The Bakken's New Direction

Faced with the challenge of low oil prices and constrained operations, service companies—like Aggreko—are finding ways to stand-out. Their efforts highlight the new operational strategies deployed by some service firms in the Bakken.
By Patrick C. Miller | October 20, 2015

Although much of the oil and gas activity in the Bakken occurs in the sweet spot of the formation where production is higher and breakeven costs are lower, it hasn’t made Guillermo Barreto’s job any easier.

As Aggreko’s business development manager in North Dakota, Barreto sometimes hits the road at 4 a.m. from his home in Bismarck to visit the four corners of the Bakken—from Dickinson to Williston to Minot and back again—as part of a 600-mile round trip in search of opportunities.

“Because power is needed across the industry, I visit with oilfield service companies, housing companies, solids control companies and operators—anybody who may need a power source or what we call critical temporary utilities,” Barreto says.

Low oil prices mean that maintaining contact with Bakken-related businesses has become more important than ever.

“The Bakken is connected very much like the network of pipeline that covers it,” Barreto explains. “You don’t know where you’re going to find the next big opportunity. In order to actually find it, you have to turn every stone and go into every business you haven’t been in before. And even the ones you have, you never know.”

Sometimes that means spending the night in a motel when the day gets too long or the weather conditions make travel unsafe, which is why Barreto always carries an extra change of clothes in the pickup that doubles as his mobile office.

Aggreko—an international company with its national headquarters in Houston, Texas, and its primary business of providing rental power solutions, as well as heating and cooling solutions for everything from heavy industrial applications to large scale events, such as the Olympics—is one of the solutions that oil and gas operators turn to when needing to reduce flaring from well sites in the heart of the Bakken.

“One of the key things that Aggreko does differently is if you drive out in the field, you’ll see that there’s typically one generator per well,” Barreto states. “That’s what we call a non-engineered solution. A generator rental company will rent you one generator per pump jack, and that will cover your needs. But, in essence, it’s not.

“What Aggreko is good at is right-sizing engineered applications,” he continues. “Your field will experience a higher demand and then a lesser demand when your load changes. Aggreko is able to scale that load up or scale that load down by adding or removing generators from the system.”

Barreto compares the approach to a Lego set that can easily be built up or disassembled to meet the customer’s power needs. Indeed, the block-shaped components imprinted with the orange Aggreko logo appear to validate his analogy.

“We determine the electrical load from a facility and calculate the number of kilowatts needed to run the facility, then add some redundancy,” he says. “Depending on the operator, some of them want redundancy included for 100 percent run-time. Others may not want 100 percent run time.”

On a clear fall day as the red and yellow fall foliage hugs the grassy green-fringed buttes of the Fort Berthold Reservation along the south side of the Missouri River, Barreto shows off several well sites powered by Aggreko technology. Although each site is operated by a different Bakken producer, he stresses their similarities.

“What all the locations have in common is that they’re all engineered solutions tailor-made to handle the loads at that particular site,” he notes. “Anywhere power’s not available because of remoteness or a utility can’t get it to you fast enough, that’s where Aggreko provides a solution.”

In addition to its rental power generators that can operate on diesel, natural gas or LNG, Aggreko also specializes in solutions that include heating and cooling control and oil-free compressed air solutions. The evolving nature of oilfield businesses in the Bakken—as well as Aggreko itself—keeps Barreto on his toes.

“These businesses keep morphing,” he says. “What used to be a business a week ago may have bought the business next door, and now they’re into something new. With the downturn in crude prices, a lot of the organizations have changed. It’s realigned some structures, so you have to understand their organizations.”

For example, Barreto recalls a Bakken operator with a midstream segment that called Aggreko’s toll-free number to inquire about oil-free compressed air. The company was commissioning a section of pipeline that had to meet certain specifications. As Aggreko’s North Dakota representative, Barreto handled the call.

“We sent them a compressor and a desiccant dryer. Within three days, we helped the operator meet specifications and avoid delays. We helped them achieve their goal.”

Aggreko has found success in the Bakken not only by providing engineered power solutions in remote locations that can be scaled to meet their customers’ needs, but also in providing natural gas generators for stranded gas. This solution has provided assistance to the oil and gas industry that’s dealing with a gas flaring problem that has become a greater challenge as producers concentrate their drilling in the formation’s high-productions areas.

