E-Frac Fleets, A Future of Promise or Peril?
An interesting advancement in technology in the oilfield services space is the NOV Ideal e-frac fleet. NOV’s e-frac fleet is the first fully remote-operated frac fleet, and “centralizes knowledge to a single location on the well-pad and removes personnel from hazardous equipment and environments”. E-fleets uses gas-powered turbines to generate electricity to power the pressure pumping equipment. As a result, roughly half the amount of pumping units are needed on location versus a diesel-powered spread, and significant emissions and fuel savings are realized each time a well is completed.
“The Ideal fleet features 5,000-hp, electric-driven pumps that eliminate costs related to engines and transmissions, and the system has fewer pump bores to service, resulting in a cleaner, less maintenance-intensive frac fleet. “ Also, the fleet is “generator agnostic”, meaning it can be power by any type of capable power supply. It has posted some impressive stats compared to traditional hydraulic fracturing and other e-frac operations including:
- Up to 89% reduction in fuel cost
- Up to 42% reduction in over-the-road traffic.
- Up to 40% reduction in the cost of ownership by reducing costs such as headcount, rig-up time, and non-productive time.
The biggest barrier to the widespread adoption of e-fleets has been the cost, often pegged at 2x the cost of a traditional diesel-powered fleet. In mid-May 2020, when the average active number of frac spreads dipped below 50 – 15 were believed to be e-fleets, despite their high upfront costs compared to traditional frac fleets according to a study by the Journal of Petroleum Technology. “It’s amazing that [e-fleets] accounted for roughly 3% of the market about 2 months [before the oil price downturn] and now they’re potentially about 30%,” said Matt Johnson, the president, and chief executive of Primary Vision.
However, to take on the risk and cost of building out a new e-fleet, service companies typically required multi-year contracts from their operator clients, which may have contributed in large part to the higher proportion of e-fleets. That said, with innovation such as the Ideal e-frac fleet and a push towards ESG, the question becomes whether the e-fleet subset of oilfield services could hold a promising future, or if it will be hampered by the cash-strapped upstream oil and gas industry facing one of its worst supply-demand dynamics in modern history.