Noble Energy moves toward mixed fleet of LNG-dedicated, dual-fuel rigs

By Katherine Scott, associate editor

Dual-fuel kits on drilling rigs provide flexibility and carry a lower conversion cost than LNG-dedicated rigs, Bryant Dear, Noble Energy, said at 2013 IADC Drilling Onshore Conference in Houston on 16 May. However, the cost savings for dual-fuel engines are still to be determined, he added.

After a pilot program initiated in early 2011 to compare the use of LNG versus diesel to power drilling rigs, Noble Energy now has four dual-fuel rigs and one LNG-dedicated rig operating in the DJ Basin and the Marcellus. “It’s going to cost you to convert your rig to LNG. There’s a price tag to it, but we see that price tag being well worth it,” Sean Howley, senior business analyst for Noble Energy, said in a presentation at the 2013 IADC Drilling Onshore Conference in Houston on 16 May. “We actually think it will pay off in two years,” he said of the LNG-dedicated rigs. “After that, it’s all savings.”

During the pilot program, Noble Energy gathered 12 months of operating data on three rigs – two that were LNG-dedicated  and one running on diesel. The goal was to demonstrate the operational and economic viability of displacing diesel and powering the majority of Noble’s rigs with LNG, Bryant Dear, a co-presenter with Mr Howley, explained. Mr Dear is a drilling engineer in the DJ Basin for Noble Energy.

After evaluating the use of field gas and CNG, Noble decided that LNG would be the best option due to its higher energy density and consistent quality. There were also multiple options for turnkey providers, Mr Howley explained.

Sean Howley, Noble Energy, said at the conference on 16 May that his company is committed to using LNG for more operations going forward. Noble is currently building an LNG plant in Colorado to provide a closer fuel source.

Currently Noble has four fit-for-purpose dual-fuel rigs –Rigs 828 and 829 in the DJ Basin and Rigs 542 and 543 in the Marcellus, all from Precision Drilling. Although the cost savings that can be achieved for dual-fuel rigs are still “to be determined,” Mr Dear said, that is offset by a much lower conversion cost than LNG-dedicated rigs. Each of the four dual-fuel rigs is equipped with a GTI Altronics bi-fuel kit set up on three Caterpillar engines, he explained. “It’s too early to tell what our (fuel substitution) rates are, but we’re working to increase those as technology gets better and these systems get better… One thing we do know is you’ve got to displace as much diesel as possible (to achieve maximum cost savings).”

Mr Howley noted that Noble Energy’s commitment to LNG is such that the company is building an LNG plant in Weld County, Colo. “That’s going to bring our price much further down; it’s going to be an amazing option,” he continued. Not only does Noble plan to build a balanced portfolio of LNG-dedicated rigs and dual-fuel rigs, but the company is already expanding LNG applications to its frac fleet as well.

Noble currently has one frac engine running on a mix of LNG and diesel in the DJ Basin and plans to have another switch to dual fuels by June. “If we don’t need (the LNG) on a frac job, we can roll it over to one of our rigs. When we don’t need it on the rig, we can roll it over to a frac job. It provides some really nice synergies for us,” Mr Howley said.

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Chesapeake taps Anadarko senior VP as new CEO

Doug Lawler will join Chesapeake Energy as CEO and a member of it Board of Directors in June.

Robert Douglas (“Doug”) Lawler will join Chesapeake Energy as its CEO and a member of the Board of Directors, effective 17 June, the company announced this week. Mr Lawler currently serves as senior vice president, international and deepwater operations at Anadarko Petroleum. He is a petroleum engineer with 25 years of experience in the upstream exploration and production industry, with significant expertise in asset development, operations management and engineering, as well as experience in corporate and strategic planning.

With Mr Lawler assuming the CEO position, the office of the chairman will be discontinued, and Archie W. Dunham, Steven C. Dixon and Domenic J. Dell’Osso Jr. will continue to serve in their roles as non-executive chairman of the board; executive vice president of operations and geosciences and chief operating officer; and executive vice president and chief financial officer, respectively.

“Doug is a talented and proven executive with the ideal skill set to lead Chesapeake forward and capitalize fully on our world-class assets. Throughout his 25 years in the upstream E&P industry, Doug has earned a reputation as a highly engaged and knowledgeable leader who delivers superior operational performance and capital efficiency. The board is confident that Doug’s deep technical upstream and engineering expertise as well as his strategic and financial skills will serve Chesapeake well,” Mr Dunham said.

Mr Lawler commented: “I am honored and excited to be joining Chesapeake Energy with its unparalleled asset portfolio, focused management team and very talented and dedicated employees. There is significant value in Chesapeake’s asset base and the growth potential of the company is tremendous. I look forward to accelerating the momentum that the Chesapeake team has built to generate value for our shareholders in the years ahead.”

During Mr Lawler’s 25 years at Anadarko and Kerr-McGee, he served in multiple engineering and leadership positions within a diverse geographic portfolio, including US onshore, deepwater Gulf of Mexico and international assets. He was most recently senior vice president, international and deepwater operations and a member of Anadarko’s Executive Committee. In this capacity, he was responsible for new and existing developments, including the company’s multi-train LNG project in Mozambique. He previously served as Anadarko’s vice president, operations for the Southern and Appalachia Region, where he directed the development of four major shale plays: Eagle Ford, Marcellus, Haynesville and Permian Bone Spring/Avalon. Prior to that, he held positions of increasing responsibility within Anadarko’s operations, business planning and analysis departments, including vice president, corporate planning. Mr Lawler began his career in 1988 at Kerr-McGee, which was acquired by Anadarko in 2006.

Mr Lawler is a member of the Society of Petroleum Engineers, the World Affairs Council and The Houston Museum of Natural Science. He holds a bachelor of science degree in petroleum engineering from the Colorado School of Mines and an MBA from Rice University.

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