APG sees renewed interest in its gas-capture technologies

By Patrick C. Miller | April 27, 2016

Although the reduction in Bakken oil and gas activity has put a damper on fielding new gas capture technologies American Power Group (APG) Corp. CEO Lyle Jensen sees the business as an opportunity that’s not going to disappear.

In a letter to the company’s shareholders this week, APG described its Trident oil and gas flare capture business in the Bakken as a “diamond in the rough.”

Slumping oil prices caused Iowa-based APG to idle it flare recovery systems during the winter. However, with oil prices experiencing a modest rally and spring’s arrival, Jensen said industry interest in the company’s technologies is picking up once again.

“There are other customers facing declination curves that are going to have to bring some of their uncompleted wells online,” he said. “During the winter, we just sat tight and watched the market. Here in April, we’ve bid on six sites.”

Some of the calls from customers have been about bringing wells online to maintain revenue while others want to be in position to start operations if oil hits $45 a barrel, Jensen noted.  

“We really do think there’s a lot of potential there,” he said.

Between North Dakota flaring restrictions requiring 85 percent capture gas rates by November this year and the Obama administration’s plans to reduce methane emissions from the oil and natural gas industry by 40 to 45 percent below 2012 levels by 2025, Jensen said there’s a need for the technologies APG offers.

“Our second system that we’re building right now is being designed to have different types of pressures, lower temperatures and a different type of separation technology to capture the methane,” he explained. “We plan on being able to separate it from the NGLs and have a quality NGL that is marketable.”

The company has designed its latest remote flare capture system with the capability to separate and process the currently unregulated flared methane into CNG that can be used with its dual-fuel solution.

With LNG, Jensen sees the emergence of markets for using methane to fuel diesel generators, diesel pumps and heavy duty trucks. Trucks running APG’s dual-fuel systems now have more than 100 million miles on them, he said.

“It can really be a win/win from the standpoint that we can produce CNG at a lower cost than diesel and also reduce diesel-related emissions by 50 percent by displacing that much diesel fuel and its use,” Jensen said.

APG’s focus is on remote sites with no access to pipelines and stranded sites—wells connected to pipelines that are already operating at capacity. Jensen sees APG’s gas capture and dual-fuel technologies as a filling in a piece of the puzzle, not as a solution that will work for every producer with a flaring problem.

“The majority of NGL is going to be pipeline-driven,” he noted. “Even at 12-13 percent flaring, it’s a tremendous amount of out-gassing and waste gas on the remote sites and stranded sites—they still have to flare on those sites.”

Between halts and delays in pipeline infrastructure construction, the need to maintain revenue streams and an uptick in oil prices that has some producers contemplating the completion of drilled wells, Jensen foresees opportunities for APG in the Bakken.  

“You have to manage not only what’s on the pipeline, but you’re also going to have to manage your remote and stranded sites,” he said.

 

For more on the Bakken, follow us on Twitter @TheBakkenMag