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
Let us hear your thoughts: Well Power Inc. Message Board
