Propane substitutes for water in shale fracking

HOUSTON Tue Nov 22, 2011 11:17am EST

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HOUSTON (Reuters) - Many controversies surround hydraulic fracturing of underground shale deposits in the quest for oil and gas, but a small Canadian oilfield services company has pioneered a way around one of them: the use of prodigious amounts of water in the process.

"Fracking" generally involves blasting millions of gallons of water down a shale well to free up oil and natural gas, and then the water needs to be disposed of because it may contain toxic drilling byproducts like heavy metals.

Much of the water required for a so-called frack job is sourced from lakes, rivers or city water systems, and water is in short supply in some drilling areas, such as drought-plagued Texas.

GasFrac Energy Services Inc is winning customers, including Chevron Corp, by using a flammable propane gel instead of the water, chemicals and sand typically blasted into rock or tight sand formations to release trapped oil and gas.

One benefit of the growing technology is that no water is used.

"The disposal situation is basically eliminated," said Zeke Zeringue, the new chief executive officer of GasFrac. "Usually, it's a lot of water in and a lot of water out."

The gelled propane turns into a gas and exits the well with the natural gas or oil stream produced, eliminating the use of millions of gallons of water pumped into a well, Zeringue said.

FIREPOWER

Richard Spears, a leading oilfield services adviser to the petroleum industry and a former Halliburton Co engineer, said using liquefied petroleum gas, or propane, makes perfect sense from a technical point of view.

"It's an ideal liquid to crack the rock open with because it does not damage the rock like water would," Spears said. "Water may cause the rock to swell."

Still, the potential for the propane to ignite is a danger that can't be ignored, Spears said.

"As a former frack engineer, I get the willies when I think about getting anywhere near a frack that is flammable," he said. "When it catches fire, it doesn't burn nicely."

Two fires have broken out at sites in Canada where a propane fracture was under way or about to take place, causing burns to some workers.

GasFrac CEO Zeringue said the process is safe.

"We've actually exceeded the capabilities to deliver this technology and in an environmentally sound manner," he said.

The Calgary, Alberta company said it recently signed multi-year contract with a major production company.

GO-AHEAD

The process has received clearances from regulators in Canada. Various state regulators in the United States have reviewed the technology, including the Oil and Gas Division of the Oklahoma Corporation Commission.

Oklahoma inspector Gayland Darity wrote in a technical report that the safety precautions taken by GasFrac at the job he witnessed were "the best" he had ever seen.

Still, according to his report, three firefighters were on hand, including one trained as an emergency medical technician. The firefighters had water, foam and chemicals at the ready to battle any potential blazes, a departure from a frack job using water.

A commission spokesman said the opinions in Darity's report were personal, not those of the commission.

The technology is so new that it has yet to catch the attention of U.S. environmentalists who track fracturing issues.

Emily Wurth, program director at the public interest group Food & Water Watch, said new fracturing technologies are not subject to enough oversight.

"People across the country are the guinea pigs for the industry," Wurth said. "My concern is a lot of these new technologies are adopted before we ensure that they are safe."

GROWING

Most of GasFrac's frack jobs have been performed in western Canada, but the company is fracking more and more wells in North America. Their largest customer is Canadian oil and gas company Husky Energy. Now some of the world's largest companies are giving the technology a look, including Chevron and Royal Dutch Shell, the company's CEO said.

GasFrac said it has so far performed more than 1,000 propane fracks on 400 wells, it said.

The company began operations in Texas this summer, using its technology to frack a well in the Eagle Ford Shale for a small Canadian company called Jadela Oil Corp

The well was fracked using propane, butane and sand instead of water. Texas is experiencing one of the worst droughts on record, and water use in the state has been an issue.

The company is also operating in the Marcellus Shale covering parts of the U.S. Northeast, where opposition to drilling has been the most fierce.

"This is the market that is booming," Zeringue said a day ahead of a trip to Houston to see potential customers. "I think this could be a game changer for the industry."

(Editing by Derek Caney)

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