In the quest for sustainability and efficiency, the frac’ing industry stands at the dawn of a new era powered by technological innovation. Primary Vision has been tracking the latest developments regarding major frac companies and there are three groundbreaking technologies that are poised to reshape the landscape of frac’ing beyond 2024. This article intends to provide a brief overview of each technology and its progress and implementation in the industry.
Dual Fuel Systems Market Penetration
Before discussing the adaptation of Dual Fuel Systems and a shift to Tier 4 from Tier 2 standards, it is important to learn about the technologies themselves.
Dual fuel technology allows hydraulic fracturing engines to operate on a combination of both diesel and natural gas simultaneously. A key feature of dual fuel systems is their ability to switch seamlessly between diesel-only and dual fuel operations. This flexibility helps prevent disruptions and downtime while reducing the environmental footprint by utilizing natural gas, which emits fewer pollutants compared to diesel. It also helps in cost reduction, for instance, engines can reduce diesel use by as much as 55% to 70%, depending on the engine’s configuration and the quality of natural gas used.
The importance of dual fuel technology lies in its economic and environmental benefits. The reduced reliance on diesel fuel results in lower emissions, supporting the industry’s efforts to meet stringent environmental regulations and fulfill their Environmental, Social, and Governance (ESG) commitments. Reducing emissions not only leads to cost savings but also aligns with environmental objectives, compelling all stakeholders to actively pursue such initiatives. A winning trifecta for all of the players in the field.
Difference Between Tier 2 and Tier 4
Tier 2 and Tier 4 refer to EPA emissions standards for non-road diesel engines, including those used in frac jobs which are counted and forecasted each week by Primary Vision through its Frac Job Count. The standards are designed to reduce air pollutants harmful to human health and the environment. Tier 2 engines are earlier generation engines with less stringent emission requirements compared to Tier 4. They can replace up to 65% of diesel with natural gas when paired with a conversion kit from the same manufacturer, achieving substantial reductions in emissions and fuel costs. Tier 4 engines represent the latest standard, imposing the strictest limits on emissions of nitrogen oxides, non-methane hydrocarbons, particulate matter, and carbon monoxide. Tier 4 engines, especially when matched with manufacturer-specific dual fuel kits, can achieve up to 85% diesel replacement, offering the highest level of emission reduction and fuel cost savings.
For instance, JCB’s Tier 4 engines have been reported to deliver up to a 5% improvement in fuel efficiency compared to their Tier 2 counterparts but other estimates include efficiency gains of up to 15%. This increase is largely attributed to enhancements in engine design that optimize combustion and reduce fuel consumption. Similarly, Cummins has reported achieving fuel consumption savings of between 3% and 6% with their Tier 4 Final engines compared to earlier versions.
Industry analysis
The latest data on engine emissions standards reveals that the hydraulic fracturing industry is increasingly adopting more environmentally friendly technologies as 12% of frac spreads are electric powered (E-fleets), which use electric power to reduce emissions drastically. Moreover, dual fuel systems, which can operate on both diesel and natural gas, account for a significant 43% of the marketed frac spreads. This category includes Tier 4 Dual systems (20%) and Tier 2 Dual systems (23%).
The use of dual fuel systems has been growing significantly, with projections indicating a substantial increase in market size from 2023 to 2028. The dual fuel engine market is expected to expand by USD 3.09 billion during this period, at a compound annual growth rate (CAGR) of 14.51%.
The distinction between ‘Active’ and ‘Marketed’ frac spreads provides insights into operational strategy and market dynamics. ‘Active’ frac spreads are currently in use, while ‘Marketed’ spreads could be considered a strategic reserve that companies might activate or deactivate based on demand fluctuations or as a proactive measure against potential market changes.
Electric Frac Spread
Electric powered frac equipment (aka Electric Frac Spreads) are a promising technology that uses electric-powered equipment to perform frac jobs – a process traditionally done using diesel powered machines. There are many advantages over traditional frac’ing processes that includes lower fuel costs, a smaller environmental footprint and increased efficiency. There are also considerable savings in the form of repair and maintenance cost. For example, when we factor the maintenance cost, over a five year period an one electric frac spread can save around $15 million as compared to conventional diesel systems.
Data from Primary Vision’s Frac Supply gives us a good overview of the use of E-fracs in the U.S. since inception as can be observed from the image below there has been a gradual increase in electric spread adoption. Profrac after its acquisition of US Well Services operates 5 electric powered fleets and 13 dual-field Tier 4 fleets as per PVN’s estimates. The company says this technology has been able to reduce frac’ing related emissions by 60 percent and 89 percent emissions of nitrogen oxide. Evolution recently extended its “electric fracturing partnership” with Well Services as they achieved all their operational milestones in 2023 with a total of 6106 pumping hours in Ohio Utica Basin. This represents an up time of roughly three out of every four days available all year long.
