* Caterpillar has dominant position in market for rig
* Tighter emissions rules may accelerate switch
* GE says gas far cheaper for drillers than diesel
By Terry Wade
HOUSTON, Nov 12 General Electric Co is
trying to deploy more of its natural gas engines on rigs
drilling for hydrocarbons in the North American energy boom -
where Caterpillar Inc diesel engines have long been the
The sales push comes as GE forecasts global natural gas
consumption will rise by a third through 2025 and as it makes
strategic investments in the gas sector - like its 2010 purchase
of U.S. engine maker Waukesha.
Rigs, mammoth machines that bore holes in the earth before
the extraction of crude oil and natural gas, normally rely on
three engines that burn expensive diesel and operate around the
Engineers at energy and drilling companies consulted by
from Ensign Energy Services Inc to
Patterson-UTI Energy Inc and Devon Energy Corp
- say that natural gas engines are far cheaper to run than
diesel, which is often trucked in to remote drilling sites from
GE says potential savings are significant and that running
cleaner-burning natural gas would help curb greenhouse gas
emissions from rigs and reduce tanker truck traffic on
overburdened local roads near drill sites.
"Exploration & production (E&P) companies can save $600,000
per engine, per year by switching to natural gas-fueled engines
versus diesel. E&Ps can realize a $1.8 million fuel savings per
rig by using field gas versus diesel," GE said in an email.
There are about 1,700 oil and gas rigs actively drilling in
the United States, according to Baker Hughes Inc.
According to several industry experts, at least 80 percent
of the diesel engines are made by Caterpillar, followed by
smaller market shares for Cummins Inc and MTU Detroit
Caterpillar declined to comment on its share of the rig
market, but emphasized it has a line of natural gas engines it
is also selling to clients.
"In the gas space, we are seeing a big opportunity," said
Steve Igoe, Caterpillar's commercial manager.
PACE OF CHANGE
The adoption of gas engines has been slower over the past
couple of years than many in the industry had predicted - in
part because of infrastructure constraints.
But the switch to gas rigs may start to accelerate as
stricter diesel regulations from the U.S. Environmental
Protection Agency take effect in 2015, more filling stations
offer compressed natural gas, and newer engines are set up to
burn gas from local wells.
Evidence of the pace of change to gas and away from diesel
is mostly anecdotal.
Ensign said it has about 300 drilling rigs globally and
about 20 of them can run natural gas, with four those being
so-called dual fuel engines.
Of some 192 rigs in operation, Patterson has four rigs
running entirely on natural gas and has commitments to power
five other rigs with gas engines.
"How far and how quickly things will grow is unknown - but
it is clear that companies are moving beyond the pilot project
phase," said Brian Murphy, engineering manager at Ensign.
Competition in the market for rig engines between GE and
Caterpillar is just the latest skirmish in a pitched battle
between the two titans - which already compete in the lucrative
market for locomotive engines and replacement parts.
Both companies say their gas engines can run on gas that
varies in quality and that may contain liquids. That means a rig
could in theory run on gas produced at local wells.
But relying on field gas can be tricky.
"These wells don't give up a steady supply of gas all the
time so that means you are depending on a well for fuel that
varies and that becomes a dynamic situation," said Michael
Matlock, a senior facilities engineer with Devon.