Another Energy Company Cutting Costs With Natural Gas

Another Energy Company Cutting Costs With Natural Gas

Make no mistake about it, natural gas is increasingly looking like the fuel of the future. Not only is cheap gas helping U.S. manufacturing regain competitiveness, it's also making inroads in the transportation sector, especially in the market for heavy-duty trucks.

And lately, a handful of U.S. energy exploration and production firms are using the cleaner-burning fuel to power their hydraulic fracturing operations, as well as some of their vehicles. Let's take a closer look.

EQT and Green Field power frack job with natural gas
Last week, EQT and Green Field Energy Services, announced the successful completion of a hydraulic fracturing job, or "frack" job, powered by 100% "field" natural gas supplied directly from a Marcellus gas well. The frack job was carried out on a Marcellus well operated by EQT.

The benefits of using natural gas to power hydraulic fracturing are well recognized. Not only does it give off fewer greenhouse gas emissions, but it can also lead to significant cost savings. Given that EQT's total operating expenses rose sequentially in the second quarter due to higher DD&A exploration costs, lease operating expenses, and production taxes, the company's efforts to use more natural gas in its operations should be viewed as a welcome development.

Since initiating a pilot program last year to convert its drilling rigs to run on natural gas, EQT has commissioned four to date, one of which uses liquefied natural gas and the other three natural gas produced on-site. But EQT and Green Field are just the latest entrants to a growing movement of energy companies using natural gas to power drilling rigs and vehicles in an effort to slash costs and emissions.

3 energy companies using more natural gas
Most recently, Cabot Oil & Gas became the first company to use "field" gas to fracture wells at its operations in the Marcellus shale in northeastern Pennsylvania. The company reckons that the duel-fuel engines, which are capable of burning either natural gas or diesel, could help it reduce its diesel usage by up to 70%, in addition to lowering emissions.

Then there's Apache , the Houston-based oil and gas producer that is, in many ways, a pioneer in using gas to power hydraulic fracturing jobs. In January this year, it became the first exploration and production company to power a full frack job using gas-burning engines at its Granite Wash operations in Oklahoma. The company estimates the transition could help it slash fuel costs by 60%.

Lastly, oil-field services provider Halliburton recently announced that it is adding nearly 100 new light-duty trucks that can run on either compressed natural gas or gasoline. The company projects the new trucks will be able to reduce emissions by as much as 90% when they run on CNG and could save roughly $5,100 in annual fuel costs per truck.

Increasing movement to natural gas
EQT and Green Field's latest joint effort illustrates how the shift toward natural gas continues to pick up steam. Along with similar efforts by Halliburton, Apache and Cabot, it marks a promising development for the entire oil and gas industry, which is working hard to reduce its environmental footprint.

With natural gas still significantly cheaper than alternatives such as diesel on an energy equivalent basis, I expect plenty more energy companies to transition toward natural gas-burning engines in the years ahead.

EQT, Cabot, Apache, and Halliburton aren't the only companies benefiting from the record natural gas production that's revolutionizing the United States' energy position. That's why the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.

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Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Halliburton. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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