Encana, Ferus to Build LNG Plant in Western Canada

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wo of the top companies in natural gas production and fueling solutions have entered a joint venture to build a new facility in western Canada.

Natural gas producer Encana Corp. and liquefied natural gas (LNG) fueling service provider Ferus LNG Inc. have announced plans to build a 190,000 liters per day LNG production facility near Grande Prairie, Alberta, according to a statement released Dec. 18. The facility is strategically located near high levels of energy industry activity in northwestern Alberta and northeastern British Columbia. It is expected to be operational by the end of 2013 and will be among the first in Canada designed to produce high-quality LNG fuel specifically for high-horsepower (HHP) engines used in drilling rigs, pressure pumping services and heavy-duty highway and off-road trucks.

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Other HHP applications for this LNG supply include rail, mining and remote power generation. To support the entire LNG supply chain, Encana and Ferus LNG have also designed and are in the process of building specialized mobile storage and dispensing equipment.

“LNG is quickly becoming the fuel of choice for HHP engines in both highway and off-road applications in North America,” said Eric Marsh, executive vice president of Encana and senior vice president of the company’s USA Division. “This project demonstrates the increasing viability of LNG as a fuel alternative for a wide range of industries. With this new LNG plant, Encana and Ferus LNG are meeting a growing market demand by helping diesel consumers in northern and western Canada make the switch to cleaner-burning natural gas to both save costs and reduce their emissions.”

This joint venture project is unique in that it brings together two experienced and complementary parties that, in addition to enabling business partners and customers to switch to LNG, have committed to using the fuel for their own internal consumption. In 2011 alone, Encana saved $12 million in fuel costs by using natural gas instead of diesel in drilling rigs and company trucks and is on track to exceed this figure in 2012.

“Ferus Inc. understands the economic and environmental benefits of using LNG as an alternative fuel, and as such, not only are we operating the first two LNG tractors in Alberta, we plan to convert our entire truck fleet over the next five years,” said Richard Brown, president and CEO of Ferus. “We are very pleased to be working with Encana to help develop the natural gas engine market by ensuring fuel supply and operating the necessary equipment to safely and reliably get the product to our customers’ site.”

The LNG fuel from this new facility can be used to power any drilling rigs and pressure pumpers in the area that have converted to natural gas, regardless of the play type, according to Blaire Lancaster, who represents government and regulatory affairs for Ferus’ LNG Division. The fuel will also be marketed to potential customers who understand the benefits of running off natural gas and are interested in converting but first need a level of comfort around security of proximal supply. With advances in engine technology, the companies will also be targeting large mining trucks in the nearby oil sands.

“While our initial focus is the robust western Canadian energy industry, Ferus LNG and Encana are building out the necessary infrastructure to service other high horsepower applications such as rail locomotives mining, on-road heavy-duty transportation,” Lancaster said. “We will continue to integrate additional LNG-fueled tractors into our own fleet, as well as providing fuel for remote power generation and marine vessels.” Lancaster added that Ferus LNG has partnered with Encana to supply and coordinate the fueling needs of CN Rail for its LNG pilot project from Edmonton to Fort McMurray.

The LNG is being produced to supply the natural gas engine market in Canada and the United States. Proximal fuel supply is critical in the development of this nascent market, and as such, Ferus LNG will strategically build plants where demand warrants.

Because natural gas liquefies at minus-258 F and must be kept at that low temperature to remain a liquid, transporting it requires specialized double-wall, vacuum insulated transports and storage tanks that would not be realistic or economical to reproduce in pipeline form, Lancaster said.

“In addition to building and operating LNG production facilities, Ferus LNG is also building specialized transport and storage equipment, operated by our highly-trained personnel, to ensure a seamless transition from diesel to natural gas for our customers,” she said.

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