With little to no available capacity in pipelines and low natural gas prices, particularly in the Permian Basin where gas often is traded for below zero, operators are either choosing to or have no choice but to flare off greater amounts of associated gas. According to The World Bank, gas flaring rose about 48% in the U.S. from 2017 to 2018. In 2018 global gas flaring amounted to 145 Bcm (5 Tcf), equivalent to the total annual gas consumption of Central and South America, The World Bank reported.
Meanwhile, Denver’s Crusoe Energy Systems is looking to put the associated gas that would otherwise be flared to good use. The company has created its Digital Flare Mitigation (DFM) service that converts natural gas into electricity, which subsequently powers containerized data center units.
“We take raw gas—we can also take lean gas—and we run it into generators that generate electricity,” said Cully Cavness, president and co founder at Crusoe. “We set up a situation where we take the gas that was being flared and we do something beneficial with it right on site.” The DFM service is set up downstream of the separator, treatment devices and heaters where a manifold is installed into the gas line, diverting the stream to Crusoe’s electricity generation system.
That electricity then powers onsite data centers that house customized electrical networking, telecommunications equipment and wellsite digital operations. According to the company, the U.S. Environmental Protection Agency-certified DFM system’s electricity generation process comes with built-in emissions control technology and catalytic converters that can reduce NOx, carbon monoxide and methane emissions compared to flare exhaust streams. The company stated in a press release that compared to flaring, Crusoe’s process achieves more than 99% reductions in emissions of volatile organic compounds.
“Crusoe’s technology harnesses otherwise wasted energy for growing industries that require energy-intensive computing, such as blockchain and artificial intelligence,” Crusoe co-founder and CEO Chase Lochmiller stated in a press release.
To date, the company has received more than $5 million in venture capital. The investor group includes Bain Capital Ventures and Founders Fund Pathfinder as well as Wicklow Capital, Winklevoss Capital and Dragonfly Capital.
Deploying the system
Cavness said the DFM systems have been deployed in the Bakken and Powder River basins and will soon be operating in the Denver Julesburg Basin. He explained that installing the system does not require permitting for pipeline or power lines.
“There’s no heavy negotiation, no right-of-way process [and] no financing process like you would have with a big pipeline project,” Cavness said. “These deploy very quickly.”
He said that for a recent project in the Bakken, Crusoe’s DFM system was set up on a Monday and was in operation the following Thursday.
“So it’s just a few days to get one of these systems up and running,” he said. “They were designed to be really portable and modular.”
Cavness said the units could scale up to handle large amounts of natural gas, or small amounts, depending on the needs of the operator.
“We have built units capable of handling more than 1 million cubic feet per day [28,316 cu. m/d],” he said. “We have made proposals on systems that can handle multiple millions of cubic feet per day. We have a goal internally of being at 30 million cubic feet per day [849,505 cu. m/d] within two years, and it could be much more than that.”
The Crusoe system could process “most or almost all of the gas away from the flare,” Cavness said.
“We’ve got sites now that are at multiwell pads where the system will take basically all of the flare gas and reduce flaring as much as is practically possible,” he said.
In addition to a challenging market and limited takeaway capacity for natural gas, regulatory statutes also can limit how much associated gas companies can flare. Many companies with an eye on environmental issues also have established internal policies designed to mitigate natural gas flaring. Cavness explained that addressing these challenges is part of where Crusoe’s DFM system provides value creation.
“We’ve worked with a lot of specialists to educate us on what our clients are facing so that we can best help them solve their needs,” Cavness said. “In every state, there’s a rule in place that limits the amount of gas that can be flared, and there are penalties for exceeding that. In order to not exceed those limits, the well might be choked back to a couple of hundred barrels per day, or even 100 barrels per day, or in some cases completely shut off.”
The DFM service helps ensure operators do not run the risk of curtailing their oil production to meet flaring regulations, he said.
In addition to addressing the challenge of flared gas, Crusoe’s DFM also provides power generation to meet the increasing need of electricity for computing power.
“We can address this huge ballooning demand for computing power, which is coming out of all the different areas of tech innovation, whether it is for cryptocurrency and blockchain or artificial intelligence and machine learning, which are incredibly energy-intensive,” Cavness said.
Have a story idea for Tech Watch? This feature highlights leading-edge technology that has the potential to eventually address real-life upstream challenges. Submit your story ideas to Group Managing Editor Jo Ann Davy at firstname.lastname@example.org
Bill Marko, managing director at Jefferies, says he sees permanent changes to the U.S. shale business resulting from the destruction to oil demand over the past several months.
Hart Energy and Oil and Gas Investor will recognize the accomplishments of 25 Influential Women in Energy alongside this year’s Pinnacle Award recipient Dr. Sharon L. Wood, dean of the Cockrell School of Engineering at The University of Texas at Austin.
Fresh off the end to proration discussions in Texas, CEO Matt Gallagher shares how Parsley Energy is responding to demand loss plus the Permian shale producer’s focus on technology and ESG.