The modern oil and gas industry depends on a wide variety of powered systems to operate its midstream activities. From the wellsite to the refinery, there is equipment of all sizes requiring a power source—be it gasoline, diesel, the electrical grid, solar generators or even steam. The variety of systems presents logistical challenges as well as high operating and maintenance costs.

The North American gas market is particularly affected because the most practical way to move gas to processing plants and consumers is by pipeline. This requires compressors, dryers, heat exchangers, centrifuges, and a plethora of instrumentation and telemetry devices and systems.

With the recent rapid expansion of natural gas plays, the associated infrastructure has not had time to catch up. Many wells are completed without any way to get the gas to market due to the relative remoteness of the fields. They remain shut-in, waiting, or they require their owners to purchase or rent temporary power-generation equipment as a power source to process and move the gas.

Renting infrastructure has other advantages, too. North American natural gas production is expanding, but margins are tight. Operators are concerned with getting the most out of every operating dollar they spend. Rental power gets new production online faster, as well as powering remediation facilities to minimize or eliminate many operational issues quickly.

Also, the industry is seeing intense pressure from regulatory and environmental fronts, from minimizing carbon emissions to the processing of water. The latter has become a major issue, whether in relation to treating source water with biocides, re-cycling produced water from existing wells, or treating flow-back of stimulation treatments.

Additionally, operators are constantly expected to minimize their environmental footprint by strategies such as reducing road miles and using multi-well drilling and production pads. They see readily available rental power-generation equipment as the answer to several issues like these, including surface impact. Modular systems have minimal surface impact because they can be set up almost anywhere, versus permanent systems which usually require a cement slab that takes up space and is difficult to move.

A typical 1.3 megawatt natural gas generator installation is relatively quiet and unobtrusive. Modularity allows upscaling as required to meet growing needs.

More activity, tighter margins

The majority of recent gas activity is in so-called unconventional gas plays—tight gas, shale gas, or coal-bed methane—in remote areas of the western U.S. Industry economists have estimated the collective potential of these gas plays can make the U.S. energy-independent for decades. Drilling contractors have reacted to cover the demand for natural gas well drilling rigs. Since the recent rig demand slump in the summer of 2009, more than 722 drilling rigs have entered the unconventional gas market.

This has caused a problem: Natural gas supply exceeds demand, so prices are depressed. Traditionally, oil and gas energy has been compared using the conversion factor of barrel of oil equivalent (BOE). Using this factor, which the U.S. Geological Survey estimates at 6,000 cubic feet of natural gas, gives roughly a 4:1 ratio for the value of a barrel of crude oil compared to a BOE of natural gas at today's commodity prices. Accordingly, on a Btu-to-Btu basis, gas is undervalued today and gas producers are forced to control costs tightly in order to make a profit.

Elegant solutions

Cost-conscious operators have figured out elegant solutions to complete field and transmission work more cost-effectively than others who take electrical power off the grid, or produce it on site using diesel-powered generators. They use natural gas-aspirated engines to drive generator sets that can power virtually all field systems. In some cases, natural gas engines can drive equipment, like compressors, directly. Otherwise, the engines drive electrical power generators.

All drilling rigs have their own generators that supply sufficient power to operate the drilling machinery. However, most require supplemental power to operate the camp, and hundreds of additional electrical devices. These supplemental power plants come in handy when the rig moves off location, taking its generators with it and leaving many systems requiring power. These include separators, heater-treaters, dewatering pumps, compressors, lighting, air conditioning, heating and employee camp housing. In addition, power for production pumps is also needed in remote areas without infrastructure to allow producers to get product to gathering systems, separation plants and to market.

All gas wells, and almost all oil wells, produce sufficient natural gas to fire a gas-driven generator set, which provides power for moving the fluid from the well downstream in non free-flowing wells. This potentially amounts to a tax-free, clean-burning, safe fuel that is available on site in abundant quantities. When field gas can be used to generate electricity, it eliminates the need to flare it off. Previously, flaring was the only practical way to get rid of small, non-commercial quantities of wellhead natural gas. Using the waste gas to generate electricity is the ultimate conservation practice.

