The
average American is currently getting crushed by rising energy prices, yet oil
and gas companies in the rapidly developing South Texas, Eagle Ford Shale alone
have flared off billions of cubic feet of gas since the 2009 rush began. Enough
gas, according to a recent report by the San Antonio Express-News, to feed
every home in the San Antonio-area for a year (around 2.7M people as of 2013).
Of course, this flaring also produces unwanted pollution; in the Eagle Ford
Shale alone this is as much as the amount produced by roughly six refineries.
A
lack of pipeline infrastructure, combined with punishing EPA regulations that
make it almost impossible to get approval, as well as a similar regulatory
nightmare when it comes to building a typically $10B or so LNG liquefaction
plant, means operators don’t have much choice but to burn off excess gas at the
wellhead. We could even be shipping this gas to Europe in the form of LNG for a
nice profit and cooling off mounting tensions with Russia, but the DOE is dragging
its feet on the 44 or more LNG export applications currently in the hopper and
just getting initial clearance from the FERC is a massive hurdle for most
operators, with costs running upwards of $100M.
The
Ceres study from 2013 shows as much as $1B of gas is being wasted in North
Dakota alone each year and earlier World Bank data from 2011 indicated that an
amount equal to as much as 25% of all annual U.S. gas consumption was being
flared off wastefully (all domestic flaring sources combined). The environmental
impact has the greens up in arms and the critical waste of energy and capital
is a soft spot for die-hard industrialists. Without a real, positive momentum
shift in the underlying methodology here, everyone walks away from the table
with a black eye and we end up passing the costs on to every consumer in the
nation to boot, while our foreign policy traction suffers accordingly.
A
JV between General Electric (NYSE:GE) and Ferus Natural Gas Fuels, alongside
Norway-based E&P Statoil (NYSE:STO), recently announced a plan to expand
the existing flare gas capture pilot program for STO’s operations in North
Dakota, capturing enough otherwise wasted/pollutive gas via the expansion to
power as many as six rigs and one frac fleet. The first phase of a more complete
commercial adoption of the GE/Ferus JV Last Mile™ Fueling Solution, this
expansion looks to capture as much as 5 MMcf per day by the end of the year and
represents the realization of a new paradigm for the industry, pairing up GE’s
own CNG In A Box™ technology with the logistical strength of Ferus’ E&P
footprint.
One
of the more attractive plays in this rapidly emerging E&P support industry
is development-stage company, Well Power, Inc. (OTCQB: WPWR), whose licensed
Micro-Refinery Unit (MRU) technology represents a proprietary, mobile solution
for processing shut-in and flared gas into both electrical power and Engineered
Fuels™ on-site. This MRU technology represents a highly competitive position in
the space and WPWR, despite being a very small company compared to GE or STO,
is currently working hard to proliferate the technology in Texas where they are
already fully-licensed, while looking to expand into other states (where WPWR
enjoys first right of refusal to the MRU technology) like North Dakota.
A
highly mobile MRU that can be moved from well to well is a game-changer for
smaller operators in particular, many of whom face increasing scrutiny over
their flaring emissions and for whom steep fines or fees could mean going
under. Killing two birds with one stone, MRU technology turns a problem into
profit and its widespread proliferation will gradually improve overall energy
efficiency in the U.S. economy itself. WPWR is positioned to act as a
technology provider to E&P’s and the Eagle Ford Shale is a superb place to
be starting, with EIA data indicating some 1.429M barrels of crude oil and
other liquids produced per day in July (up 24k bbls/day from June), with around
7.1 Bcf of gas, the Eagle Ford Shale is the fastest growing shale field in the
U.S. production-wise.
Oil
and gas production in the Eagle Ford Shale was recently analyzed by the
University of Texas at San Antonio’s (UTSA) Institute for Economic Development,
leading to the conclusion that within a 21-county area around the play, as many
as 155k full-time equivalent jobs are supported, with $4.4B coming in to local
and state coffers as a result of activity last year. The projection for 2023
from the UTSA is that over 196k jobs will be supported by regional energy
recovery activities and that the $72B impact generated in the core 15-county
region will likely rise by a similar factor over the same time period.
Get
a closer look at Well Power Inc. by visiting www.wellpowerinc.com
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