American Power Group Corporation’s subsidiary, American Power Group, Inc. (APG) has signed a license agreement with Trident Resources, LLC for the exclusive worldwide right to commercialize Trident’s proprietary Natural Gas Liquid (NGL) process technology. In essence, the technology captures and liquefies the hydrocarbon gases released during shale oil extraction which are currently being flared at thousands of well sites. The technology can deliver premium quality natural gas for vehicular use and stationary applications at remote locations.
In addition, APG purchased substantially all of Trident’s operating assets including two existing mobile NGL operating systems currently servicing remote or stranded well-sites for one of the top five exploration and production (E&P) companies in the Bakken shale region of North Dakota.
APG has also secured a verbal commitment for $3.25 million of additional project lease financing from several existing shareholders and investors affiliated with members of our Board of Directors to immediately build two additional NGL operating systems. These next generation NGL systems will include the first NGL system with the capability to convert the unconventional Bakken flared gas into a premium quality natural gas for all local APG dual-fuel stationary and vehicular applications.
The Trident NGL equipment acquisition is forecast to be incrementally accretive in revenue and profitability and positions APG to take a vertical step in providing integrated alternative energy solutions with significant regulatory reductions in diesel and flared gas related emissions.
Shale Gaseous Hydrocarbons
When oil is extracted from shale, a mixture of hydrocarbon gases (methane, ethane, propane, butane, pentane and other heavy gases) reach the surface at each well site. These gases are either gathered in low-pressure pipelines for downstream NGL and methane extraction by large mid-stream processing companies or flared into the atmosphere when the gas-gathering infrastructure is too far away (remote well sites) or the pipeline is insufficient to accommodate the volumes of associated gas (stranded well sites). These remote and stranded well sites are under increasing regulatory requirements to either capture and liquefy the flared gas into NGL or significantly reduce oil output.
According to APG’s press release, most mobile NGL processor technology currently capture only 70% to 75% of the total flare to liquefy for sale and continue to flare the ethane and methane which remain below regulatory limits. In the Bakken, there are over 2,500 well sites classified as remote or stranded. In North America, there are thousands more well sites that have similar classification where pipeline access will never be logistically or economically feasible. An average remote or stranded well site producing one to two million cubic feet of flared gas per day has the capacity to produce several million gallons of NGL and over a million equivalent diesel gallons of natural gas on an annual basis making this a multi-billion dollar regulatory-driven market.
Trident has developed and exclusively licensed to APG their standard NGL processing configuration as well as their latest proprietary NGL compression/refrigeration process to meet the highest Bakken regulatory capture rate of 90%. More importantly, the new NGL process will be able to produce a premium quality natural gas capable of being used for both stationary and vehicular APG dual-fuel applications. The Trident modular NGL system is constructed on mobile skids and trailers for scalability and ease of transfer from site to site to optimize E&P flare capture rates. APG has created a Trident NGL Services Division that will launch in the Bakken region with expectations of expanding its Flare to Fuel™ capabilities to other oil and gas fields in North America and, eventually, other regions of the world. The marketing and operations of the NGL Services Division will be integrated into the current APG organization for maximized continuity. APG is forecasting this new NGL Services Division will generate between $5 to $10 million of revenue in its first year of operation based on the targeted number of systems to be deployed during this initial phase. We anticipate multiple new customer site locations, once the first phase is fully operational.
Lyle Jensen, CEO of American Power Group stated, “The Bakken region of North Dakota is an area facing significant penalties and restrictions through the year 2020 associated with the flaring of their well head gas. We are very comfortable moving into this new vertically integrated space given the fact that approximately 85% of APG’s North American dual-fuel oil rig conversions are currently operating on conditioned well head gas. The challenge in the Bakken region is efficiently processing their high BTU flare gas which is where Trident’s licensed technology is expected to differentiate APG from other NGL processors. NGL can be sold to a variety of end markets for heating, emulsifiers, or as a combined liquid called Y Grade that is sold to refiners. These next generation NGL systems will include the first NGL system that will have the capability to convert the high BTU flared gas into a premium quality natural gas for APG vehicular and stationary dual-fuel engine conversions as well as any of the dedicated natural gas engines in the region. Our strategy is to continue to sell the NGL into Trident’s end markets discussed and begin to leverage the premium natural gas into vertically integrated locally sourced fuel.”
Mr. Jensen added, “We see a very large addressable market in the thousands of heavy-duty trucks supporting the oil and gas production industry. The ability to use conditioned wellhead/flared gas to safely dual fuel these trucks can provide an operator with a competitive economic advantage as well as help address a significant challenge for the E&P companies who have to significantly reduce the flaring of their wellhead gas before 2020. APG intends to be the first to bring our many oil and gas customers an integrated alternative fuel solution that delivers favorable regulatory, environmental, and economic results to their business. APG is at the forefront of providing technical and practical solutions to meet the ever increasing regulatory demands of reducing diesel-related emissions with our Turbocharged Natural Gas® Dual Fuel Technology and now reducing flare-gas emissions with our Trident NGL Flare To Fuel™ Technology.”
In December last year Trident and Harrison Truck Centers joined forces in the Bakken to help trucking companies lower fuel costs and reduce diesel emissions while assisting producers with flaring issues. Trident provided operators with small-scale LNG and fractionation plants to develop a gas capture infrastructure. The CNG and LNG produced by the plants is being used to power the dual-fuel Freightliner Glider trucks sold by the Iowa-based Harrison Truck Centers.
In February this year, APG was selected by Harrison Truck Centers to provide APG’s Turbocharged Natural Gas® Dual Fuel System for HTC’s new dual-fuel heavy-duty and severe-duty glider kit product line launch.
(Primary Source: American Power Group Corporation)