the shared strategic incentivemedia.virbcdn.com/files/20/c4e7927589119277-eca_afelton_pionee… ·...
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take a closer look
Powering Your Operations with Natural Gas
Aaron Felton | Group Lead, Drilling
Sherri Zeller | Commercial Sales – Heavy Duty Non-Road Market
Dallas | May 17th | 2012
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The Shared Strategic IncentiveOur Industry
Maintaining industry leading cost structures
Creating demand through business transformation
Accelerating social currency and license to operate
Our Strategy
Having built a high-quality resource base, the greatest value creating proposition for our shareholders is to now deliver a sustainably higher growth rate and to do it at the lowest possible cost.
A six faceted approach to accelerate value creation:
Provide comprehensive disclosure of reserves and resources
Accelerate pace of development
Advance resource play hub design and development
Increase exposure to oil and natural gas liquids
Attract third party investments in undeveloped reserves and resources
Grow the market for North American natural gas
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The ANGA Collaboration
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America’s Natural Gas AllianceNGVe Committee
Working to advance the market adoption of natural gas vehicles in North America
Advancing the natural gas industry’s understanding and use of natural gas in our operations
– Implementing light duty vehicles in our fleet
– Developing opportunities to use natural gas in our operations –drilling and pressure pumping services
– Encouraging adoption by our supply chain
America's Natural Gas Alliance exists to promote the economic, environmental and national security benefits of greater use of clean, abundant, domestic natural gas.
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The Membership of ANGA
America’s Natural Gas Alliance (ANGA) exists to pursue a single mission:
“to increase appreciations for the environmental, economic and national security benefits of clean, abundant, dependable and cost efficient American natural gas”
Source: www.anga.us as of 4/30/2012
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NGV Marketing Analysis Report
Source: ANGA NGV Marketing Analysis _ TIAX LLC
$46,000
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Natural Gas UniversityThe marketplace terminology
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Terminology – Natural Gas Sources
Treated gas from the gas plant is piped back to location or gas lift lines are used to supply gas. No treating is needed.
Plant Gas
Typically gathered from existing in-field gathering lines and piped to location. Limited treating is done – liquid knockout.
Field Gas
Liquefied through refrigeration (-260 oF), stored as liquid in insulated vessels and transported to site via tractor/trailer.
LNG
Compressed into storage vessels (tubes) and delivered to site via tube trailers. Stored at 3,600 psi.
CNG
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Terminology – Natural Gas Engines
Incorporates two independent fuel systems and can run alternatively on either fuel, but only one at a time. Bi-fuel systems are used in light duty and medium duty vehicles with gasoline engines.
Bi-Fuel
Implies that only one fuel system is used. For natural gas dedicated engines, spark ignition is required for combustion.
Dedicated
Incorporates two independent fuel systems and can run on both fuels simultaneously. The engine may also run on either or one fuel alone, typically employed on diesel engines.
Dual Fuel
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Terminology – Natural Gas as a Fuel
Diesel - volumetric energy content or heating value of Diesel #2 is approximately 129,500 British thermal units (Btu) of energy per gallon (34,210 Btu/liter).
Natural gas volumetric energy content can range from 900 to 1,400 Btu per standard cubic foot, depending on gas composition.
Comparison
–If natural gas has and average 1,000 Btu, then it would take 129.5 Scf to equal the same energy content as a gallon of diesel, diesel gallon equivalent (DGE).
–Gas volumes are typically measured in one-thousand standard cubic feet or Mcf
1 Mcf ≈ 7.72 DGE
1 gallon of diesel ≈ 1.7 LNG-g
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The Recipe for CNG & LNG
DemandStorage
Infrastructure
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Natural Gas as a FuelThe value proposition and success approaches
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What Makes LNG Viable?Illustrative Full Cycle Cost Components – LNG vs. Diesel
12%
13%
7%
21%23%
24%
Sales and ExciseTax
Retailing
Distribution
LNG offers 20% to 40% savings depending on region*
LNG feed stock price is one third of diesel*
LNG per unit margin can provide at least a $4.00/mcf uplift in value to feedstock*
*$5.00/MMBtu Gas and $100/bbl oil, blended Canada/U.S. analysis
63%
14%4%
2%
8%
9%Refining /Liquefaction
Feedstock
ProfitMargin*
LNG$2.50 to $2.90/DGE
Diesel$3.70 to $5.00/DGE
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Fuel Consumption by Market Segment
0
5
10
15
20
25
30
35
40
45
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Light Duty Heavy Duty Medium Duty DomesticMarine
Rail O&G SupplyChain
Displacement opportunities exclude Air, International Shipping, Military, Pipeline FuelSource: Data and forecast from EIA, Encana
Displaceable Market Volume: 73 Bcfe/d
