Noble Energy moves toward mixed fleet of LNG-dedicated, dual-fuel rigs

Posted on 21 May 2013

By Katherine Scott, associate editor

Bryant Dear

Dual-fuel kits on drilling rigs provide flexibility and carry a lower conversion cost than LNG-dedicated rigs, Bryant Dear, Noble Energy, said at 2013 IADC Drilling Onshore Conference in Houston on 16 May. However, the cost savings for dual-fuel engines are still to be determined, he added.

After a pilot program initiated in early 2011 to compare the use of LNG versus diesel to power drilling rigs, Noble Energy now has four dual-fuel rigs and one LNG-dedicated rig operating in the DJ Basin and the Marcellus. “It’s going to cost you to convert your rig to LNG. There’s a price tag to it, but we see that price tag being well worth it,” Sean Howley, senior business analyst for Noble Energy, said in a presentation at the 2013 IADC Drilling Onshore Conference in Houston on 16 May. “We actually think it will pay off in two years,” he said of the LNG-dedicated rigs. “After that, it’s all savings.”

During the pilot program, Noble Energy gathered 12 months of operating data on three rigs – two that were LNG-dedicated  and one running on diesel. The goal was to demonstrate the operational and economic viability of displacing diesel and powering the majority of Noble’s rigs with LNG, Bryant Dear, a co-presenter with Mr Howley, explained. Mr Dear is a drilling engineer in the DJ Basin for Noble Energy.

After evaluating the use of field gas and CNG, Noble decided that LNG would be the best option due to its higher energy density and consistent quality. There were also multiple options for turnkey providers, Mr Howley explained.

Sean Howley

Sean Howley, Noble Energy, said at the conference on 16 May that his company is committed to using LNG for more operations going forward. Noble is currently building an LNG plant in Colorado to provide a closer fuel source.

Currently Noble has four fit-for-purpose dual-fuel rigs –Rigs 828 and 829 in the DJ Basin and Rigs 542 and 543 in the Marcellus, all from Precision Drilling. Although the cost savings that can be achieved for dual-fuel rigs are still “to be determined,” Mr Dear said, that is offset by a much lower conversion cost than LNG-dedicated rigs. Each of the four dual-fuel rigs is equipped with a GTI Altronics bi-fuel kit set up on three Caterpillar engines, he explained. “It’s too early to tell what our (fuel substitution) rates are, but we’re working to increase those as technology gets better and these systems get better… One thing we do know is you’ve got to displace as much diesel as possible (to achieve maximum cost savings).”

Mr Howley noted that Noble Energy’s commitment to LNG is such that the company is building an LNG plant in Weld County, Colo. “That’s going to bring our price much further down; it’s going to be an amazing option,” he continued. Not only does Noble plan to build a balanced portfolio of LNG-dedicated rigs and dual-fuel rigs, but the company is already expanding LNG applications to its frac fleet as well.

Noble currently has one frac engine running on a mix of LNG and diesel in the DJ Basin and plans to have another switch to dual fuels by June. “If we don’t need (the LNG) on a frac job, we can roll it over to one of our rigs. When we don’t need it on the rig, we can roll it over to a frac job. It provides some really nice synergies for us,” Mr Howley said.

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