BY JAY F. MARKS firstname.lastname@example.org
Published: May 6, 2011
BROKEN ARROW — High diesel and gasoline prices aren't good for most businesses. Broken Arrow's SourceOne Engine Equipment just might be the exception.
The family-owned company is applying technology commonly used in other industries to reduce fuel costs for oil and natural gas producers by using their own product.
Shane Janssen, the company's vice president of sales, said natural gas can replace up to 70 percent of the diesel fuel used by drilling rigs, which can consume an average of 1,500 gallons of diesel a day.
He said the technology is not new. Janssen and his father, Barry Janssen, started considering how it could be used on drilling rigs about three years ago when diesel prices spiked in Oklahoma at more than $4.60 a gallon.
“It hadn't really been done before,” the younger Janssen said. He said the technology is mostly used for stationary generators at hospitals, but it works on drilling rigs also. “It's the same kit,” he said. “It's just a different application.”
Using natural gas from the well site can reduce fuel costs by as much as $1 million a year because it is much cheaper than diesel, Janssen said. Engines fueled by natural gas and diesel do not lose any of the horsepower needed to power a drilling rig.
Janssen said he and his father have had to convince drilling companies and producers to try the technology, since drillers own the rigs and producers pay for the fuel on their projects.
“We have to educate a lot of people,” he said.
Janssen said many people in the oil and gas industry rely on time-tested methods to get the job done, but they are always interested in finding ways to save money.
“When they see how much money they can save, it's hard for them to not listen,” he said.
The system sold by SourceOne can be attached to existing engines on drilling rigs in about three to five days, Janssen said. The conversion can be done in the field, often as the rig is being moved between well sites.
He said SourceOne has outfitted 15 to 20 drilling rigs with the bi-fuel system, but its operations can be expanded to match demand as needed.
At least one of the Broken Arrow company's customers declined to discuss the system, citing the need to protect a competitive advantage.
Another company, Oklahoma City-based Chesapeake Energy Corp., declined to discuss the system being sold by SourceOne, but spokesman Jim Gipson said the company has multiple ongoing initiatives to use more natural gas in its operations, including its drilling fleet.
Janssen said the system also is greener than a traditional drilling rig.
“By removing up to 70 percent of the diesel that is being burned and replacing it with a cleaner natural gas, it can reduce some of the harmful emission being produced from the engine,” he said.
Reduced fuel use by drilling rigs makes it easier to operate in heavily populated areas as well.
“We can reduce the amount of trucks coming in and out of drilling sites by using a resource that doesn't have to be delivered,” Janssen said.
Read more: http://newsok.com/oklahoma-company-offering-diesel-alternative-for-drilling-rigs/article/3565207#ixzz1OWx4E66X
A bi-fuel system sold by Broken Arrow's SourceOne Engine Equipment allows drilling rigs to run on diesel and natural gas. Shane Janssen is the company's Vice President of Sales.
SourceOne Engine Equipment of Broken Arrow is working to help oil and natural gas producers and drilling companies save money by using natural gas to fuel drilling rigs.
Father-and-son firm offers alternative to diesel for drilling rigs
By D. Ray Tuttle
The Journal Record
Posted: 11:39 PM Friday, July 8, 2011
Shane Janssen of SourceOne Engine Equipment. (Photo by Rip Stell)
BROKEN ARROW – Barry and Shane Janssen have a way that drilling rigs can operate on natural gas coming out of the wellhead, with the potential to save drillers money. The Broken Arrow father-and-son-operated company, SourceOne Engine Equipment LLC, sells a bi-fuel system that allows drilling rigs to run on diesel or natural gas.
Barry Janssen launched the business five years ago. The elder Janssen had worked at a Tulsa Caterpillar dealer for 27 years, but was at a point where he wanted to start his own company.
The younger Janssen – who had worked at the local Caterpillar dealer as well for five years before leaving in 2009 – went to work for his dad as vice president of sales to develop new customers.
SourceOne is a manufacturers’ representative, offering 10 different lines. “When I came on, we started looking at the bi-fuel systems available and since we are located in the oil patch, the first place we thought to use them was on rig generators,” Shane Janssen said. “Come to find out that this idea hadn’t been done before and there were a lot of people interested in the technology and how it would work using wellhead gas.”
Shane Janssen didn’t think it would be a hard sell – then discovered differently. “I just thought wow, we can save drilling companies some serious money,’” Shane Janssen said. “They are going to have to buy this.”
But the younger Janssen figured out there was a big learning curve with the product. So, Shane Janssen has a lot of explaining to do to potential customers.
“I have to deal with both sides – the operators and the contractors,” Shane Janssen said. The contractors own the engines that run on diesel. And, typically, they are not interested in the savings from the fuel because they pass the fuel bill off to the operators. The operators save the money, but the engines don’t belong to them.
“It has to be a shared project between the operators and the contractors and it takes a lot of work to make a project like
this happens,” Shane Janssen said.
SourceOne was just beginning to gather some momentum in 2009 when the bottom dropped out on oil prices.
“Drilling halted and any new money for projects like ours was locked down tight,” Shane Janssen said. “Now that the price of diesel is high and drilling operations are in full swing, bi-fuel systems are on everyone’s mind.”
Customers typically substitute half their diesel fuel with natural gas, Shane Janssen said.
“A rig generally burns about 2,000 gallons per day. Every gallon of diesel we replace with 140 cubic feet of natural gas,” Shane Janssen said. “If we replace half the diesel with natural gas, we would burn 140 mcf of natural gas per day instead of 1,000 gallons of diesel.”
If a customer owns the gas well and only has to pay rights for the gas, they may pay as little as 50 cents per 1,000 cubic feet of gas, or mcf, he said.
An example of the savings would be if the spot price for 1,000 cubic feet is $4.25. Figuring 1,000 gallons of diesel is the equivalent of 140 mcf, that totals $595. Then, 1,000 gallons of diesel at $3.25 a gallon is $3,250. That gives the customer a savings of $2,655 daily – and that’s if the customer pays spot price for gas.
“A typical customer pays about half the price of spot gas and usually saves around $3,000 a day,” Shane Janssen said. “If that rig runs 80 percent of the year, then the customer will save more than $800,000 annually.”
SourceOne is a two-man operation that contracts installations through JT Power LLC. Jason Todd, owner of JT Power and a former Warren Caterpillar technician, started performing work for SourceOne three or four years ago.
“We are basically the selling arm for the companies we represent. Everything is direct-shipped to the customer, so it doesn’t take a lot of manpower to do what we do,” Shane Janssen said.
The fuel kits for a typical rig engine are about $30,000 each, Shane Janssen said. Including all the accessories that are required – oxidation catalysts, gas detection system, among others – the installation and setup usually costs about $150,000 per rig.