Powering the changing landscape of shale gas

D. Dickert, Aggreko, Houston, Texas

Natural gas is one of the most abundant resources to come out of the horizontal drilling revolution in unconventional plays. Yet, its value as an economical onsite fuel and the benefits it serves in various liquid forms (i.e., LNG, NGL) as an additive in crude oil are only just being realized.

Without the proper infrastructure in place to capture and clean stranded natural gas found at the wellsite for commercial use, operators have few solutions to capitalize on this valuable resource. As a result, flaring has erupted as a potentially harmful environmental practice.

To take advantage of shale gas, operators must first understand the opportunities and challenges of leveraging it as a power source. With the forecast price of natural gas at under $4/MMBtu for 2015, gas is an attractive fueling option when compared to more expensive diesel fuel.

As operators realize the value of natural gas to power their operations, many are looking to temporary power solutions, such as gas generators or dual-fuel generators, to reduce operational costs and capital expenditures, to lower emission levels and to keep production uptime at its maximum.

Well gas as a power source. Depending on the shale formation, natural gas comes in many different forms, with varying levels of methane, butane, propane, hydrogen sulfide (H₂S) and water. Some gas streams may be lean enough to run in generators straight from the wellhead, whereas richer gases carrying high levels of propane, butane, pentane or hexane must be cleaned to achieve a high enough methane content to run effectively in gas generators.

The good news is that some of today’s temporary power generators come equipped with state-of-the-art gas cleaning technology, making it possible for onsite natural gas to be cleaned at the wellhead and used immediately in generators. Dual-fuel generators offer a backup for intermittent gas stream supplies that allow the generators to switch seamlessly from natural gas to propane, ensuring more than 90% uptime.

While a natural gas generator may cost more to rent than a diesel generator, the long-term savings of fuel costs make natural gas generators a more economical option. The ability to utilize well gas through a buyback meter provides operators with access to a cheaper source of fuel.

Altogether, using onsite natural gas as a fuel source provides operators with multiple benefits, including the reduction of both operational costs and transportation costs from shipping diesel fuel, along with reduced emissions and the decreased likelihood of spills or other environmental incidents.

Bolstering revenue with NGL. Another valuable use of stranded gas or associated gas is to convert the gas to NGL and blend it with crude oil, effectively increasing production and revenue from the field. Once the lighter components are extracted from the natural gas stream, the remaining gases can be cooled and condensed. This process produces valuable liquids for fractionation or blending with crude oil to improve crude volume.

Generating success. Oil and gas operations are benefitting from the cost savings and operational efficiencies provided by temporary generators powered by well gas. For example, one oil and gas producer in West Texas had limited access to grid power. As a result, more than 16 wells were underdeveloped or shut in.

The operator needed a temporary power solution; however, neither diesel, LPG, LNG nor CNG were economic options for a power generation fuel source. Field gas was available, although it was in the form of hazardous wet sour gas containing greater than 200 ppm of H₂S. A permanent solution to clean the gas also proved uneconomical. With a utility upgrade six months away, the operator needed an alternative solution quickly.

The operator consulted with a power generation company to determine a better power management strategy. Technical specialists helped engineer a cost-efficient solution to clean up the toxic wet sour gas and turn it into a fuel source to power the gas generation station. The temporary station was designed to work in parallel with the utility grid, providing incremental power to supply operations (Fig. 1).

Fig. 1. Temporary power generation equipment running on stranded gas in the Eagle Ford shale play.

This solution generated a payback of greater than 10 to 1. The temporary power system was able to:

• Reduce the H₂S level to 0 ppm
• Reduce the liquid content of the gas via multiple gas/liquid separators
• Use a temporary flare to purge/test gas prior to being placed into application
• Parallel and base load with the utility grid at 12.4 kilovolts using 2 × 1 megawatt (MW) natural gas generators
• Power a fully operational site in less than one week.

With the additional electricity supply, the system allowed eight well conversions from rod pump to electrical submersible pump (ESP). This change increased the operational capacity to immediately begin drilling new wells and make progress toward 100% operation of available production.

Since the power generation company could adequately supply the power needed to operate the ESPs, the customer was able to increase production and make efficient use of otherwise unusable gas. This enabled a safe, scalable application to economically deliver reliable temporary power to the field.

Future trends. Over the next decade, unconventional operators will go deeper into shale formations and farther into remote locations. As a result, operational costs will rise as companies spend more capital to reach difficult pay zones. Due to fluctuating power requirements from drilling to production, utility infrastructure may never catch up to the demand needed to make investments profitable.

Operators initially requiring 40 MW to drill and only 20 MW to produce leave the utility companies with excess power and costs that nearby residents must absorb. Due to this challenge, many utility companies are declining to invest in additional infrastructure unless the required loads can be sustained over 20 years. As a consequence, operators may be left to fend for themselves and must continue to seek cost-effective power supply options, such as onsite natural gas, to maintain their bottom lines. GP

David Dickert is Aggreko’s head of oil and gas for the Americas, focused on developing and managing the business strategy for the company’s upstream and midstream oil and gas business. He has been with Aggreko for more than 25 years, supporting commercial and industrial projects within the oil, natural gas, refining, petrochemical, manufacturing, utility, mining, disaster, emergency, construction and events sectors.