Encana Corp.'s Encana Natural Gas Inc. plans to supply liquefied natural gas (LNG) to fuel fleet vehicles in the Haynesville Shale. It will source the LNG from Pivotal LNG, a unit of AGL Resources, Inc., Pivotal said Monday.
"AGL Resources has made commitments to serve the needs of an emerging market around the use of natural gas as a transportation fuel," said AGL CEO John W. Somerhalder II. "This agreement follows those commitments, creating a progressive relationship with Encana that we believe will help to stimulate this new industry."
Encana plans to serve the fleet trucks of service providers in the North Louisiana gas play by dispensing LNG through mobile and permanent public fueling stations. Pivotal is expected to supply up to 100,000 gal/d of LNG for an initial five-year period.
"Encana is committed to expanding the use of environmentally responsible natural gas, and this is an important step towards building an infrastructure that will enable companies servicing the energy industry to convert their large-freight vehicles," said Encana Corp.'s Eric Marsh, executive vice president.
Recently Pivotal said it would buy a 60,000 gal/d natural gas liquefaction facility in Trussville, AL, in support of its plans to market LNG to the wholesale vehicle fuels market as an alternative to diesel (see Daily GPI, Aug. 9). The Trussville facility will be AGL Resources' first LNG facility dedicated solely to the merchant market and will play a role in supplying LNG to Encana.
"We are a part of a strategy by our parent company, AGL Resources, to build a foundation to support new and creative ways to bring the many benefits of natural gas to the forefront of our nation's energy landscape," said David Schultz, Pivotal LNG vice president.
In April an Encana Corp. subsidiary agreed to be the sole fuel supplier to a California-based water company that will use trucks powered with LNG initially to service Haynesville producers (see Shale Daily, April 6). Encana Natural Gas Inc.'s new mobile LNG fueling stations would be used to fuel a heavy-duty truck fleet owned by Heckmann Water Resources, a Heckmann Corp. subsidiary. With the transaction Heckmann would become the largest LNG fleet operator in North America, said Encana.
Encana currently holds 350,000 net acres in the Haynesville/Bossier play, which is second only to Chesapeake Energy, which holds 495,000 net acres. The top five is rounded out by Petrohawk Energy (345,000), which is currently in merger talks with BHP Billiton, followed by ExxonMobil with 240,000 and EOG Resources with 190,000.
While production is still strong, the activity level in the Haynesville/Bossier play continues to decline, according to NGI's Shale Daily Unconventional Rig Count. For the week ending Aug. 19, the number of rigs actively drilling for oil and gas dropped by 4% from 114 in the previous week to 109. Over the past year the number of rigs operating in the play has dropped 40% from 181.