Rickandtherig

In the Marcellus Shale, Cabot Oil & Gas Corporation is a leader in natural gas production, reporting an estimated 1.5 billion cubic feet (Bcf) per day.

The company is also establishing itself as an industry innovator – striving to find ways to use natural gas to fuel vehicles, power drilling equipment and supply completion operations.

As a result, Cabot is experiencing measurable economic and environmental savings which is creating a significant economy of scale few other operators can even come close to, all by utilizing natural gas it produces.

Let’s take a look at the evolution of Cabot’s natural gas usage.

Transportation

In 2013, Cabot opened a compressed natural gas (CNG) station in Springville Township – the heart of its Marcellus Shale operations. This station is the first of its kind in Susquehanna County where there is little distribution infrastructure.

The station is designed to support the company’s growing vehicle fleet and to supply remote drilling operations with natural gas via tube trailer if no pipeline is accessible nearby.

Cabot operates 60 bi-fuel vehicles; each capable of running on gasoline or CNG with a flip of a switch. The vehicles range in size from half-ton to full-ton and are comprised of Ford and Chevrolet models. Cabot’s bi-fuel vehicle can hold approximately 18 gasoline gallon equivalents (GGE) of CNG in addition to the standard fuel tank. Miles per gallon (MPG) while running on CNG is comparable to running on gasoline, averaging between 15 – 18 mpg.

At a price point approximately $1.35 for CNG per GGE compared to $3.49 for a gallon of gasoline, these bi-fuel vehicles are saving the company a significant amount of money. The use of cleaner-burning natural gas in the vehicles is also reducing the overall maintenance cost of the fleet.

Drilling Operations

Cabot is one of the first operators in the Marcellus to power its drilling rigs with natural gas. While other operators in the play have used liquefied natural gas (LNG), Cabot instead opted to use either line gas or CNG for its fuel needs. In a unique opportunity due to the quality of the gas Cabot produces – approximately 97% methane and less than 3% heavier hydrocarbons – it is possible to retrofit generators on the drilling rigs with dual-fuel technology that can use the gas.

Dual-fuel technology allows an engine to continue running on diesel while a computer scales back the fuel simultaneously replacing it with natural gas. As demand changes, the computer adjusts the ratio of diesel to natural gas accordingly. Dual-fuel technology can displace 30-40% of Cabot’s typical 2,000 gallons of diesel consumption per day: approximately 600 – 800 diesel gallon equivalents (DGE) at each drilling location equipped with the technology.

Cabot utilizes two different methods to supply the needed natural gas during drilling operations. The preferred method is to connect into existing pipelines whereby line gas is constantly supplied to the dual-fuel engines. The other method is the use of mobile tube trailers.  Cabot has built-in capabilities at its vehicle fueling station to compress natural gas into mobile tube trailers. Each tube trailer holds approximately 1000 DGE and can be moved to remote drilling locations where pipelines are not accessible as a source of supply.

Currently, Cabot has four drilling rigs capable of running dual-fuel. Given the price of diesel fuel, the logistics to move it and the preventive cost to guard against spills, diesel fuel represents a costly expense for the company. In an example of the savings, four wells were drilled using a dual-fuel drilling rig resulting in a savings of $144,012. These fuel costs were achieved during summer months; significantly higher savings will be seen in the winter due to increased use of the natural gas for heating.

In 2013, Cabot successfully drilled 19 wells on natural gas.

Completion Operations

During the summer of 2013, Cabot became the first operator in Northeast Pennsylvania to use dual-fuel engines during completion operations specifically during the hydraulic fracturing process. On a 10 well pad site with 170 stages, Baker Hughes provided a fleet of 14 pumps capable of running on a mixture of diesel fuel and field gas.

Baker Hughes estimates its pumps are capable displacing 70% of diesel fuel. During this particular completion operation, 110,000 gallons of diesel were offset. This is the equivalent of 16 resupply runs, reducing not only the cost for fuel and the environmental impact but the heavy logistics associated with completions operations.

And the environmental savings when utilizing natural gas are astounding: 70% less carbon monoxide (CO); 87% less non-methane organic gas (NMOG); 87% less nitrogen oxide (Nox); 25% less carbon dioxide (CO2).

In 2013, Cabot completed 422 hydraulic fracturing stages using natural gas.

Moving Forward

Since entering the Marcellus shale, Cabot has continually lowered its operational costs associated with natural gas development. This ongoing strategy has shield the company from historically low gas prices and diminishing returns impacting other operators in the play. Cabot’s decision to implement technology to utilize natural gas throughout its operation is a continuation of this core strategy allowing the company to cut costs further. Indirectly, the company is streamlining its operation in ways no other E&P competitor can, yet. The success Cabot is enjoying in the Marcellus has many asking: what next?

Additional bi-fuel vehicles are already on order for 2014 and the company is looking into acquiring larger, heavy duty trucks to further expand its CNG usage. Cabot is also evaluating the use of natural gas powered equipment like light towers, heaters and pumps to further offset its diesel consumption. Cabot estimates 110,000 gasoline gallon equivalents will be displaced in 2014 for these equipment types.

Cabot’s drilling operations are expected to displace approximately 1 million DGE in 2014 and the company is working towards utilization of CNG/line gas in future drilling operations.

Completion operations for the company in the coming year will also include more dual-fuel capable equipment. Cabot estimates displacement of 1.5 million DGE in 2014. In the future, Cabot plans to fully embrace the use of line gas in completion operations.