Show all What Does Efrac Need to Flourish? 1 1 1 rigzone.com | Rigzone January 28, 2021 Matthew V. Veazey, Rigzone Staff Earlier this month, Halliburton (NYSE: HAL) reported what it contends is the industry’s first successful electric grid-powered hydraulic fracturing operation. Rigzone’s article on the Efrac development generated considerable interest from readers, including questions about the feasibility of powering frac jobs from the grid. Rigzone has contacted a trio of individuals well-versed in the hydraulic fracturing sector to provide additional insights about opportunities and challenges linked to Efrac. Read on for their perspectives. Rigzone: Why would an operator want to go the Efrac rather than conventional route? Matt Johnson, CEO, Primary Vision – Frac Spread Count: Simply put, one of the largest line items on a frac job is fuel. If an operator can reduce or omit fuel costs alongside similar/improved production results, they’ll choose that option every time. Other considerations such as safety – delivering and distributing that fuel on a well pad as an example – and the push toward a greener environment will also be drivers. The majority of operators decided years ago that being vertically integrated – owning their own frac equipment/spreads – didn’t work at scale. Since the technology is still new and cost-prohibitive, operators are choosing conventional spreads 40-1. It is important to remember that continuity caused a lot of problems in the early stages of E-fracing. Operators weren’t convinced they could get the same level of uptime as they would with conventional spreads so, in some cases, the cost savings were brushed aside to move the production needle forward. Rigzone: How far along has Efrac gotten in terms of deployment? JB Sowyrda, Managing Partner, CSD Energy Advisors: I would say not terribly far. The cost to build the Efrac fleets require significant capital and incredible expertise. The vast majority of Efrac companies are struggling and unwilling to step out from the traditional programs that “got them there” or are having a difficult time justifying spending capital dollars on a new fleet. Evolution Well Services stands out because they are not just ahead of the curve with regard to providing Efrac solutions, they have seemingly set the pace and are lapping the field. Nick Ruppelt, Director of Sales and Marketing, Evolution Well Services (EWS): The focus on electric frac quickly shifted from purely fuel savings to a blend of fuel savings, emissions reductions, and efficiency gains. Since deploying in 2016, the EWS technology has pumped over 24,000 stages across seven electric fleets and quickly proved to not only be the environmentally conscious method to complete wells, but also financially sustainable. Rigzone: Based on your encounters with oil and gas producers, how would you describe the level of interest in Efrac vs. alternatives? Ruppelt: Interest in electric frac has never been higher due to the integration of the ESG (environmental, sustainability, and corporate governance) focus into investment decisions within the upstream sector. There are very few technologies that enable a meaningful reduction in greenhouse gas emissions while also capturing the economic benefits of drastically lower fuel costs. Electric frac has almost unanimously become the primarily oilfield services (OFS) and exploration and production sector technology focus, but the obstacle for the industry is navigating the challenging investment cycle while also trying to expand innovation. Sowyrda: With the traditional fracing methods coming under fire from a regulatory standpoint, the Efrac model is gaining tremendous momentum. We work with oil and gas producers on finding solutions to minimize their opex through creative structures and product designs and it was that expertise that has brought producers to our door, asking about the benefits of Efrac or alternative grid power solutions. From an ESG standpoint, the answer is clear: burning field gas to power your fracing operation instead of diesel reduces your traditional carbon dioxide emissions by 30 percent with the cost differential to perform the job all but negligible in today’s market. From a grid power solution standpoint, the answer is much more complicated and nuanced. Rigzone: How does Efrac look in terms of market size and penetration? Johnson: The Efrac market is still relatively small. We track under 20 spreads in the United States that use electricity as its primary power source, led by U.S. Well Services (NASDAQ: USWS), Evolution, and now Halliburton. This represents under 10 percent of all the available frac supply in the United States. Rigzone: What are questions/concerns you’re hearing about Efrac, and how well are pressure pumpers responding? Ruppelt: There is a bifurcation happening within the electric frac industry and it centers around experience. The OFS companies like EWS that have years of electric frac operating experience are seeing great success while new entrants have an uphill battle to select a technology path and convince E&Ps of the viability without a track history or years of proven research and development. Regardless, we do believe there will be a strong convergence around single turbine-driven electric fracturing spreads due to the financial and operational sustainability versus competitive technologies. Rigzone: Looking ahead, what needs to happen before Efrac can become ubiquitous among operators? Sowyrda: We may be seeing our last days of your traditional diesel frac model. I’d bet the leading frac companies today won’t be looking to buy more diesel engines but instead will have their sights set to turbine technology and the Efrac model moving forward. Ruppelt: A primary driver for electric frac is cost reduction. To maximize cost reduction and introduce lean principles, E&Ps are focusing on the transition to field gas to power the entire upstream ecosystem. As companies complete this transformation, electrifying completions, drilling, and production becomes the primary way to economically and efficiently develop and acreage position. From a financial perspective, the industry needs to regain the confidence of the investor community and prove that we can produce hydrocarbons in a clean and financially sustainable manner. This renewed focus on investor returns and ESG should help guide the industry through this challenging period and introduce a new investment cycle in next-generation technologies like electric hydraulic fracturing. Johnson: Everyone has been super-patient in this arena (operator ubiquity for Efrac). We look for a blend of solutions to be available to operators in limited quantities until the frac market improves. The motivations need to change. This discussion has been about cost and uptime, but an aging frac supply will need to be refreshed at some point – presenting its own set of challenges. Will it be because of cost savings and continued growth in U.S. shale? Will it be because the ESG movement takes full grip at a major and they lead the way by saying they’ll only use Efrac solutions starting in XX/YYYY? Will a major team up with a pumper to provide exclusivity to a particular technology? Will Wall Street see the light and empower pumpers to put orders in? Lots of these questions are in play as we move into increased demand in 2022. Rigzone: Would you like to add any comments? Sowyrda: I strongly believe that the oilfield will be leading the way on energy innovation in the years to come. I expect to see the majority of high-energy consumers choose to avoid the traditional models of consuming electricity but instead work with groups like CSD to elect to go electric over diesel, gas to electric compression, or choose to build their own private distribution network that’s connected to their own generation resource and powered by their own onsite fuel. Renewables such as behind-the-meter wind and solar will become more prevalent, along with alternative carbon capture techniques just as Efrac is gaining momentum today. Click Here to View Original Article. Recent News Next Generation Pressure Pumping – Inside O&G Featured Article Around Partnership w/ CNX August 31, 2021 Evolution Well Services Extends Scope of Operations to West Virginia July 8, 2021 Evolution Well Services Achieves New Electric Frac Operational Milestone June 15, 2021 Are electrically powered fleets the future of fracking? April 5, 2021 What Does Efrac Need to Flourish? 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