The trend of adoption of electric frac spreads can be seen in other companies too. For instance, ProPetro continues to add to its electric fleets as the company had two FORCE e-frac fleets at the start of January 2024 and it plans to add two more in the coming months. Patterson UTI also aims to invest in 140,000 electric horsepower by mid of 2024.
Additionally, companies like Halliburton have developed all-electric fracturing solutions that demonstrate the capabilities of this technology. A project with Chesapeake Energy involving Halliburton’s Zeus™ 5000 horsepower electric pumping unit and VoltaGrid’s power generation system achieved a 32% reduction in emissions and applied over 25 megawatts of lower-carbon power generation.
This showcases the effectiveness of electric fracturing in reducing the emissions profile of frac jobs without compromising on reliability and performance. Such integrated systems, capable of grid power utilization, mark a pivotal step towards an environmentally conscious approach, reducing emissions by up to 45% compared to conventional Tier 2 diesel engines. HAL expects that well over half of their fleets will be electric in 2025 with all of these e-fleets on multiyear contracts generating full return of and return on capital during their initial contract terms.
Geothermal fracturing and AI
What is Geothermal Fracturing?
Geothermal fracturing is part of Enhanced Geothermal Systems (EGS) which means to tap into the heat from underground rocks that don’t naturally let water flow through them, scientists break or dissolve the rocks using water pressure, heat, or chemicals, creating pathways for water to carry the heat to the surface where it can be used for energy. Geothermal fracturing adapts techniques from the oil and gas industry, specifically hydraulic fracturing and horizontal drilling, to access geothermal energy.
This method involves injecting fluids into the Earth’s crust to fracture hot rock, creating pathways for water to circulate, heat up, and be returned to the surface as steam to generate electricity.
Why is it Important?
The significance of geothermal fracturing lies in its ability to provide a constant and reliable source of renewable energy. Unlike wind and solar, geothermal energy does not fluctuate based on weather conditions and has a minimal land footprint. It’s a clean energy solution that contributes to a diverse and stable energy grid, reducing dependency on fossil fuels and helping to meet climate goals
Have We Tried it Yet?
Geothermal fracturing has been tried and is currently in use. Innovations like hydraulic fracturing and horizontal drilling have been employed to unlock geothermal energy’s potential. In the U.S., projects like Utah’s FORGE (Frontier Observatory for Research in Geothermal Energy) and companies like Fervo Energy, which is a startup by Devon Energy, are using these techniques to create enhanced geothermal systems. FORGE, in particular, is a $220 million research project funded by the Energy Department aimed at developing the technology needed to make EGS a reality. Fervo has further raised $244 million and as one geothermal project in Nevada producing 3.5 megawatts of electricity and is working on a second project in Utah of 400 megawatt. It is expected that this second project will finish development in 2028.
What Can We Learn?
From the ongoing projects, we can learn about the potential for scaling geothermal energy production using EGS and the challenges it presents. We learn that the technology, while promising, is still expensive and the best resources are often located in challenging environments, such as on federal lands where regulatory reviews can be protracted. However, the ability to create geothermal reservoirs almost anywhere could vastly expand the availability of this clean energy source. The industry is also learning to manage risks such as induced seismicity from fracturing operations and the complexities of underground geology.
We have seen breakthroughs, such as FORGE’s success in sending water between two wells and Fervo’s 30-day test in Nevada that produced enough heat for electricity. These successes show that with further technology advancements and cost reductions, geothermal fracturing could become a significant part of the energy mix. There is an estimated potential to power the entire U.S. five times over with the energy in underground rocks when the technology moves to mainstream. The ongoing projects and research are critical in advancing our understanding and overcoming the technological and financial hurdles to make ESG a viable large-scale option for clean and reliable energy production.
Dual Fuel Systems, Electric Frac Spreads, and Geothermal Fracturing are some of the technologies that can help the oil industry to comply with the growing environmental standards yet still play an important part in the overall progress and growth of the society – as it has already done. As these technologies reduce environmental impacts along-with an increase in efficiency it will help the industry to align with Environmental, Social, and Governance (ESG) criteria.
Dual Fuel Systems are making significant strides in market penetration, Electric Frac Spreads continue to gain traction and Geothermal Fracturing is emerging as a reliable, renewable energy source that could potentially revolutionize our energy infrastructure, with projects like Utah’s FORGE exploring the capability to generate significant electricity from underground heat.
Collectively, these developments underscore a dynamic shift in the energy sector, emphasizing innovation and sustainability. The industry’s proactive adaptation to these technologies ensures its long-term viability and success in a rapidly changing global energy landscape. It highlights that the industry is ready to power the present and charge the future!
Additional Readings:
https://www.nytimes.com/2023/08/28/climate/geothermal-energy-projects.html
