A $2 million high-capacity compressed natural gas (CNG) facility is currently under construction at Weyburn, which will be first station of its kind in Western Canada, and will be used to supply a drilling rig company with an alternate fuel supply for use in southeast Saskatchewan.
CanElson Drilling signed a three-year natural gas delivery agreement with Bayhurst Energy Services Corporation, a subsidiary of SaskEnergy, which is developing the new CNG facility located one mile north of Fifth Avenue on Highway 35.
The CNG facility will be finished by late November or early December, said Dave Burdeniuk, director of government and media relations for SaskEnergy.
SaskEnergy has 11 town border stations that dispense natural gas for use in vehicles, including to SaskEnergy’s fleet of vehicles, and CanElson Drilling indicated they wanted to explore using an alternate fuel to diesel for their drilling rigs.
SaskEnergy test-filled a tanker truck, but it took a full 24 hours to fill it at one of their normal facilities; the Weyburn facility differs in that it is high-pressure, fueled off a TransGas transmission pipeline, and they were able to fill a tanker truck of compressed natural gas in one hour.
This tanker can hold 100 gigajoules of natural gas under pressure, which is the equivalent of what an average home would use in one year’s time, said Burdeniuk.
He added there are multiple benefits to CanElson to use this as a fuel; one, it is much cheaper fuel than diesel, and two, its emissions are far lower than from diesel.
“Your emissions are reduced by about 30 per cent, and you also save on the cost versus diesel. We’re marketing natural gas for about 47.9 cents a litre equivalent, which is significantly cheaper,” he said.
“This is a very key sector for this province’s economy. If we can help with oilfield costs and also help with the environment, it’s a double-plus. Weyburn is key because of the oil drilling, and hopefully there will be other opportunities for us to expand these facilities,” said Burdeniuk.
CanElson agrees this arrangement will be beneficial to them.
“With this agreement, we can start rolling out our plan to substitute diesel fuel with clean and inexpensive natural gas in our own fleet of mobile drilling rigs in Saskatchewan. We expect this agreement will serve as a regional model under which we can quickly expand our CNG road transport services business to supply drilling rig engines and other equipment in markets across North America,” said W. Randy Hawkings, president and CEO of CanElson.
As a result of this agreement, CanElson will focus $9 million of their previously-announced investment of $20 million in their subsidiary, CanGas, to establish a fleet of 30 Saskatchewan-based truck-hauled CNG delivery trailers, and to convert the primary diesel engines on its 14 drilling rigs in Saskatchewan to bi-fuel capacity, so the engines can operate on a mixture of natural gas and diesel.
The three-year agreement with CanGas is projected to generate $2.3 million in revenue to SaskEnergy. The permanent CNG cardlock loading facility, located at the Weyburn town border station, will not impact SaskEnergy’s ability to provide natural gas service to Weyburn’s residential, business or industrial customers. CanGas will only use a portion of the facility’s capacity, allowing SaskEnergy to pursue other customers in the Weyburn region.
CanElson will take about one-third of the facility’s capacity; in one year’s time, at full capacity, they will supply to CanGas the equivalent of what the entire City of Weyburn would use in a year, said Burdeniuk.
SaskEnergy has 11 loading facilities for CNG around the province, fuelling fleet vehicles and school buses, along with 160 SaskEnergy vehicles.
Bayhurst owns a 50-per-cent interest in a natural gas processing plant in southeast Saskatchewan, operated through an unincorporated joint venture with ATCO Midstream Incorporated.