As of August this year, U.S. production of crude
oil and lease condensate exceeded a whopping 8.6M barrels per day, a figure not
seen in nearly three decades according to the EIA. More than half that sum came
from the top three basins alone, with the Permian Basin in Texas and New Mexico
doing 1.66M bbls/day, the Eagle Ford Shale in the Western Gulf Basin of
southeastern Texas doing 1.57M bbls/day, and the still rapidly advancing Bakken
Shale in the Williston Basin of (primarily) North Dakota doing about 1.13M
bbls/day.
Improved drilling efficiency has been a driving
force behind rising production outputs, with a single rig able to drill four
wells these days in a fraction of the time, compared to just one well per rig
only six years ago. Drillers are able to successfully tap more of the target
formation(s) as well, using advancements like multiple hydraulic fracturing
stages. Even in tight formations like the Eagle Ford, where EIA data indicates
a sharp rise in initial production rates over the last five years, the
combination of technological advancements now in play industry-wide are
translating into significantly improved overall output on a per well basis over
the lifetime of each well.
One of the drawbacks to all this production
spiking however is the flaring of excess natural gas at the wellhead, due in
large part to how much our national pipeline and CNG/LNG infrastructural
capacities have lagged behind. This problem is exacerbated by the baseline
logistics of development too, with isolated wells that are difficult to tie-in
to existing infrastructure being a consistent problem. In the Eagle Ford Shale
alone during the first seven months of this year, over 20B cubic feet of
natural gas was wasted, burnt off straight into the atmosphere, a figure exceeding
the total for all of 2012. Such staggering waste and pollution unfortunately
has not led to massive public outcry for improved offtake infrastructure,
instead crippling regulations have slowly been creeping their way into the
industry cost structure, gradually passing the price point increases right back
to the consumer.
One of the companies at the forefront of the drive
to solve this dilemma is Well Power, Inc. (OTCQB: WPWR), which has secured
exclusive licensing rights the state of Texas to a proprietary, patented Micro
Refinery Unit (MRU) based solution, and the company has the right of first
refusal to license this emergent technology in the other states as well. This
MRU solution is an assembly of already proven commercial technologies, combined
with a proprietary micro-reactor system, which can rapidly process hydrocarbon
and perform the necessary catalytic reactions to efficiently produce “green
fuels” like diluents, drop-in (no-sulphur) diesel and pipeline-quality
synthetic crude (Engineered Fuels™). The system can even be used to generate
clean electricity for use by equipment, directly at the well-site, turning
otherwise wasted gas, including stranded, shut-in, flared and vented gas (which
is increasingly under the crosshairs of regulators who want to jack up permit
costs or bar operations on emissions grounds outrightly), into increased profit
margins.
Moreover, the MRU is extremely flexible and
modular in its design, as well as being easily transportable (skid-mounted),
scalable and customizable, making it the perfect fit for remote well or wildcat
operations. The MRU skid can be tailored to meet site-specific requirements as
well, with features like a two or three phase inlet separator for easily
parting production fluids, the ability to handle custom sweetening or
dehydration needs, or even do cogeneration and HVAC using the excess heat and
pressure. Yet the system can still handle high yield throughput, easily taking
on raw natural gas flows up to 250 Mcf. The MRU technology also allows operators
to jumpstart production without having to wait for tie-ins, and there are
increasingly attractive logistical benefits to simply selling liquid
hydrocarbons (instead of natural gas) as well.
Crude production in Texas for 2014 is on par with
the whole of last year so far according to the latest RRC (Railroad Commission
of Texas) data. With figures indicating Texas’ crude production this year is
just 34M bbls shy of 2013 totals, not even counting November and December, and
given that natural gas production is on-track to hit parity with last year,
such a solution as the one being developed by WPWR for gas flaring is now in
higher demand than ever before, and for an increasing variety of reasons. On
the global scale, over 40% of the world’s natural gas reserves (over 3k
trillion cubic feet) are classified as stranded, giving Well Power an
exceptionally large, target-rich playing field longer-term, one which is
roughly equivalent to the combined oil reserves of the whole of Saudi Arabia.
To get a closer look at Well Power, visit
www.wellpowerinc.com
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