By John Kemp
LONDON Jan 25 Oilfield services company
Halliburton blamed the upfront cost of rolling out its
"frac of the future" efficiency initiative, as well as lower rig
rates and idled equipment, for shrinking margins in its North
American business, when the company presented its Q4 results on
Frac (or frack as it also called) of the future maybe
causing the company some discomfort in the short term. But it is
a perfect case study of how the drilling industry is innovating
in response to pressure to cut costs and its environmental
HIGH-HORSEPOWER GAS ENGINES
Working with Apache, a major gas producer, and
Caterpillar, an equipment supplier, Halliburton has
started to convert some of its pressure pumping units employed
in fracturing operations to a dual-fuel system that uses
compressed or liquefied natural gas as well as diesel as a
source of power.
Natural gas is cleaner burning than diesel, allowing
Halliburton to claim its dual-fuel system cuts carbon emissions
and is more environmentally friendly.
Much more importantly, natural gas is plentiful and cheap,
especially in the oil and gas producing regions, while oil is
more than six times as expensive on a calorific basis, and
diesel is the most expensive refined fuel of them all.
Converting pressure pumps to run on a gas-diesel mix is
mutually beneficial for gas producers, who do not know what to
do with all the gas currently coming out of the ground, and
drilling companies, under pressure to show they can drill and
complete wells more cheaply to cope with depressed U.S. gas and
increasingly oil prices.
Caterpillar's Dynamic Gas Blending (DGB) sets allow
customers to use up to 70 percent natural gas in their existing
diesel engines with no loss of performance, and can be
retrofitted to existing equipment, according to the company.
The new DGB kits were specifically designed for petroleum
operations, and were first released to customers in 2012. They
have already been supplied to Halliburton and a range of other
drilling and pumping companies.
Oilfield operations account for only a tiny fraction of
total diesel demand. But Dynamic Gas Blending engines could in
principle be used in a much wider range of industrial
operations, providing another way for cheap gas to displace
expensive oil in one of the liquid fuel's remaining core markets
"Caterpillar believes the price disconnect between petroleum
and natural gas is here for the foreseeable future. (The
company) sees natural gas as the future for high-horsepower
applications -- the higher the horsepower, the faster the
adoption -- and is betting that its commitment will pull the
market along," the specialist website "Fleets and Fuels"
reported in September.
"Large engines are going gas," a Caterpillar official
associated with the programme told a Houston conference. "It
becomes economically suicidal not to do anything else
("Caterpillar embraces natural gas" Sep 27).
Allowing for self-interested ebullience, there is clear
interest in replacing expensive diesel with cheaper gas in a
wide range of applications.
VERTICAL SILOS AND PAD SPACE
Frac of the future is also introducing vertical storage
silos for storing the frac sand (proppant) employed in fracking
Rather grandly named the "SandCastle PS-2500 Vertical
Storage System," which at least shows someone at the company has
a sense of humour, it minimises the amount of ground space by
the simple expedient of storing the frac sand in a vertical
tower, with solar power providing all the operating power needs
for the unit ().
It is a prosaic innovation. But fracking firms are under
intense pressure to drill and frack more wells from fewer and
smaller pads. SandCastle is just one example of numerous large
and small operational improvements drilling and fracking firms
are introducing in the field to squeeze costs out of the
They come in response to pressure from clients worried about
the continued economics of exploration in a world where gas
prices are already low and oil and liquids prices are coming
under pressure and likely to fall in future. Necessity (in this
case low natural gas prices) is again proving the mother of