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Cabot Oil & Gas (NYSE: COG ) , a leading independent natural gas producer with significant operations in the Marcellus, recently announced that it is using natural gas from the Marcellus to fracture wells via an innovative dual-fuel technology.
The use of this exciting technology, which uses engines that operate on a mixture of both natural gas and diesel, may help reduce the use of diesel -- the traditional fuel of choice to operate hydraulic fracturing equipment -- by as much as 70%.
Cabot's efforts mark the first time "field" gas has been used in northeastern Pennsylvania for this purpose. In developing and implementing the dual-fuel technology, the Houston-based company partnered with FTS International, a leading provider of well completion services for the oil and gas industry, and Caterpillar Global Petroleum, the oil and gas division of manufacturing giant Caterpillar (NYSE: CAT ) .
How the technology works and its benefits
In powering its hydraulic fracturing operations with natural gas, Cabot used a mobile pressure pumping unit provided by FTSI, which was then retrofitted with a dynamic gas blending kit from Caterpillar. This system allows diesel to be substituted with natural gas during high-pressure pumping operations and is compatible with field gas, compressed natural gas, and liquefied natural gas.
"Cabot is continually searching for ways to utilize cutting-edge, environmentally friendly technology during our operations," said Cabot President and CEO Dan O. Dinges. "We are already converting our vehicle fleet and currently have a drilling rig using natural gas as well, so the next step is to utilize the technology on a hydraulic fracturing site."
According to a statement released by the company, dual-fuel technology offers several benefits, including "(1) Reduced air emissions for a cleaner environment, due to a reduction in diesel usage, (2) reduced truck traffic when field gas at or near the well site is used due to a reduction in the transportation of diesel fuel to site, and (3) reduced costs, as natural gas can be a less expensive fuel option than diesel, providing potential cost savings for the industry and for energy consumers."
With its foray into dual-fuel technology, Cabot joins the likes of Apache (NYSE: APA ) , which in January became the first energy exploration and production company to power a full hydraulic fracturing operation using natural gas-burning engines at its Granite Wash operations in Oklahoma. By switching to natural gas, Apache said it expects to reduce fuel costs by roughly 60%, while also lowering emissions.
Apache and Cabot's successful efforts in using cleaner-burning natural gas are a promising development for the oil and gas industry, which is constantly under fire for its alleged neglect of the environment. Not only is using natural gas a cost-effective solution for hydraulic fracturing operations, but it is an innovative way to utilize the nation's abundant supply of the fuel, while also minimizing greenhouse gas emissions.
With natural gas demand expected to grow sharply over the next few years, Chesapeake Energy, as the nation's second-largest gas producer, stands to benefit. Though the company has allocated the majority of its capital this year toward drilling in liquids-rich plays, natural gas still makes up more than three-quarters of the company's production mix. Will the company be able to ramp up oil production and survive until natural gas prices finally recover? Or will it languish under the weight of its heavy debt load? To answer that question and to learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy, and, as a bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.