VRGE TM Overview. Patented Non-Hydraulic Fracturing Technology for Unconventional Oil & Gas Production. Expansion Energy LLC.

Transcription

1 VRGE TM Overview Patented Non-Hydraulic Fracturing Technology for Unconventional Oil & Gas Production

2 Shale Gas & Shale Oil Revolution» Technology-enabled, economic production of Shale Gas & Shale Oil has dramatically increased global output & recoverable reserves Especially in North America including Marcellus, Barnett, Haynesville, Fayetteville and other shale gas plays Energy independence is now plausible for the U.S year supply of Gas + increased Oil production Other global shale gas regions will follow soon China, Australia, Argentina, Brazil, South Africa, Poland, UK, etc. Rapid expansion of Bakken Shale oil play made North Dakota the #2 oil-producing state in 2012 Eagle Ford (TX), Niobrara (CO, WY, NE) and other U.S. shale oil regions are also rapidly developing» Made possible by technological advances in hydraulic fracturing + horizontal/directional drilling Source: US Dept. of Energy Energy Information Administration VRGE -- Non-Hydraulic Fracturing Technology 2

3 North American Shale Oil & Shale Gas Plays Reliant on Fracking VRGE -- Non-Hydraulic Fracturing Technology 3

4 Major Shale Gas Basins A Global Opportunity Technically recoverable shale gas reserves (32 countries) = 6,622 TCF > 100 years of Supply Source: US Dept. of Energy Energy Information Administration VRGE -- Non-Hydraulic Fracturing Technology 4

5 But Hydraulic Fracturing is Under Threat» from regulators, policy-makers, litigation, environmental groups and the public in the U.S.» Virtually continuous media scrutiny» Many believe chemicals & fluid additives used for hydraulic fracturing threaten groundwater & health» Concerns over water consumption up to 5 million gallons per well Scarcity of water in some regions is constraining the number of wells that can be drilled» Truck traffic & road wear (up to 500 water truck deliveries + > 200 wastewater truck trips per well)» Air emission concerns such as VOCs, benzene, formaldehyde, NOx» France banned hydraulic fracturing before it even began; Spain and others also considering bans» Specific examples: EPA s Pavilion, WY investigation + other studies to determine effects of hydraulic fracturing on groundwater EPA is developing stricter standards that fracking wastewater must meet before going to a treatment plant Environmentalists are pressuring EPA to regulate fracking water disposal wells as hazardous (Class I wells) Disposal wells are now being blamed for small earthquakes in some regions (e.g., Ohio) Congressional investigations into the effects of hydraulic fracturing fluids on groundwater The FRAC Act introduced in Congress would require regulation of hydraulic fracturing under the fed SDWA Many state legislatures & regulators are moving toward stricter regulations on hydraulic fracturing New York, New Jersey & Maryland have de facto moratoriums on hydraulic fracturing due to potential risks US Centers for Disease Control (CDC) is beginning to investigate toxicity of fracking chemicals Hydraulic fracturing-related litigation is increasing VRGE -- Non-Hydraulic Fracturing Technology 5

6 The Solution: VRGE TM A Non-Hydraulic Fracturing Technology» A unique, patented Expansion Energy technology (US Patent # 8,342,246) available for license» VRGE TM (pronounced VeRGE ) = Vandor s Refrigerated Gas Extraction technology For extraction of Natural Gas (NG), NG Condensates & Crude Oil from shale, sandstone & other tight formations» A dry fracturing technology that replaces hydraulic fracturing» Requires virtually no water and avoids the need to dispose of large volumes of fracking wastewater» Because virtually no water is used, chemical/fluid additives used for hydraulic fracturing are avoided Some of those chemicals are deemed harmful/hazardous by regulators, politicians, environmentalist & the public» VRGE relies on the utilization of deep refrigeration (cryogenics) + energy-efficient compression Both are accomplished with a single (mobile) cryogenic plant located at the well site see Slide 11 - VX TM Cycle» The fracturing medium for VRGE is natural gas from nearby wells or from the targeted formation itself The cryogenic (VX Cycle) plant + cryogenic pumps produce high-pressure CNG The NG used by VRGE eventually resurfaces and can be sold to the market or used for further VRGE fracturing» Uses a proprietary, non-toxic, foam-based proppant delivery system» The cryogenic plant can remain on site to produce LNG fuel for drilling rigs, frac pumps, trucks, etc.» Refrigeration from the cryogenic plant can also be used to separate NGLs from the NG stream On-site extraction of: propane / ethane / butane / isobutane / pentane» Pre-fracking steps drilling, perforation, etc. are the same as for hydraulically fractured wells VRGE -- Non-Hydraulic Fracturing Technology 6

