Natural gas-powered rigs on the rise in oil fields

Apache Corp.’s announcement earlier this month that it will power an entire hydraulic fracturing job with engines running on natural gas was only the most visible sign of a change sweeping the industry.

Lyle Jensen, CEO of American Power Group, said his company saw orders grow tenfold between 2011 and 2012 to convert drilling rigs from diesel to a system allowing them to use natural gas.

Speaking this week at the World LNG Fuels Conference, Jensen said some companies like the security of knowing they can still use both fuels. But he said the technology allows them to reap the benefits of natural gas, including lower emissions and cost savings.

Jensen’s company supplies dual fuel technology to convert diesel engines, including heavy-duty trucks and oil field equipment, to run on natural gas.

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Originally, he said, he expected the software to be a temporary solution until companies switched to full natural gas operations.

Not anymore.

“We now believe full-bore natural gas and dual fuel will co-exist,” he said.

The conference and a related expo, which concluded Wednesday, drew about 800 people, a sign of the growing interest in finding new ways to use the bounty of natural gas unleashed by horizontal drilling and hydraulic fracturing in the United States.

Many of the sessions dealt with using liquefied natural gas for heavy duty trucks or building the LNG infrastructure. But Jensen, along with Russell Goss, a marketing project manager with Caterpillar, talked about the implications for the oil field.

Caterpillar worked with Halliburton and Schlumberger on the Apache project, which Apache estimated would cut fuel costs by about 40 percent.

Although most U.S. drilling operations are still run on diesel, use of natural gas is growing.

Jensen said American Power Group saw orders to convert drilling rigs jump from six in 2011 to 60 last year.

Older engines also require the addition of a catalytic converter; even so, he said the conversion pays for itself in reduced fuel costs within a year. The payback time is shorter if gas from the wellhead can be used, he said.

Jensen estimated the diesel consumption of a fully operating drilling rig at as much as 16,000 gallons a day. Converting to natural gas under his company’s system won’t eliminate all diesel use, but will cut it in half, he said.