RE:Drillers dropping diesel for cheaper natural gas
HOUSTON (Reuters) - North American oil and gas companies are trying to take the sting out of low natural gas prices by using it instead of costlier diesel fuel to drive their drilling rigs.
Oilfield technology such as horizontal drilling and hydraulic fracturing have unlocked record supplies of natural gas in North America, pushing prices to a 10-year low and cutting profits. The oversupply has prompted gas producers to actively promote the fuel as a low-cost, cleaner burning means of fueling vehicles and other equipment.
Apache Corp (NYS: APA - News), the largest U.S. company focused solely on oil and gas exploration and production, is in the process of converting its first rig to run on power generated by liquefied natural gas (LNG). Canada's Encana Corp's (TOR: ECA.TO - News) already has 15 of its more than 40 rigs driven by gas, and plans to convert even more.
"What we need to do is increase the amount of natural gas demand in this country," Steve Farris, chief executive of Apache, said in a recent interview in New Orleans. "From an economic standpoint, it's a no brainer."
Two years worth of fuel savings can cover the cost of conversion, according to Encana.
U.S. natural gas producers including Chesapeake Energy Corp and Apache have long touted compressed natural gas as a fuel for truck and vehicle fleets. Now, more energy companies are looking to natural gas as a means of powering their drilling rigs.
"We've seen interest just kind of explode in the last six to eight months," said Ron Bertasi, chief executive officer of Prometheus Energy Group Inc, which provides LNG and services to energy companies to run drilling rigs.
So far Prometheus, owned by Cargill Inc backed-Black River Asset Management and Royal Dutch Shell's technology fund, service about 10 rigs that have been converted to run on natural gas. Inquiries are pouring in, Bertasi said.
Prometheus, which Bertasi said was first and is so far alone with its technology, has five customers and opened an office in Houston to grow its energy business.
By switching to natural gas, companies can reduce fuel bills and cut greenhouse gas emissions by up to 20 percent, according to Encana and Prometheus. Natural-gas generators are also less noisy than diesel engines.
finance.yahoo.com
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Kirby |
