Straight From The Bakken Source

Ferus Natural Gas Fuels is perfecting a flare gas capture and recycling process to power Bakken drill rigs. After tweaking the unique logistics and capture process throughout 2014 with GE Oil & Gas, the process is ready for commercial implementation.
By Luke Geiver | March 03, 2015

Ferus Natural Gas Fuels LP relies on a trailer design that, at first glance, seems out of place on the gravel roads and paved highways of the Bakken. The trailers, often pulled by white semis, feature two pairs of long, narrow tubes stacked together. The word Ferus is painted across the stacked tubes, the curvature of the letters highlighting the unique design and placement of the tubes on the trailer, each letter wrapping into itself as if everything important to the trailer originated from within the tubes. Although the trailers can draw double takes from industry and community members accustomed to seeing water trucks and oil transport trucks, the tube trailers could soon become commonplace in the play if a unique joint venture between Ferus and GE Oil & Gas continues to prove out.

Throughout 2014, the duo has been working to perfect what Ferus and GE Oil & Gas have called The Last Mile Fueling Solution. The solution relies on the logistics know-how of Ferus and the modular gas compression technology provided by GE Oil & Gas. The combined efforts of each has developed a system capable of capturing, storing, moving and reusing associated gas produced at one Williston Basin well site to power a natural gas-converted drilling rig or other capable equipment operating on another. Statoil has played a significant role in the development of the system. After more than one year working to streamline the process, the Ferus team believes it has moved past the pilot project stage into full commercialization mode. Expanding its reach into the Bakken, and other shale plays, is dependent on future clients understanding those tube trailers and history of Ferus. As that happens, the gravel roads and highways of the Bakken could look much different.

The Evolution Of Ferus
In the early 2000s, Ferus began providing oilfield logistic services in western Canada moving liquid nitrogen and CO2. Oil producers in the region were in need of fluids to increase production associated with energized well fracturing, and significant reductions in water use. “The general message then was that we could make molecules and transport them through tough terrain and complex logistic networks. We could get them to and from the wellsite,” Stewart Wilson, vice president of commercial development for Ferus, says. Roughly four years ago, Wilson and his team began exploring the possibility of utilizing the company’s knowledge in moving cryogenically treated fluids through complex logistics networks into the fuel supply business. At that time, the team was focused on natural gas fuels and how the company could supply the fuel for use in fleets. “Our problem then was the supply chain,” Wilson says.

While working to develop a supply chain model, the team was introduced and began discussions with GE Oil & Gas. “They wanted to partner with us to deploy their machines and equipment into productive use,” Wilson says. Shortly after the introduction of GE and Ferus, Wilson began working with GE and an exploration and production company looking to better utilize a resource while reducing its production of flared gas. Through the addition of Statoil, Ferus began developing and perfecting the system it provides today. “Statoil challenged us. They said they had a gas with no market,” Wilson says.

Through the end of 2013 and most of 2014, the trio worked to optimize the system. And, although flare gas capture outfits were already present and available in the Bakken, none were matching the service style and capabilities of Ferus. The team is now on what it believes to be generation two of the process and has multiple units including trailers and GE’s CNG technology running in the Bakken.

In mid-September of 2014, Statoil announced it was officially committing to the Ferus, GE Last Mile Fueling Solution. “Not only is Last Mile enabling our company to better comply with the new flaring regulations in North Dakota,” Lance Langford, vice president for Bakken development and production at Statoil said, “but by using this captured natural gas in place of diesel in our drilling and hydraulic fracturing operations, we are further reducing emissions and costs. This is good for profit and climate.” Langford’s confidence in the Ferus, GE process gave him the confidence to use the system in real-time commercial operations.

Moving Flared Gas From A To B
There are two pieces to the Ferus gas movement logistics puzzle: the gas consumption side at the drilling pad and the production side at the well head. “The complicated part is not making one individual piece of that supply chain work. The complicated part is connecting it all so that you have a reliable product of natural gas for powering the drilling rig. The drilling rig doesn’t care if you are having supply issues,” Wilson says. And, he adds, supply issues possible from the gas supply itself are totally independent from the demand for the product. “We need to be able to make sure there is consistent gas supply from an inconsistent product source.”

Starting at the well site producing associated gas, the gas is captured and streamed through equipment that relies on pressure and temperature to strip out the natural gas liquids such as butane, ethane and propane. The leftover dry gas is then streamed into GE’s gas compression equipment to a high pressure. The dry, compressed gas is then streamed into the tube trailers. Once full, the tube trailer leaves the site and drives to a well pad with a drilling rig in need of power. The tube trailer is then plugged into a pressure reduction unit that reregulates the temperature and pressure before feeding the treated gas stream into an engine powering the drilling rig.

The Ferus team manages the whole process, needing only the okay from the producers indicating they want the Last Mile Solution and the location of the wells where gas can be sourced and the wells where drilling is scheduled. “We manage all of the inventory. We time the logistics so that as one trailer is getting empty we replace it with another,” Wilson says.

More Than A Milk Run
The process of capturing, storing and transporting associated gas is not akin to the term used to describe a simple, repetitive route Wilson refers to as the milk run. There is a big difference between delivering a product on a paved road location and doing so on a leased road made of gravel in the middle of winter, according to Wilson. “The nature of some logistics is literally a milk run, where you make the same trip at the same time over pretty consistent road conditions,” he explains. “We are the opposite of that.” According to Wilson, the team is constantly managing produced gas resources and the demand from drilling rigs on neighboring well sites that could be several miles away.

Because the fueling solution is unique, the payments for service plans are also handled in unique terms. There are several different payment plans, Wilson says, ranging from gas prices attained at the well head or savings over diesel costs. Most producers don’t care where the gas will come from for drilling rig power. “What they care about is cost savings over diesel and that they can get a consistent supply.”

GE and Ferus are not working exclusively with Statoil. The duo is already well into contractual discussions with several Bakken producers, according to Wilson. The discussions could remove roughly 15 million standard cubic feet per day of flared gas from the Williston Basin, enough to fuel more than 100 drilling rigs in North Dakota.

The Ferus and GE combo isn’t focused solely on the oil and gas industry either. According to Wilson, the system can be used in other markets, including agriculture, construction and the very industry that had the original Ferus management team of the early 2000s excited about expanding out of the oilfields of western Canada: transportation.Until that happens, Wilson is working to expand the network of tube trailers and GE compression units in the Bakken. But someday, he believes, tube trailers won’t just be seen as a staple to the Bakken. The Bakken will instead be the starting point. “We are trying to connect all dots,” he says, “with all markets.”

Author: Luke Geiver
Editor, The Bakken Magazine
701-738-4944
lgeiver@bbiinternational.com