7 Fracturing Issues Avoided by Not Fracking with Water» Use of water is the root cause of hydraulic fracturing s main drawbacks & public concerns» The main reason chemicals and fluid additives are used for hydraulic fracturing is to counteract the negative effects of water, such as: Swelling of the underground formation (e.g., shale) Surface tension of water which constrains the flow of oil & gas Fluid viscosity issues» Disposal of contaminated wastewater in underground wells or above-ground pits Fracking chemicals/fluid additives cause concerns about groundwater quality & human health Insufficient number of wastewater treatment plants equipped to treat fracking wastewater Disposing large volumes of wastewater underground can cause geologic disturbances» Consumption of large volumes of water causing concern for policy-makers & the public» Scarcity of water in some regions may limit the number of wells that can be drilled» The majority of fracking-related truck traffic is for water & wastewater transport Highway safety concerns Road wear / road re-construction costs Virtually eliminating the use of water avoids most of fracking s political/regulatory threats. VRGE -- Non-Hydraulic Fracturing Technology 7

8 How VRGE Works A Metacritical TM Technology» VRGE uses a dense, cryogenic non-liquid fluid phase of NG that Expansion Energy calls Metacritical TM Metacritical TM NG ( Meta-NG ) is natural gas above its critical pressure & below its critical temperature Metacritical TM natural gas is synonymous with cold compressed natural gas ( CCNG TM ) Ideally, Meta-NG is produced at the well site a balance of refrigeration & compression Optimally, the Meta-NG plant is a VX TM Cycle LNG/CCNG plant (see Slide 11)» Natural gas is both the fracturing medium + part of a proprietary, non-toxic proppant delivery system Little or no water is sent down-hole to the well bore NG used to make the Meta-NG comes from the targeted formation itself or from a nearby well(s)» Meta-NG is nearly as dense as a liquid and thus can be pumped like a liquid with relatively little energy» Extracted oil, NG and/or NG condensates evacuate the well bore the same way they exit a hydraulically fractured well» After initial fracturing, the on-site VX TM Cycle plant can either be moved to a new well or can remain at the original well site to: Produce truckable LNG (e.g., from stranded wells) or cold, dense NG (to increase pipeline take-away capacity) Extract NGLs from the NG stream Knock out CO2, N2 and water from the NG stream NG clean-up VRGE -- Non-Hydraulic Fracturing Technology 8

9 VRGE Process Steps 1. Natural gas is supplied from a nearby well(s) or from the targeted formation itself 2. NG is converted to CCNG TM (Meta-NG) by an on-site cryogenic plant such as the VX TM Cycle 3. The CCNG is pumped to high pressure with a cryogenic pump 4. CCNG is then warmed & expanded by waste heat from the CCNG plant to make high-pressure CNG 5. The high-pressure CNG is then blended with a proprietary, non-toxic, proppant-carrying foam 6. The energized warm, high-pressure CNG+foam+proppant is sent down-hole to the well bore 7. The high-pressure CNG+foam creates, extends and holds open fissures in the underground formation, and also carries proppant into those fissures 8. Pressure is then reduced, leaving proppant to hold open the fissures, thus liberating oil and/or NG The process is repeated for each stage of fracking to be completed per well (similar to stages of hydraulic fracturing) Optional Bonus Feature Thermal Shock The CNG+foam+proppant can be sent down-hole cold (e.g., -20 F) to shock the warm formation, making it brittle and creating/extending fissures VRGE -- Non-Hydraulic Fracturing Technology 9

10 VRGE Process Schematic Proppant Storage Proppant Hopper/Blender (skid- or trailer-mounted) Non-Toxic Foaming Fluid Heat Exchanger (waste heat from CCNG plant) Cryogenic CCNG Pump CCNG Plant e.g., VX Cycle (skid- or trailer-mounted) Truck delivery of LNG and/or Oil to market High-Pressure CNG + Foam + Proppant LNG/CCNG Storage Tank (can be mobile) NG pipeline to market Oil- and/or Gas-Bearing Formation e.g., shale (~5,000-10,000 ft. sub-surface) Extracted Oil and/or Gas VRGE -- Non-Hydraulic Fracturing Technology 10

11 Optimal Technology Combination: VRGE TM + VX TM Cycle» Two Expansion Energy technologies VRGE + VX Cycle are highly complementary» The VX Cycle is an ultra-small-scale LNG/CCNG production plant as low as 6,000 gal/day» VX is the best choice for cost-effectively producing LNG/CCNG on-site at small-scale» All VX Cycle plants < 100,000 GPD are manufactured by Dresser-Rand Co. (Houston, TX)» The VX Cycle is: Energy-efficient 70% to 85% NG conversion efficiency Compact and mobile can be skid-mounted, truck/trailer-mounted or containerized Affordably priced Low-cost to operate Able to be fully automated for off-site control Manufactured using only off-the-shelf components Durable and long-lasting, with few moving parts ( > 20 years useful lifetime) Provides refrigeration for extraction of NGLs propane/ethane/butane/isobutane/pentane» VX produces dense LNG/CCNG that can be stored in on-site tanks LNG can be trucked to nearby pipelines, then re-gasified Can provide LNG fuel for nearby drilling rigs, frac spreads, trucks and construction equipment» VX boosts pipeline capacity by providing a more dense (colder) NG product VRGE -- Non-Hydraulic Fracturing Technology 11

