Plan would also have drillers use natural gas-fueled rigs, but conflict arises between E&Ps and drilling companies regarding the use of gas at the well sites.

Holding out the prospect of real cost savings for producers, Dallas-based Inc. plans in September to begin offering a well site service that strips natural gas liquids (NGL) and methane from wellhead production on an interim basis until permanent gathering infrastructure is in place. It involves skid-mounted liquefied natural gas (LNG) machines.

AmericaCNG’s Joseph Farley, business development director, told NGI Thursday that the company has confidentiality agreements with major E&Ps and it is working with 75% of the 20 largest U.S. producers in the Bakken, Eagle Ford, Utica, Marcellus shales and Permian Basin, in addition to recently looking at the Cline play.

Using a Y-grade extraction process, AmericanCNG separates natural gas at the wellhead from oil production, and the NGLs and methane are drawn off separately in two pipes. “The NGLs are sold off, and the producer paid on the netback, while the methane is converted to LNG, which can be used to power drilling rigs,” the company said.

From the producers’ perspective, particularly in places like the Bakken, where amounts of gas stay naggingly high, oil drilling can continue even with no gas gathering infrastructure in place, according to AmericanCNG.

As one of several new services it is marketing, the Texas firm, which provides compressed natural gas (CNG) vehicle fuel and fueling stations across the United States, has identified the wellhead in the burgeoning domestic oil/gas fields as a ripe market, although Farley said there is somewhat of a conflict between E&Ps and drilling companies regarding the use of gas at the well sites.

“Typically, the E&P companies pay for the fuel for the drilling companies,” Farley said. “The drilling companies don’t really have a vested interest in spending $1 million to get the rigs converted to run on natural gas just to save the E&Ps money because there has not been a steady supply of gas to the drillers. Under our system, we can follow the drilling rig around in the field, and from field to field, to make sure the drilling unit has an adequate supply of natural gas.”

Farley said an average drilling rig will use 2,000 gallons of diesel daily, or 500,000 gallons annually. Assuming $3.50/gal for diesel and $2/gal of diesel gallon equivalent natural gas, E&Ps have the prospect of big savings, he said. “Most of the drilling companies have been kind of dragging their heels on making this conversion because there is so much business out there, so we decided to step in and make it easy and profitable for the E&P companies until the rest of the market gets on board.”

AmericanCNG promotes its skid-mounted LNG machines as producing supplies that can be sold for $1/gal, depending on the individual installation, and in the process saving E&Ps millions of dollars monthly in drilling costs, while allowing them to drill without flaring. “The company’s strategic alliance partners construct the plants based on the gas analysis obtained from the oil/gas producers,” the company said.

Another variation of the gas-powered drilling is to use ethane where it is available in abundance, such as the Bakken, said Farley, who added that AmericaCNG’s system can run a rig 100% on ethane. “Ethane is a product that has absolutely no value in the NGL stream, so to speak,” he said. “The price of ethane is so low that it doesn’t even make sense to truck it to a fractionation facility, which is another issue we see on the horizon.”

Farley said for the most part fractionation facilities nationwide are full and can’t handle any more NGLs. AmericanCNG’s proposed solution is to “have a fractionation facility close to every one of the major fields,” he said.