OIL & GAS EXPLORATION INDUSTRY

The oil and gas industry is a high-volume consumer of diesel fuel in its drilling and production operations, with a typical drilling site consuming between 700-2,500 gallons of diesel per day.  Adding to this level of fuel use are high-pressure pumping ("fracking") equipment vital to the production of oil and gas from shale formations.  For example, a typical frack job in the Granite Wash play of Texas and Oklahoma can use around 36,000 gallons of diesel (source: Fuel Fix).

While not as dense as diesel fuel, LNG occupies just 1/600 of the volume of uncompressed natural gas, making it possible to be moved to drilling locations as a viable alternative to diesel with environmental benefits to operations.

Since 2009, when LNG was first tested for use as a fuel in drilling rigs, the experiment has matured into a standard practice where LNG is available.  The IPAA estimates that slightly less than 5% of the current rig fleet is running on natural gas (May 2014).  This number is expected to increase over time, however, as LNG becomes more readily available to operators and as the anticipated divergence in the spread between the cost of diesel and natural gas fuels widens over time.  This market is suitably included in LNG America's hub-and-spoke distributed LNG network solution.



KEY STATISTICS

Total Diesel Usage
in Gallons
1.7 Billion*
LNG Equivalent in Gallons 2.8 Billion**
Total Rigs Running as of June 2014 2,123 in
North America

*Statistics based on 2012 EIA data 
**DGE equivalent for LNG is 1.62
Average diesel price EIA average 2012
Rig count numbers from Baker Hughes


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