Calgary鈥� Millennium Stimulation Services Ltd. has launched their new liquefied natural gas-based frac system, and will be deploying it to the field likely before this edition hits the stands.
鈥淐yclone Z鈥� is the name of their system of an all-hydrocarbon frac, fracking with frack oil and using ENG, their trademarked term for energized natural gas, according to Mike Heier, president and CEO of Millennium.
Water or oil can be energized with natural gas. 鈥淚t becomes really, really high pressure natural gas.鈥�
(A detailed story on the actual processed can be found on Page A20)
Using this system minimizes water or frac oil usage, as well as frac flowbacks and flaring.
鈥淥ur first cryogenic pump, we just finished all the mechanical and electrical work and we will be doing tests on it next week,鈥� he said on Sept. 10. 鈥淲e鈥檒l be doing an actual high-pressure LNG test in about two weeks time and it will be going out into the field for a number of clients.鈥�
鈥淲e don鈥檛 have anything scheduled in B.C., yet. We have a number of clients that want to do some work with it in northern Alberta, central Alberta,鈥� he said.
About four clients with programs and specific jobs are lined up. 鈥淎s soon as we鈥檙e ready to go, they鈥檙e ready to go,鈥� he said. 鈥淭hey want to be the first to pump the stuff, and we鈥檙e happy to do that for them.
There are many more clients interested who don鈥檛 want to be first, but are interested nonetheless.
鈥淚t鈥檚 a lot safer than propane, in fact, dramatically safer than propane,鈥� Heier said. He noted a competitor has been using propane, and the physical properties 鈥� heavier or lighter than air, flame front travel, all tend in favour of using natural gas.
Natural gas is also a prime commodity, whereas propane is a derivative, he added. It鈥檚 also less expensive.
鈥淲e鈥檙e going out to basically replace water and we鈥檙e dealing with what we would call the wholesale level of pricing of natural gas. We don鈥檛 want any players in the middle, so eventually you鈥檒l see Millennium operate LNG plants,鈥� Heier said.
Currently, they have two sources of LNG they are working with, one in North Dakota, another in central Alberta. But the volumes available are meagre. So they intend on building their own facilities to minimize the middlemen, making it affordable for the clients. This is in keeping with Millennium鈥檚 tendency towards vertical integration of its operations.
鈥淵ou鈥檙e seeing us move as fast as possible into a midstream model. As soon as we start pumping any LNG volumes, the largest part of the invoice is the product we鈥檙e selling, the LNG itself. We鈥檙e a midstream company that happens to own some transportation pumping gas.鈥�
鈥淲e are trying to do a capital raise right now. We have a term-sheet in house right now that we鈥檙e dealing with. We have just under $19 million to build our first cryogenic rolling stock 鈥� three Cyclone 700s. They鈥檙e 700 standard cubic metre per minute high pressure cryogenic pumps. There鈥檚 nothing like it out there.鈥�
These pumps are much like commonplace frac pumps, except that there are two pumps on a unit instead of one, using the same large engine. 鈥淲e鈥檙e basically taking a 50 litre frac engine, a 2,500 horsepower Cummins.鈥�
It will provide 2,000-plus horsepower cryogenic delivery during a frac.
While Millennium has two frac spreads of their own, they will be willing to provide this ENG service on frac jobs where another frac operator is doing the main job.
鈥淲e鈥檙e happy to do that,鈥� he said. 鈥淭here鈥檚 very little barriers to entry to get into the frac industry these days. Aside from just doing a better job than your competitor, eventually everybody catches up to one another. One big barrier to entry is a patented process. The three key takeaway pieces are we鈥檙e giving the client a better well. He鈥檚 getting more production for the dollars spent, or he鈥檚 getting the same production for less dollars, or some combination thereof; an improvement in economics. We get into significantly minimize or replace water use in a frac. And we can minimize or totally eliminate post-completion frac flaring. Those are the three key things we can do.
When energizing a frac with nitrogen or CO2, the result can鈥檛 be put into a sales line, so it has to be flare off initially, he noted.
It depends on the size of the frac, but they can replace up to 80 per cent of the total fluid in the well.
鈥淭he reason guys use water in a frac instead of frac oil in the first place is just cost. Once you鈥檝e gotten rid of that much water, a lot of guys go back to frac oil, so now you鈥檝e got a totally waterless frac,鈥� he said. 鈥淚t typically does a better job in the reservoir than water does.鈥�
Most frac oils are in the heavy gasoline to kerosene to diesel.
They might be doing some jobs in Saskatchewan and North Dakota. There鈥檚 even interest in using this technology in Texas.
Once they get up to scale with their equipment, they will soon 鈥渂e on the hook for one or two LNG plants,鈥� he noted.
With their three cryopumpers there will be five transports and seven or eight site storage units called 鈥渒ings.鈥�
A small scale job, it could be 5,000 to 10,000 gallons of LNG. A larger one could require a couple hundred thousand gallons. A single U.S.-style transport can take about 10,000 gallons at a time.
The last time Pipeline News spoke to Heier, Millennium was in the middle of a fund raise.
鈥淚t just got hung. We put a little bit do bed, and the market turtled. So we pulled it back from the table and went out to some 鈥榮trategics鈥� on global basis on our LNG patents. They鈥檙e the ones who鈥檝e come to the table and said 鈥榃e like what you鈥檙e doing, but we want the rights in other countries to go chase this.鈥欌��
He was reluctant to use names just yet, but they were very large foreign companies, he noted. 鈥淭hey developed an immediate interest in what we鈥檙e doing.鈥�
It鈥檚 tight, financially, right now, but they will have the equipment and doing a small equity raise.
High oil-to-gas ratio oils, including the Bakken are among the candidates for this type of frac. Heier added that re-fracs are another possibility as one of the larger applications.
鈥淲e鈥檙e getting applications thrown at us,鈥� he said.
