Washington (Platts)--27Aug2012/103 pm EDT/1703 GMT

Oil and natural gas companies that operate in US shale plays use enormous amounts of water, sometimes requiring upwards of 5 million gallons to frack a single well. And there are significant costs and operational requirements that come with using so much water, such as trucking it to remote job sites, mixing it with various chemicals, and later removing those chemicals from the oil and gas that fracked wells produce.

But a New York-based energy-technology company called Expansion Energy says it has invented a type of fracking that will allow oil and gas firms to avoid all of those water-related costs and operational hassles. David Vandor and Jeremy Dockter, Expansion's co-founders, say their process will allow shale drillers to frack oil and gas wells without using a single drop of water. Moreover, the process does not require drillers to use other types of fracking liquids that are sometimes used instead of water, such as liquid propane or liquid nitrogen, Vandor and Dockter say.

"We think we have a better mousetrap," said Vandor, who is seeking to patent the liquids-free fracking technology under a fast-track patenting program that the Obama administration launched in 2010 for environmentally friendly energy technologies.

The process, called Vandor's Refrigerated Gas Extraction, or VRGE, uses ordinary gas to fracture shale formations and to deliver sand or other so-called proppants to hold open the fissures in the rock. The gas comes from the targeted hydrocarbon formation itself, following an initial "charge" of gas or liquefied natural gas delivered to the well site to begin the process.

Using cryogenic technology, the gas is then processed into something that Expansion calls "cold compressed natural gas," or CCNG. Vandor says CCNG is similar to LNG in that it can be pumped to very high pressures. But he says CCNG is "not a true liquid" because Expansion's technology cools it to between minus 160 to minus 170 degrees Fahrenheit -- substantially warmer than LNG, which is typically cooled to minus 250 or minus 260 F. Vandor's patent application (No. 2012/0118566) makes that claim in detail, saying CCNG fluids "are not true liquids," but that they are "viewed as liquids by pumps."

Expansion Energy has already secured multiple patents for a related invention that it says can economically produce between 2,000 to 50,000 gallons of CCNG or LNG per day -- a much smaller scale than other systems. Vandor says the 2,000 gal/day version of that technology, dubbed the VX Cycle, can fit inside a standard, 52-foot-long, rubber-tired trailer that can easily be towed to fracking sites. Vandor says drillers who use the patented VX Cycle device in conjunction with the patent-pending VRGE system can effectively frack oil and gas wells using no liquids whatsoever. He said other key aspects of the fracking process remain the same, such as using sand, ceramic pellets or other materials as proppants to hold open the newly created cracks in the shale.

"Fissures are created and held open without use of water or other liquids, and the proppant is delivered without water or other liquids," Vandor wrote in his patent application.

No foreign chemicals to remove

Vandor says fracking with natural gas instead of water, liquid propane or other fluids has a host of advantages that will save drillers time and money. Among these, he said, is that drillers do not have to separate out the foreign chemicals that inevitably get mixed into the oil and gas that fracked wells produce. Vandor acknowledged that GasFrac Energy Services, a Calgary-based oilfield-services company, has made headlines with its patented approach of fracking wells with gel-like propane, and that other firms are using liquid carbon dioxide or other substances.

But he said the problem with all of those approaches is that the fracking fluids contaminate the very oil and gas that drillers are going after. Even fracking with water is problematic in that regard, he said, because drillers typically add chemicals to lessen the water's impact on the shale formation, among other things.

"We take the position that what you want to send down to the formation that you want to fracture is not water, not diesel fuel, not all kinds of other chemicals, because every one of those other liquids tends to contaminate the natural gas that you are tying to release," Vandor said. "So if you send down CO2, when the natural gas finally comes up out of the ground, it's CO2-laden. And the same with the nitrogen -- those are precisely the things you don't want in the natural gas" or oil.

GasFrac, the Canadian propane-fracking company, recently announced at an industry conference in Denver that it had recovered and sold much of the propane that it used in a fracking operation in Colorado. But Zeke Zeringue, the company's president and CEO, also said that because propane is a highly flammable substance that could potentially explode, his company must conduct its fracking operations by remote control, with no workers in the immediate vicinity of the well.

Expansion Energy's Dockter, who handles the business side of his firm's operations, called that another advantage of VRGE. He said workers can be onsite to operate Expansion's VRGE system, which he likened to "LNG dispensing units that are all over the world."

Fewer trucks required

Dockter said another major advantage to fracking with gas is that it is readily available at shale plays such as the Bakken in North Dakota, and thus does not need to be trucked to remote job sites as propane, nitrogen and even water must be. Dockter said all the gas that drillers need to frack a new well with Expansion's VRGE system can be easily obtained from an adjacent well or a nearby pipeline.

"With GasFrac -- you've got to truck in all of that propane," he said. "The technical merit could be there, -- but it's a very large expense and an additional complication logistically that we can avoid using with the VRGE approach."

Indeed, Dockter argued that eliminating the need to hire trucks to transport water or other fracking liquids to and from job sites is one of the primary reasons that Expansion Energy's approach will be less expensive than conventional fracking.

"We predict that it will be much less costly than today's hydraulic fracturing [because] we avoid the majority of all that truck traffic that is required to bring in water and to take away water, as well as avoiding the cost of the chemicals that are added to the water beforehand," he said. "We can shrink the footprint of the fracking operation by a dramatic percentage."

Dockter and Vandor also noted that liquid-free fracking would diminish the need for wastewater disposal wells, which some studies have found can cause earthquakes -- a conclusion that the oil and gas industry vigorously denies.

"The earthquake issue is not so much about the fracking, but about the disposal wells," Vandor said. "You certainly don't want to end up with a very large disposal problem" by using water or other liquids for fracking.

Vandor said Expansion has estimated how much gas it would take to frack typical oil and gas wells, but he said he's not yet ready to release that proprietary information to the public. But Vandor did say that it's a "small fraction" of the equivalent amount of water that's normally used in fracking.

"People talk about millions of gallons of water, and it's a much smaller amount of natural gas," he said.

Vandor and Dockter both argued that their system will be cheaper than conventional fracking, in part because drillers will no longer need to truck liquids back and forth. But they said the capital costs of their mobile CCNG plant and associated equipment will not be prohibitively expensive, either. For example, a mobile plant capable of producing 2,000 gallons of CCNG per day would probably cost "well under $3 million," Vandor said.

"That's a small, small fraction of all of the costs of trucks bringing in water, the chemicals and all the cleanup," he said.

Dockter noted that a driller could move its mobile CCNG plant from frack site to frack site, or it could leave it in one location that's particularly rich in natural gas liquids, which currently fetch much higher prices than dry gas. Using the plant's deep refrigeration ability to separate out those gas liquids would be a good way to "get your money back pretty quickly," he said.

Dockter and Vandor said they expect to sign a licensing agreement for the mobile VX Cycle CCNG plant part of their operation in October. They said they cannot yet say who is going to license the technology, other than it is a "big company" that already provides equipment to the oil and gas industry globally.

"We're not trying to be the next Schlumberger here," said Dockter, referring to the giant Houston-based oilfield-services company. "But we would like to license this technology to the likes of Schlumberger and others who do completion services and fracking, or producers, depending on how it all works out."

Vandor said the patent for Expansion's liquids-free fracking system may be issued by the end of the year.

--Brian Hansen, brian_hansen@platts.com

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