As fracking scrutiny snowballs with California’s stringent new regulations set to take effect in July and a successful anti-fracking referendum earlier this month in Denton, Texas, industry is eyeing new technology that foregoes toxic chemicals and harnesses plasma pulses reminiscent of science fiction weaponry.
Indeed, Plasma Pulse Technology (PPT) is a weapon of sorts—one that could bridge the divide between oil and gas producers on one hand and environmentalists and regular citizens who are concerned that the toxic chemicals used in the process will pollute groundwater.
Because it does not use any chemicals, Plasma Pulse Technology—exclusively licensed in the US by Houston-based Propell Technologies Group Inc. (PROP)—is deemed to be an environmentally friendly way to clear clogging sedimentation from well drainage areas to allow the oil and gas to flow.
Plasma Pulse is an easy-to-deploy technology that uses vibrations, or electrically generated plasma impulses to reduce viscosity, increase permeability and improve flow of oil and gas to the surface for extraction. The technology is designed to improve production costs effectively and without resorting to acidization, hydrofracking or other environmentally harmful processes.
When it debuted last year, PPT was excitedly discussed among circles interested in improving processes of Enhanced Oil Recovery (EOR), but today—as fracking restrictions tighten along with the rise in anti-fracking sentiment—PPT could play a much more significant role in the American oil boom, and beyond.
Although California’s new anti-fracking bill, SB-4, is specifically targeting hydraulic fracturing, the trickledown effect will be very tight restrictions on acid washing for the state’s 42,000 injector wells which produce 200,000+ barrels of oil per day.
The regulations will have a profound effect on key producers in the area, such as Chevron Corp. (NYSE:CVX), ExxonMobil (NYSE:XOM) and Occidental Petroleum (NYSE:OXY).
For starters, the new restrictions mean that oil and gas companies must go through a long and costly permit process for each individual acid wash procedure. Even more harrowing for the industry, the new regulations restrict the amount of acid a service provider can use.
At the end of the day, service providers will only be allowed to use around 20-30% of the acid that is required to completely clean out an injector well so that oil and gas can flow uninhibited. These regulations will significantly cut into the bottom line by increasing costs through the necessity of performing multiple acid washings at lower acid injection rates in order to keep the wells pumping, which also means more permits.
This is where Plasma Pulse Technology—no longer languishing in the realm of science fiction—comes in.
The Environmental Protection Agency (EPA) says there are 42,000 waste water injector wells in California alone, and PPT is poised to step in to resolve the fracking problems that will arise in 2015. Country-wide, we are looking at around 150,000 injector wells.
It’s good news for the Plasma-Pulsing segment, but bad news for the acid-washing segment.
On the flip side, service companies injecting acid into well perforations to melt away build up and restore water pressure charge $25,000-$30,000 per cleaning treating, and this billion-dollar industry could face extinction in California next year. The new regulations will mean that either acid cleaning must be conducted 3-4 times per year at $25,000+ each time, or oil production will be reduced by at least 50% due to reduced water injection pressure.
Not only does PPT provide an outlet for the industry to continue fracking without damaging the environment with toxic chemicals once California’s new regulations are in effect, but the process can also be completed without any permits.
Because plasma pulsing is undertaken without using any chemicals or any water—the two primary targets of California’s new restrictions—there is no need for a permit. In fact, according to Propell Technologies, all you need is a wire-line truck and a laptop computer.
Most significantly, for the industry, this marriage of high-level plasma physics and oil and gas is not experimental—it’s already commercially viable.
According to Propell Technologies CEO and Chairman John W. Huemoeller II, PPT has been used very successfully for years, including in Russian injector well, even without what the industry would call “draconian” fracking regulations pressuring its use.
It’s also been used in California, home of the Monterey Shale. Last month, Propell announced that it successfully treated five wells in the Bakersfield area, two injector wells and to producing wells, along with one injector well in Los Angeles County.
"While the operators continue to evaluate the wells, we are pleased with the revenue and our growing sales pipeline," Huemoeller commented. "The new tool was easy to operate and the treatments were delivered smoothly according to plan."
The North American oil boom, and the lessons learned along the way, will now render plasma-pulse technology a must have as the industry is forced to search for environmentally friendly solutions to keep wells pumping, economically.
The bottom line is that what was once science fiction is now a reality for the North American oil and gas industry, and California will once again be the pioneering state for this new, environmentally friendly technology.
Not only will California’s producers be allowed to continue to operate amid tightening restrictions, they will be able to do so without permits and for costs three-to-four times lower than toxic chemicals. And at the end of the day, it could also help repair reputations behind the pump.
In the meantime, we are looking at Propell Technologies’ potential to become an overnight sensation and a $250-million market cap company just on California operations.
By James Burgess of Oilprice.com
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