction in carbon dioxide."

During 2013, Stark said Cabot completed 422 stages using natural gas as a fuel. For 2014, the company's goal is for natural gas to be used in half of the wells drilled and half of the wells fracked.

Stark added that the most important part of Cabot's recent initiatives, is the public and transparent way the company is going about them, which could lead other producers or end-users to follow suit. He noted that the Procter and Gamble plant "right down the road from us" has a few natural gas wells on site to fuel operations, and has also put in a CNG fueling station on its property. "They're picking up on what we're doing, and we're looking at what they're doing."

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