Aggreko LLC powers an oil-field shift
A centralized power systems makes inroads in remote locales
While high oil prices are driving increased drilling activity across Western Canada, this black oil bonanza has a downside – it means the cost to power these work sites is getting more expensive. But Sue McGregor, Aggreko LLC’s vice-president, area general manager for Western Canada, thinks her Scotland-based temporary power supply company has a solution to that challenge: a more efficient electricity system for the industry.
Aggreko’s interest in the oil patch’s power needs is obvious – it supplies electricity through mobile generators ranging in capacity from 30 kilowatts (KW) to 1,500 KW. Typically, each contractor on site draws electricity from its own power supply, which usually leads to a motley ensemble of generators and power lines on location. “People don’t size the loads right, they use more units than they need, they have a higher risk on environmental spills, [and give off] higher emissions,” McGregor says.
Aggreko’s solution to this confusion is for producers to invest in more centralized power systems that feed multiple well sites at a time. She says this would cut costs and reduce overall carbon emissions. “Instead of contractors having, say, 10 generators each with a 35 KW capacity, we could consolidate those 10 into one 300 KW [generator] and distribute power to where they need it.”
The company has been working out of Edmonton since 2008 when it acquired Leduc-based Power Plus Rentals and Sales Ltd., and has since expanded into Fort McMurray and Fort St. John, British Columbia. McGregor says the company was attracted to the energy sector because of the resilience it showed during the economic downturn.
Aggreko, which operates in more than 100 countries, has rapidly expanded its base in the oil and gas sector since 2008. The firm increased its capital spending by $77.4 million between 2009 and 2010. And Aggreko’s financial statements show a fair share of that spending has been on new generators in North America − largely for oil and gas companies.
The gambit has paid off for Aggreko. Its total revenue jumped from $946 million in 2008 to $1.2 billion in 2010. Aggreko has mainly profited from maintenance projects or jobs that require increased temporary power generation. For some drilling projects, particularly when fracking in tight oil and gas plays, rigs require increased voltage to sufficiently crack into the hard rock formations. Aggreko once supplied 17 megawatts of power to a single site, which is about the power supplied by 11 of its largest generators put together.
However, as with anything in the oil and gas business, it takes time for new ideas to gain acceptance. While Aggreko says its centralized power system concept will bring long-term savings to producers, the initial cost of a few high-capacity generators might be too steep for an industry looking to cut costs wherever possible. McGregor says when financing a project, the back-end savings of power efficiency tend to go unnoticed by clients.
There is also the added pressure to winterize the mobile equipment, particularly in northern Alberta’s harsh climate. Generators are insulated around the body and over the exhaust tubes to keep the condensate from freezing and shutting down operations. Traditional electricity supply that runs through power lines is less prone to the same malfunction.
Still, McGregor says having a backup generator can be as much about safety as it is about an efficient supply of electricity. When the mercury falls to about -50 Celsius, people become the top priority. “That’s where power is not just going to impact the project cost but it can become a real safety issue for the folks working on site.”
Reducing on-site spills is also important, as the oil and gas sector comes under increasing pressure to reduce the environmental impact of its activities. McGregor emphasizes that in light of tightening government regulation, minimizing fuel leakage is more important than ever. Generators are often fueled by diesel, and spillage can yield unwanted attention. “There are a huge number of spills on site,” she says. “Every time you add another piece of equipment that needs to be fueled, you’re increasing your spill risk.”