Natural gas wins place as oil field fuel

The biggest, baddest engines in the world, long chained to diesel fuel, are on the verge of a mass transformation because of cheap natural gas - with oil field equipment holding particular potential, executives said Thursday during a summit of heavy fuel users and producers.

"Here's the first reason that large engines are going gas," said JoelFeucht, director of gas engine strategy for Caterpillar's energy and power systems division. "Large engines burn the most fuel. I could try to make it harder, but that's pretty straightforward."

Oil companies alone use nearly 1.2 billion gallons of diesel fuel a year just for pressure pumping equipment that supports hydraulic fracturing, said David Hill, vice president of natural gas economy operations for Encana Corp. Adding the diesel used to power drilling rigs themselves, the total is more than 2.8 billion gallons annually, said Pierce Dehring, a project engineer for Baker Hughes.

A single fracturing job can involve 7,800 gallons of diesel, at a cost of as much as $5 a gallon at some oil field operations, said Pat Osachuk, an engineer for Encana.

The savings of natural gas, which now is around $2 cheaper for the energy-equivalent of one gallon of diesel, inspired a wave of interest at the High Horsepower Summit 2012, a conference dedicated to natural gas use in high-horsepower applications. Hundreds of company representatives packed into conference rooms at the Royal Sonesta Hotel in Houston to hear about developing engine technology and various uses of natural gas in large engines.

Feucht said that Caterpillar, which makes large engines for oil field operations, mining trucks and other uses, is committed to being a leader in natural gas-powered products.

"We just decided to go all in on gas," he told an audience that included scores of potential customers. "So if you're waiting for someone to decide, let me just tell you that we decided. The product's going to come."

A crowd packed into a conference room to hear about oil and gas drilling companies that were switching away from diesel power and seeing big savings.

One drilling rig running on diesel, for example, consumes about $4,653 worth of fuel a day, said Brian Murphy, an engineering manager for Ensign Energy Services. But a drilling rig using gas processed directly from the well site would have a fuel bill of $1,322 a day, he said.

Ensign, which operates 15 drilling rigs exclusively on natural gas, is developing ways to increase the fuel efficiency of rig operations to further cut the cost of the fuel, which does not produce power as efficiently as diesel, he said.

Advances on the horizon are likely to wipe out efficiency differences and result in an annual fuel savings of nearly $1.3 million per rig by using natural gas tapped and processed at the well site, Murphy said.

Other speakers said they're working with bi-fuel pressure pumps that substitute natural gas for as much as 60 percent of their diesel use, resulting in substantial savings.

Dehring noted that the substitution also cuts carbon and particulate emissions.

While discussion at the conference included greater use of natural gas to power trains, trucks and ferries, energy industry players said the biggest financial gains could be made in the oil fields.

David Ross, director of business development for EQT Corp., said drilling and fracturing present greater opportunity for conversion from diesel to gas than ferries, long-haul trucks and train locomotives combined.