Gas versus diesel

A comparison of a gas generator and a diesel generator shows significant savings in favor of gas. A couple of years ago, when natural gas was selling at $4 per thousand cubic feet, and diesel was selling at $2.75 per gallon, a 1.3 megawatt rental gas-fired generator set proved more economical than a much smaller, 1000 kilowatt diesel unit. The same comparison, made today using current diesel prices, results in even more dramatic savings.

One enterprising operator in Louisiana used a gas-fired engine to generate power for his field processing facility, and then ran the exhaust gases from the engine through a small compressor and injected them back into the oil well to maintain reservoir pressure and to act as a solvent to make the oil flow more freely. Total CO2 emissions from the facility were almost zero.

Since generators are modular, operators can contract just the right amount of power they need by adding or subtracting modules. Most are available on a rental basis to give maximum flexibility, but they can also be bought outright. To determine the most economic strategy for acquiring equipment, operators must consider the hidden costs of maintenance, inventory management, operator training, transportation and storage, and regulatory compliance aspects of owned generator fleets.

In most cases organizations are not equipped to provide operation and maintenance on these units and the total cost of ownership tips the scales in favor of renting. Most operators need several small generators scattered across their field rather than a single high-capacity power station. They like to be able to move the sets around as needed to satisfy small, temporary power requirements. For field production facilities, a long-term contract is usually preferred, and can be more economical.

Long-term benefits

Often, as a field is developed, the operator has no idea what the ultimate production from the field will be, so it is difficult to properly scale the permanent production facilities. Using portable, modular power plants makes economic and logistical sense until a firm estimate of permanent power requirements can be made.

Natural gas generator sets are not just for remote areas like the Rockies or Northern Alberta. There are plenty of sites in mature producing areas of Texas and Louisiana, for example, where grid power is insufficient or non-existent.

One operator needed to place a production treatment facility in the Haynesville play. Utility power was stressed to the maximum just supplying local residences and existing businesses. To beef up the power grid would take a major capital improvement process, extensive permitting, and construction of substations. Plenty of field natural gas was available, so a 1.3 megawatt natural gas-driven generator set was deployed on a rental agreement.

To ensure 100% reliability, a back-up diesel unit was deployed to take over during any emergency shut-downs or routine preventive maintenance periods. Since the back-up generator was designed to run only during short outages and shut-downs, fuel costs were negligible. The gas generator ran 24 hours, seven days per week, and did the bulk of the work. After the gas unit was deployed and running, it became clear that costs were significantly lower than if the utility had been able to accommodate the power demand on its local grid at the prevailing rates.

Better for service providers

Service companies, too, need portable electric power plants. Water treatment plants, waste treatment and disposal facilities need substantial electrical power. While they are often sited away from utility power, they can be in a location with available field natural gas.

Service companies deploy early production facilities (EPF), especially in large-scale plays or extremely remote plays. An EPF has similar applications as do portable electrical power generator systems. They are designed to permit the operator to put wells online as they are completed, ensuring positive cash flow from the earliest possible moment. EPFs include portable modular production systems and sensors that allow the operator's production engineers to make precise estimates of the potential production rate for the field, so the permanent production facility can be properly scaled. When the permanent facility is ready to be commissioned, the EPF can smoothly hand over production processing to the new facility; then it is efficiently demobilized. The same is true for modular electric power plants, and EPFs include them in their composition. Service companies value economical, clean-burning, low-emission, gas-fired power plants just as much as operators.

One of a fleet of 350 similar units, this trailer-mounted package can be towed to location by a one-ton pick-up truck and quickly set up by one worker.

Conclusion

Portable modular natural-gas-fired power plants provide the maximum in flexibility and convenience to solve a pressing problem being experienced by operators across North America. They are economical and reliable, and have low environmental impact. By using field gas, they sometimes provide an acceptable means of getting rid of non-commercial waste gas that would otherwise have to be flared.

Also, the units can be deployed to any location quickly, supplying critical power to get wells into production fast and cost effectively. They can help operators set up critical processing facilities in remote locations to maximize the profitability of field and midstream operations.

Finally, the inherent flexibility allows deployment in highly efficient centralized nodes or critical remote outposts. By focusing solely on providing electrical power, a universal power supply is available to operate the largest variety of appliances and systems providing maximum flexibility to the customer. n

Walter Dale is the South Texas area manager and David Dickert is the central area manager for rental power specialist Aggreko Plc.