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Encana Turns Low-Cost NatGas to Production Tasks

As Canada's largest natural gas producer, Encana Corp. has built a track record for utilizing natural gas instead of diesel to power some of its drilling rigs, and as the price of natural gas has fallen the exploration and production (E&P) giant is even expanding to using liquefied natural gas (LNG) on the rigs.

Encana also recently developed Louisiana's first natural gas transportation fueling station, dispensing LNG in Frierson, LA (see NGI, Feb. 27), and it is reportedly applying LNG to power drilling rigs in the nearby Haynesville Shale/Bossier Sands play that spans parts of East Texas and Northwest Louisiana.

The company's drilling costs were reduced 47%, or $830,000, at a shale gas drilling site in the Haynesville, an Encana market strategist recently told reporters. Based on consumption of about 500,000 gallons of fuel, the LNG price averaged the equivalent of $1.11/gallon diesel, compared to the actual average diesel price of $3.28/gallon. The company has used a lot of compressed natural gas (CNG) at its rigs in Colorado and Wyoming, Encana spokesman Doug Hock told NGI on Friday. Depending on which is more accessible, the company intends to spread the use of CNG or LNG in its drilling operations.

"It only makes sense that we should utilize the product we're producing," Hock said. "It has a lot of benefits, both from an environmental and business standpoint. Natural gas-powered rigs release about 50% fewer emissions into the air than do diesel rigs, and are cheaper to operate. It saves us an average of 30% versus the cost of diesel fuel for our rigs."

Hock said Encana uses 14 natural gas rigs across the company, two of which are running on LNG in the Denver-Julesburg Basin north of Denver. Encana has 200 fleet vehicles converted to natural gas and encourages its contractors to use natural gas by operating six CNG stations, four in the United States, and maintaining four mobile fueling stations.

In opening the Louisiana LNG fueling facility at The Relay Station in February, Encana USA Division Executive Vice President Eric Marsh said Encana is looking for innovative ways to expand the use of LNG. He said he hoped the new station would encourage more fleet operators to convert their vehicles to run on natural gas, something Encana is doing with its own fleet.

"Encana works with supply chain partners and other external heavy duty fleets by offering fueling solutions to help them better manage fuel usage and realize the cost savings of natural gas," he said.

Calgary-based Encana is joining other producers in North America to push for increased use of natural gas, both as a transportation fuel and possibly to export as LNG (see NGI, March 12). Encana also has a stake in a project to export LNG to Asia from a site in British Columbia in a partnership with units of Apache Corp. and EOG Resources Inc. (see NGI, Feb. 13).

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