With greater oil volume comes more natural gas production in an area of the Bakken that lacks the infrastructure to move the gas to processing facilities on the north side of the Missouri River. The problem was further compounded this year by construction delays. Rather than requiring industry to meet an 85 percent gas capture goal beginning in 2016, the North Dakota Industrial Commission in September chose to delay the goal until Nov. 1 next year.

“The fact that Aggreko has a strong fleet built around natural gas and with flaring being an issue, we can certainly be part of that solution for operators that are looking at both saving costs on fuel and controlling their flaring,” Barreto notes.

“We have the infrastructure, the hardware and the human resources behind them to make it happen,” Barreto explains. “It’s typically a matter of how long it takes for the operator to get us the information. Once we’re in the door, it could be the very next day or it could be as long as two or three weeks. We always try to engineer the best solution.”

A number of factors go into determining whether the generators supplied by Aggreko will be run on diesel fuel or natural gas.

“The determining factor for either diesel or natural gas is the timeframe for utilities to get to that location,” Barreto explains. “There are some hardware requirements that have an additional cost around natural gas, such as the plumbing of the gas lines from the source to the generators and the backup propane line.

“You need an extended run time for that payback to occur on that investment,” he adds. “If it’s typically one to two months out to have utilities come on location, an operator will usually go with a diesel-run unit.”

If the operator wants to run generators on gas produced at the well site, it’s important for Aggreko to have accurate information to engineer the proper solution. For example, Barreto says knowing the electrical load, how many motors are running, whether they’re on soft start or whether pump jacks have a filtration systems is key. A gas analysis is required as well. 

If it’s determined that using gas-fired generators makes the most sense for the customer, then Aggreko’s proprietary cleaning technology comes into play.

“When we take the gas—no matter where it’s coming from—it goes through our proprietary cleaning device called the scrubber and then it hits the engine,” Barreto explains. “We can take the gas right from the wellhead and make it work, as long as it’s within the H2S and other gas parameters.”

Another feature Aggreko provides its customers is remote monitoring that can spot problems 24 hours a day, seven days a week through a communications link to the company’s operations center in Louisiana. Aggreko’s systems are analyzed every three minutes. Another feature Aggreko provides its customers is a unique service - Aggreko Remote Monitoring (ARM), a real-time asset monitoring and dedicated diagnostic support that can detect potential or existing issues 24 hours a day, seven days a week. If a problem occurs ARM will transmit this information to Aggreko’s Remote Operating Center (ROC).

“We’ve invested heavily in this technology,” Barreto says. “If there’s anything that goes wrong with the system—it can be as simple as oil pressure, temperature, fuel level, gas pressure or volume—ARM will send an alarm which transmits to the ROC. The team at ROC gets in touch with the field personnel to let them know that the alarm has been triggered.”

Immediately knowing the nature of the problem saves Aggreko’s customers time and money.

“We’re prepared accordingly to deal with the issue when we arrive on location,” Barreto notes. “It keeps our equipment proactively and preemptively running. It’s also a very distinguishing feature from the rest of the industry.”

Even Barreto receives the notifications by email when the remote monitoring system detects a problem, sometimes in the middle of the night.

“As a salesman, you want to know when something goes wrong because you never like that call from the customer saying ‘What’s going on?’ and you don’t know,” he says. “Part of customer service is not only knowing when everything is good, but also knowing when something is wrong. It’s better for you to take the bad news to your customer rather than the other way around.”

Barreto knows that the long hours that come with traveling hundreds of miles a day in western North Dakota are the key to establishing good relationships with potential customers.

“We go into our meetings with an understanding of what our customers do so that we can uncover opportunities together,” Barreto says. “But even when we don’t know exactly what they’re doing, we go with an open mind to try to understand what they do and then see if there’s an opportunity for us to aid them in whatever they’re trying to achieve.”

And that’s how Barreto helps Aggreko maintain its edge in the remote power and gas capture field.

Author: Patrick C. Miller
Staff Writer, The Bakken magazine
701-738-4923
pmiller@bbiinternational.com