Is electric fracking the next big thing in oil and gas?

Electric fracking or E-Frac is a new technology used to power hydraulic fracturing equipment with electric turbines that utilize the excess natural gas from a drilling site instead of conventional diesel-powered engines. The actual process of hydraulic fracturing, which is a well-stimulation technique in which a hydraulically pressurized liquid is injected into the ground in order to create fractures in shale rocks to increase the flow of hydrocarbons from a well, stays the same.

The natural gas that powers these new turbines is gas that has no current use because of lack of pipeline infrastructure or market to sell it and is usually burnt as flare gas or vented. Both flaring and venting are a big source of greenhouse gas emissions. In some shale plays like the Permian, approximately 104 billion cubic feet of natural gas are wasted by flaring. Taking advantage of the excess resource makes electric fracking “environmentally friendlier” than the current diesel engines as producers are utilizing their own natural gas instead of burning it and its emissions are less polluting than diesel’s. That is a point in favor for e-frac.

Another advantage is a significant reduction in noise pollution which makes this technology most suited for areas with stricter noise restrictions. Some well services companies promise +/-85 db compared to +/-115 db of conventional frac fleets. Additionally, producers can save up to $350,000 per well over the traditional diesel-powered hydraulic fracking fleet as diesel is more expensive. Using a resource that is already onsite instead of transporting big trucks full of diesel makes it very convenient too. Electric fracking also has a smaller footprint, meaning less space occupied by pumpers and less personnel.

But all those advantages are one sided. The hydraulic fracturing equipment is provided by well service companies, not the producers who are the ones benefiting from all the savings. Well service companies have to invest in changing their diesel-powered fleets to natural gas turbines; an investment of around $60 million per fleet, much more expensive than the current ones.

Even though some service companies like Evolution Well Services, U.S. Well Services and Baker Hughes already have e-frac fleets, others like Halliburton are not so keen to make the change. It is not a good time to do it. Service companies are expected to go into recession next year if oil and gas prices do not go up. Investing in gas-powered fracking fleets would have made sense when prices were over $100 per barrel or if it goes up close to that price again. Therefore, it seems like a large deployment of electric fracking will have to wait until market conditions allow for it to happen without putting the burden in the already struggling well service companies.

Sources:

Oil Price, IHS Markit, Forbes

Featured image: Vinson & Elkins LLP