Markets for use of natural gas as a transportation fuel and to power industrial equipment are poised to take off in the next few years, the head of Encana said in Houston on Tuesday.
"We at Encana believe that natural gas creates an unbeatable value proposition," Encana President and CEO Doug Suttles said at the World LNG Fuels conference. "No other fuel offers the same unique blend of abundant supply, improved environmental performance, cost efficiency and energy security.
"Abundant low-cost supplies have stabilized the market, making natural gas an increasingly attractive supply option for power generation, for manufacturing and for transportation," he said.
"The opportunity in front of us is huge, and we believe we've been at the forefront of that, as a gas producer and as a consumer and a service provider," he said.
Besides being one of the largest gas producers in North America, with an average output of about 3 Bcf/d, Encana is also a leading gas consumer, using the fuel to power its exploration-and-production efforts and to fill its transportation needs, Suttles said.
"In 2013 we converted over 50% of our rig fleet to run on natural gas and we also began using bi-fuel LNG frack spreads both here in the United States and in Canada," he said.
Encana was one of the first oil and gas producers to use gas in its drilling and fracking operations, pioneering the use of the equipment in the Jonah field of Wyoming, where it was employed as a way to comply with strict air emissions controls.
The per-rig cost savings the company sees from using gas-fired drilling and fracking equipment "ranges between $250,000 per year to upwards of $1.5 million per year if we're able to use lease gas produced on location," Suttles said. "In 2013, somewhere around $16 million in savings was generated across the company."
More recently, Encana has focused converting its light-duty truck fleet to natural gas.
"Today over 30% of our fleet runs on natural gas," he said.
The producer operates seven compressed natural gas fueling stations across its North American operations, which, in addition to fueling the company's CNG-fueled vehicles, are also open to the public.
The use of gas also provides potentially significant cost savings, compared with diesel or gasoline, when used as a fuel to power large industrial and mining equipment, and as a transportation fuel for large vehicles, as well as ships and locomotives, Suttles said.
The North American shale gas boom has eased concerns over the long-term adequacy of gas supplies.
"The reality is the supply is probably as robust or more robust than it's ever been," he said.
"No one predicts a natural gas price increase," he said. Most market observers predict that gas will trade in a range of $4/MMBtu to $6/MMBtu for the near future.
"This is equivalent to $25 to $35 per barrel of oil, which is significantly below the price of oil today," he said.
In addition to the economic benefits of using gas as a fuel for heavy-duty vehicles, there are also significant environmental rewards, Suttles said.
He cited research by the California Air Resources Board, which found that gas is the only proven alternative power source for vehicles weighing more than 13 tons.
"In 2012, US CO2 emissions dropped to their lowest level in 20 years, due to gas fundamentally displacing coal for power generation," Suttles said. "In 2010, CO2 emissions declined by 3.8%, while the economy grew by 2.8%. The emissions decline was the largest of any year in which the economy grew.
"Technological innovations and the drive for improvement have transformed North America to become a clean energy leader, rather than simply an energy consumer," he said.