65%
21%
5% 5% 3%(2 Bcf/d)
47 Bcf/d
15 Bcf/d
4 Bcf/d 4 Bcf/d1%(1 Bcf/d)
Most Commercially Ready
Influence on Early Adoption
Largest Opportunity
U.S. and Canada Natural Gas Use Opportunity Transportation Sector Displacement
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Promoting the Unique Value Proposition
30 Drilling Rigs
100 Mine Haul Trucks
10 Ferries
150 Locomotives
1000 Class 8 Tractors
40,000 Cars
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The Approaches to Transformation SuccessDedicated Natural Gas
Gas ConditioningIn-field
Conditioning / Treatment
RegasificationLiquefaction
LNG
Field Gas
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The Approaches to Transformation SuccessDual-Fuel Natural Gas
Gas ConditioningIn-field
Conditioning / Treatment
RegasificationLiquefaction
CNG Station
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Potential Costs OpportunitiesIllustrative Example of Approaches
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Diesel Dual-Fuel LNGDedicated
Field GasDedicated
Fue
l Cos
t pe
r D
ay
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The Considerations of Transformation Success
Diesel
Dual-Fuel
Field Gas
LNG
Strong
Moderate
Weak
Savings Mobility Supply Quality Environment
1919
The Current Supply Source Model
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The Drilling Rig Design of Experiments2011 Focal Points
Indicates dual-fuel
Indicates dedicated field gas
Indicates dedicated LNG
$11 Million $11 Million saved in 2011saved in 2011
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Natural Gas for Drilling RigsA Case Study: Using LNG Fuel for Rig Power in MCBU
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Encana’s Rig GasificationWhy We Are Motivated
Driving Change
Strategic Alignment
– Abundant supply of fuel
– Leading by example
Clean – Emissions Reduction
Domestically Produced, Locally Consumed
Technology Advancement Stewardship
Cost Savings
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2009 2010 2011
#2 Online #2 Online (November 2010)(November 2010)
NLA Natural Gas Rig Initiative Kickoff
(Middle 2009)
Fuel options Review(October 2009)
Collaboration Session with Prometheus and Ensign
(December 2009)
Prometheus contract signed(January 2010)
Ensign contract signed(January 2010)
Risk Assessment Meeting
(April 2010)
#1 Online#1 Online(August 2010)(August 2010)
Two Ensign generator skid conversions complete
(May 2010)
LNG equipment complete
(June 2010)
Idea Becomes RealityAbout One Year in the Making
#3 Online#3 Online(March 2011)(March 2011)
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LNG Fuel System
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Deployment – Bundrick Pad in NLA
Safety
– Risk assessment
– Location and isolation
– Training
– Design
Operation
– Seamless transition from diesel, no interrupts
– Average 4 day supply of fuel with 2 tanks
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Results
21 wells, ~350,000 feet drilled
1.7 million gallons of diesel displaced (40,625 bbls)
$1,200 to $1,500 per day saved for dedicated LNG
Demonstrated feasibility of LNG as a fuel
Transfers to other producers
No downtime due to fuel
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Insights & Opportunities
Perception and education
– Address fear of unknown with crews
– Involve local emergency responders
Logistics
– More critical managing fuel supply from the rig
– Must anticipate impacts from severe weather
Location design
– LNG skid needs to be incorporated in the location standard
Engine management
– 2 engines at lower loads is not better than 1 engine at peak load
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Encana NGE LNG Regasification SolutionsNew in 2012
All-weather design
Fully integrated safety system
Active pressure management
Remote monitoring
13,000 gallons storage
31,500 scfh vaporization rate (~9,225 LNG/day)
Requires 177 kW power and instrument air
120 psi MAWP
AugustJuly JulyJuneMayAprilMarchFeb
RFS #2
RFS #3
RFS #4
RFS #1 More to Come
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Emerging Technology and Other Options
Field Gas
– Ultimate in operating cost savings.
– Used 250-450 Mcf per day.
– More components between fuel source and engines as compared to LNG set-up
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Emerging Technology and Other Options
Two recent announcements by major manufacturers
– Cat – Dynamic Gas Blending
– Cummins – High Horsepower Dual Fuel
General Specs
– Expect 1st Half 2013 availability
– Up to 70% replacement of diesel with gas
– Bolt-on component installation
– New engines and retrofits
– Accepts up to 55% inerts (CAT Only)
Thank You
Aaron Felton
469.461.2412
Sherri Zeller
720.876.5145
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Supplemental Material
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CNG Station Types
Suction Gas
DryerSystem
Compressor
Buffered Fast-Fill System
Suction Gas
DryerSystem Temperature
Compensation
Fill Hoses
Compressor
Time-Fill Fueling Station
#4
Suction Gas
DryerSystem
Compressor
Cascade Fast-Fill System
Prio
rity Fill
Sequ
enc
ing
Tempe
rature
Compe
nsa
tion
Low
Med
High
Ground Storage
FillHoses
#1
#2
Storage Bypass
Tem
per
atur
e
Com
pens
atio
n
Buffer Storage
FillHoses
#1
#2
#3
#2
#1
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Natural Gas Liquefaction (Mixed Refrigerant)
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Natural Gas Liquefaction