Natural gas is steadily becoming a realistic source of energy for the future. More companies are adopting it as it is slowly seeping into the mainstream consciousness. America has an abundant amount of the stuff, with much of it coming from the process known as fracking. Certain companies are in line to benefit from the upcoming natural gas boom in more ways than one.
"Don't get high on your own supply"
These were unheeded words of wisdom spoken to Al Pacino in the film Scarface (and maybe this is a bad analogy), but this is similar to what some energy companies are doing, by taking advantage of the cheap natural gas they are pulling in and using it to fuel the same equipment that they use to get it. That's why soon this message may not apply to energy companies such as Halliburton Company (NYSE:HAL) and Apache Corporation (NYSE:APA). Both companies plan to use their own supply for power and fuel, by aligning themselves with Caterpillar Inc. (NYSE:CAT) to create a dual-fuel technology (one that mixes natural gas and diesel) to power equipment used in the hydraulic fracturing process, or "fracking." Apache's Executive Vice president Mike Bahorich chimed in on the situation, explaining that:
“Taking advantage of natural gas can lead to cost savings for the industry and for energy consumers, new jobs and a cleaner environment – it’s time for us to use this resource to its full potential. We commend Halliburton for its ability to take on our dual-fuel challenge and quickly make it possible.”
Why is all of this significant? In what will be one of the largest dual-fuel projects ever conducted in the gas and oil industry, the three companies plan to have 12 dual-fuel pumps (24,000 horsepower) powered by using what is being called "Dynamic Gas Blending" engines, retrofitted to burn conditioned field gas. Apache plans to eventually shift to using field gas as a power source. Caterpillar is charged with the task of converting Halliburton’s new Q-10 pumps to dual fuel, allowing the company to utilize both compressed natural gas and liquid natural gas in their dual-fuel system. Caterpillar will be supplying bifuel kits that allow pumping truck engines to run on diesel when idling and on natural gas when throttled up for pumping, as well.
Apache also plans to implement permanently mobile frac spreads using natural gas to power a fleet at its Granite Wash operations. By using these frac spreads to fracture about 140 wells in 2013, the company is estimating they may be able to cut diesel costs by up to 60%. Apache also sought out Halliburton, as well as Schlumberger Limited. (NYSE:SLB), to help. Compressed natural gas is cheaper, but liquid natural gas is more efficient to transport. While Schlumberger is expected to help supply CNG, Halliburton will be supplying LNG, through their invented system that quickly connects natural gas to pumping engines and makes it a viable, usable fuel source for Apache. It's becoming quite clear that companies such as Halliburton and Apache will be able to save tremendously on fuel costs by utilizing natural gas going into the future.
And they are not alone...