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Electric fracking could cut costs and emissions for Permian producers, pumpers


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Essential Energy Insights - October 2021

Electric fracking could cut costs and emissions for Permian producers, pumpers

As the energy industry becomes more environmentally conscious, and as oil and gas producers remain hyper-vigilant about their spending in the oil patch, a step toward resolving both issues is emerging from an unlikely source: electricity.

Although the upfront costs are high, exploration and production companies could see substantial savings by switching from diesel-fueled frack fleets to electric-frack fleets that utilize the natural gas produced during the process of shale gas extraction, which is typically flared off as waste, experts say.

The upfront costs for an electric-frack fleet are around $50 million to $60 million versus about $30 million to $40 million for a conventional fleet, said George O'Leary, Tudor Pickering Holt & Co.'s managing director of oilfield services research.

Despite the costs, producers seem to believe that electric fracking is positive for the overall industry. On a recent visit with companies in Midland, Texas, Goldman Sachs research analysts found that some producers see half the industry's fleets becoming electric-frack fleets in three to four years, while some expect all fleets to become electric over the next 10 years.

Producers have the potential to save $10 billion to $20 billion per year, per frack spread, by switching to fuel gas rather than diesel for pressure pumping spreads, O'Leary said in a May 31 Weekly Video Digest.

"Across North America, there are more than 500 frack fleets totaling around 20 million horsepower, the majority of which are powered by trailer-mounted diesel engines," said Lorenzo Simonelli, chairman and CEO of Houston-based oilfield services major Baker Hughes, a GE company. "Each fleet can consume up to 7 million gallons of diesel annually, [emit] 70,000 metric tons of CO2 and require approximately 700 tanker truckloads of diesel to be supplied to site," he said during the company's April 30 earnings call.

Electric frack systems enable operators to switch from diesel-driven pumps to electric-powered pumps that run on modular gas turbine generating units consisting of a compressor module, combustor module and turbine module that are linked together by one or more shafts to form a single gas generator.

Feedstock would not be a problem; there is an extensive amount of natural gas available to fuel the electric fleets.

Flaring and venting of natural gas in the Permian Basin in Texas and New Mexico reached a new all-time high in the first quarter of 2019, averaging as much as 661 million cubic feet per day, Rystad Energy wrote in a June 4 report.

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Baker Hughes, along with other oilfield services and equipment providers, are developing electric-frack technology to utilize the wasted resources, and in turn are creating economic advantages for producers and pumpers.

Through its Turbomachinery and Process Solutions business, Baker Hughes provides the gas turbines that are used to create electricity to run pressure/frack pumps for hydraulic fracturing, a Baker Hughes spokesperson said in a June 11 email.

Oilfield services provider ProPetro Holding Corp., driven in part by customer demand, announced its intention to build two electric fleets using its DuraStim fracturing pumps. Incremental fleets are expected to be announced in 2020, Goldman Sachs analyst Angie Sedita said in a June 7 note.

These newer technologies result in less shaking, fewer mechanical failures and reduced downtime, and could save pressure pumpers between 50% and 75% on repair and maintenance costs that range between $10 million and $12 million annually, O'Leary said.

Oilfield services company ST9 Gas + Oil is working to improve the electric-frack system, engineering a new pump with 8,000 horsepower motors per trailer across two continuous-duty pumps designed to operate for the majority of the day. The pumps have multiple redundancies, which are duplications of critical components or functions in order to mitigate failure potential and increase unit efficiency, Tudor Pickering Holt said in a May 21 note.

As the industry works to improve the technology, the largest remaining hurdle is the extensive upfront capital cost, O'Leary said. Nonetheless, the overall savings for the pumper and the producer make the technology "very attractive."

"You will see a heavy dose of dollars flow into [the electric frack market] and [electric frack will] become an increasingly important piece of the hydrocarbon value chain," O'Leary said.