Fracking
has led to increased energy resource recovery all over the planet in recent
years and nowhere is that more evident than right here in the U.S., where
E&P activity in North Dakota’s Bakken and other shale plays has led to the
country retaking the top slot as the biggest oil producer on earth, surpassing
even Saudi Arabia and Russia. Q1 output this year climbed to more than 11M
bbls/day, with France’s IEA confirming Bank of America’s earlier analysis that
the U.S. is now the number one global producer of oil and natural gas liquids.
IEA projections further indicate that output will continue to rise through
2019, hitting around 13.1M bbls/day, creating substantial, growing
opportunities for companies who can serve the needs of the industry.
Unfortunately,
pipeline and LNG/CNG (liquid/compressed natural gas) logistical capacity has
not kept pace with the proliferation of fracking and horizontal drilling
technologies, leading to serious economic and environmental problems, as
stranded natural gas ends up flared right into the atmosphere for want of
either room in the gas pipelines, or expensive facilities required to render
the gas transportable to distant markets. The Wall Street Journal estimates
that in North Dakota alone this April, as much as 10.3B standard cubic feet of
gas was burned off at wellheads across the state, an even more alarming
statistic considering the amount of energy used by drilling and well
maintenance equipment.
Maxed out
pipelines, the steep costs and regulatory obstacles for building LNG plants,
lack of CNG hardware (not to mention associated risks) and the growing glut of
gas, means that as much as 30% of gas production is simply ending up wasted,
flared into the air by companies who could really use the addition to their
bottom line. DOE estimates for the roughly 50% of homes in America using natural
gas for heat this winter indicate a savings of only 5% will be experienced and
the latest EIA working natural gas inventory data shows we are 294B cubic feet
lower (3,840 Bcf total) than the same time last year, or around 310 Bcf off the
5-year average.
North
Dakota’s Industrial Commission (NDIC) has even moved to curb gas flaring with
stringent new regulations aimed at reducing flaring to 26% by Q4 this year, and
to as little as 10% by 2020. An initiative that tracks well with the World
Bank’s guidance from June, where they urged energy producers to stop flaring by
2030, citing the 5.3 trillion cubic feet of gas flared globally each year as
enough to power the continent of Africa and the fact that such flaring is a
seriously negligent environmental hazard to boot.
There is
tremendous earnings potential for companies who can step in and fill the gap
here, and one such company is Well Power (OTCQB: WPWR), which is developing a
proprietary Micro Refinery Unit (MRU) technology anticipated to process up to
250 Mcf gas flows, right at the wellhead, into electricity or Engineered Fuels™
(diluents, drop-in/no-sulfur diesel and pipeline-quality synthetic crude). More
importantly, and unlike many other players in the sector, WPWR’s MRU
technology, exclusively licensed from Canada-based ME Resource Corp., is a
scaled-down, modularly configurable and highly portable (skid-mounted) solution
that is perfect for moving from site to site.
Adaptability
of design is key in the often difficult operating environments E&Ps are known
for and the ability to generate energy or saleable secondary products directly
at the well site are a serious boon to individual well economics, making the
technology highly sought after, especially by smaller operators and
exploratory/wildcat operations. Site-specific configurability is a huge
advantage, with the ability to handle sweetening or dehydration, produce mixed
or separated product streams, tailor product specifications on-site, or even
derive co-gen/HVAC secondaries from the excess heat and pressure generated.
Key
advantages of the MRU technology, such as improved safety and single-vessel
design with extremely efficient, integrated heat exchange, and the ability to
do high yield (over 50% pentane plus or C5+), make the technology really stand
out among competitors. 100M cubic foot per day plus production capacity from
MRUs is music to the ears of Eagle Ford Shale operators in Texas, where WPWR
has already secured licensing, and the company has first right of refusal to
license the technology in other states as well. The MRU units will be made
available for outright purchase, but also through leasing and JV with WPWR,
making this technology even more attractive to smaller operators. In addition
to avoiding the likely crippling regulatory fees on flaring which are rapidly
emerging, the MRU technology also means individual wells can expect better
initial startup times, as they do not have to wait for tie-ins.
For more
information on Well Power, visit: www.wellpowerinc.com
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