12 VRGE s Environmental & Safety Advantages» Virtually eliminates the use of water a precious resource that is scarce in many regions Lack of water has constrained oil & gas production/drilling in certain regions» Needs no chemical additives to counteract the effects of water Reduces threats to groundwater / public health / worker health» No contaminated fracking waste streams Only normal produced water from the underground formation needs disposal» Eliminates the need for transport/treatment/disposal of fracking wastewater & chemicals» Reduces the need for water trucks and reduces the number of compression trucks/trailers Reduced fuel consumption Reduced diesel exhaust (from truck engines & diesel compressors) Reduced road dust an air quality/emissions issue» Reduced truck traffic = improved highway safety (a major concern in producing regions)» Smaller well sites & well pads» Reduced noise levels» VRGE s on-site LNG/CCNG plant allows capture & sale of associated gas (instead of flaring) More energy-efficient & resource-efficient than hydraulic fracturing. VRGE greatly reduces political & regulatory threats! VRGE -- Non-Hydraulic Fracturing Technology 12

13 VRGE s Economic Advantages» Greater oil & gas production (See next slide.)» Lower well costs vs. hydraulic fracturing many fewer trucks/deliveries + less equipment» Virtually eliminates costs for water consumption & transport» Virtually eliminates costs for transport, treatment & disposal of fracturing wastewater» Eliminates the need for new (or upgraded) wastewater treatment plants» Reduces the need for new disposal wells» Substantially reduces costs for chemical/fluid additives» Reduced truck traffic = less need for road repairs/expansions a key issue in oil & gas basins» Smaller well sites & well pads reduces well construction costs» VRGE s on-site CCNG plant can produce LNG for additional revenues» VRGE s on-site CCNG plant can separate NGLs from the NG stream for additional revenues» VRGE s on-site CCNG plant can be used for re-fracs (re-completions)» Far less energy is consumed for VRGE vs. hydraulic fracturing = lower energy costs» The NG used by VRGE for fracturing eventually resurfaces and is sold to the market VRGE s capital costs & operating costs are far lower than hydraulic fracturing s costs! VRGE -- Non-Hydraulic Fracturing Technology 13

14 VRGE s Well Performance & Efficacy Advantages» Oil-bearing & gas-bearing formations do not like water (from hydraulic fracturing) Water causes swelling of shales + creates surface tension that restricts the flow of oil & gas Chemicals/fluids are used in hydraulic fracturing to reduce swelling + weaken surface tension VRGE avoids this drawback by virtually eliminating the use of water» Greater oil & gas production e.g., from use of gas-energized fracturing fluid Wells fracked with CO2- or N2-energized foams perform better than hydraulically fractured wells Higher production + shallower decline curves Can also reduce the amount of proppant and pressure required for fracturing VRGE s CNG-energized system provides similar benefits while avoiding the costly importing of fluids (CO2, N2, etc.) to the well site» VRGE-produced oil & gas is not contaminated with nitrogen, CO2 or chemicals» Optional thermal shock (subjecting the formation to cold temp.) can create more fissures» VRGE allows stranded NG wells to be viable by providing a truckable LNG product» VRGE s cold (dense) gaseous NG increases pipeline take-away capacity (in BTU terms) VRGE increases the effectiveness of fracturing and production! VRGE -- Non-Hydraulic Fracturing Technology 14

15 VRGE s Addressable Market» Total global fracking market is currently ~ $20 billion/year Includes fracturing only (not drilling, site construction, etc.)» U.S. is ~ 80% of current fracking market both in terms of $ and # of frac jobs Nearly 120,000 frac jobs per year in the U.S.» U.S. and global markets continue to grow» U.S. will rely heavily on fracking in order to maintain/grow oil & gas production» Revenue potential from VRGE is in the billions of $! Source: EnergyTribune.com, Michael Economides VRGE -- Non-Hydraulic Fracturing Technology 15

16 Targeted VRGE Users/Licensees: Fracturing Services Companies» A somewhat consolidated industry» The 3 largest fracturing services companies have ~ 65% combined global market share Halliburton / Schlumberger / Baker Hughes» Next 3 largest have ~ 15% combined global market share Weatherford / Frac Tech / Trican» Several dozen smaller companies make up the remaining ~ 20% global market share Source: EnergyTribune.com, Michael Economides VRGE -- Non-Hydraulic Fracturing Technology 16

17 Seeking Industry Partners for VRGE Expansion Energy is seeking industry partners to license, co-market & demonstrate the VRGE technology, including:» Oil & Gas Producers» Fracturing/Completion Services Companies» Manufacturers of Oil & Gas Production Equipment Interested parties are invited to contact us for further discussion. Contact Information David Vandor, CTO, Co-Founder & Managing Director Tel.: dvandor@expansion-energy.com Jeremy Dockter, Co-Founder & Managing Director Tel.: jdockter@expansion-energy.com VRGE -- Non-Hydraulic Fracturing Technology 17