Reduce Fuel Costs and Emissions with Dynamic Gas Blending with Steven Youssef

00:00:00 Speaker 1
This episode of The Energy Pipeline is sponsored by Caterpillar Oil and Gas. Since the 1930s, Caterpillar has manufactured engines for drilling production, well service and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions.

00:00:28 Speaker 2
Welcome to The Energy Pipeline Podcast with your host KC Yost. Tune in each week to learn more about industry issues, tools, and resources to streamline and modernize the future of the industry, whether you work in oil and gas or bring a unique perspective. This podcast is your Knowledge Transfer Hub. Welcome to The Energy Pipeline.

00:00:51 KC Yost
Hello everyone, and welcome to this episode of The Energy Pipeline Podcast. Today we'll be discussing how to reduce fuel costs and emissions using dynamic gas blending for Drilling Wells. Our guest is my latest and bestest, best old friend, Steven Youssef, senior corporate account manager at Caterpillar Inc. So welcome to The Pipeline Podcast, Steven.

00:01:14 Steven Youssef
Hey, KC, glad to be here.

00:01:17 KC Yost
Tickled to death that you're here. I'm very excited to learn new things. I can build you a pipeline anywhere in the world, but drilling and production, I'm lost. So you're the subject matter expert. I'm looking forward to this discussion, but before we start talking about Dynamic Gas Blending and Cats Gen 2 kit, I'd like for you to take a few minutes to share your background with our listeners. And before you start, just make sure six years in the Marines, right?

00:01:46 Steven Youssef
Yes, sir, I did.

00:01:47 KC Yost
All right, super. Thanks for your service. Okay, go ahead. Tell us your background.

00:01:52 Steven Youssef
Yeah, no, yeah, I'm happy to be here. My name is Steven Youssef. I've been in the oil and gas now for 19 years. Feel like I just started yesterday, but yeah, 19 years. And I started out as a field mechanic and I worked my way up to managing teams and supporting operations both internationally and domestically. I've spent time in both the service side as well as the supplier side. And today I have the great privilege to be part of the Caterpillar Oil and Gas team as an account manager overseeing the drilling accounts.

00:02:30 KC Yost
Excellent, excellent. Well, glad to have you here. I think your information, sharing it with our listeners is going to be a tremendous podcast. So speaking of Caterpillar, give us a two-minute elevator speech on your department or group at Caterpillar, please.

00:02:51 Steven Youssef
Yeah, I'll try my best. So I mean, Caterpillar is as a giant company, and worked for the oil and gas division. And my team specifically focuses on major accounts and we work with these accounts on everything from everyday issues to support on the product side to agreements to, I mean, it's basically the main point of contact for each one of these accounts within Caterpillar. So anything and everything that they need goes through our team and we're that main point of contact. So it's pretty fun.

00:03:39 KC Yost
And Cat Oil and Gas is specifically focused in on exploration, production, drilling area of the oil and gas industry, right?

00:03:50 Steven Youssef
Correct, correct. Yeah, we support the well service, which is your fracking, and then your drilling as well, and your gas inaudible as well.

00:03:57 KC Yost
Super. Super. So now we're going to be talking about how to save drillers time, money, and cut down on emissions using Dynamic Gas Blending. So before we get into questions, could you define Dynamic Gas Blending, please?

00:04:16 Steven Youssef
Sure, sure. It's a bit of a mouthful. So for short, we call it DGB. And basically what it allows is it allows you to take a diesel engine and be able to also run natural gas. So it allows you to run both of these together in an engine to achieve the same level of power and help you reduce some costs and reduce some emissions as well. So yeah, it's a pretty neat system and you just install it and it just does its own thing.

00:04:57 KC Yost
So it's not as if you're in there removing burner tips or this, that and the other in order to worry about the BTU of the gas versus the diesel generator and all of that kind of stuff. The kit kind of is all-inclusive and does everything you need for it to do.

00:05:16 Steven Youssef
Yep, you just got to run it.

00:05:18 KC Yost
Sweet, sweet. So question, let's get back to the big end of the funnel, if you will, but thanks for that definition. How are drillers balancing operational efficiency with calls from the federal government and their clients and all to reduce greenhouse gas emissions? How are drillers handling that?

00:05:46 Steven Youssef
Well, it is a bit of a balancing act, drillers today, they have to find solutions to improve their operational efficiency and reduce greenhouse gas emissions all the while without compromising performance and uptime. So it's a bit of a balancing act for them. And because of this, they're continually looking for solutions that help them meet those sustainability goals, maintain that efficiency, and doing all this, without adding significant costs. So one of the strategies that you can adopt to this is dual-fuel technologies. The Dynamic Gas Blending system, and with this, at least with the Caterpillar Gen 2 DGB, drillers are able to displace an average of about 70% diesel with natural gas and under-

00:06:45 KC Yost
I'm sorry, did you say 70%?

00:06:47 Steven Youssef
70%, yep. And under peak conditions as high as 85% we've seen.

00:06:52 KC Yost
Oh, my.

00:06:54 Steven Youssef
Yep. So the dual-fuel approach, not only does it lower the GHG emissions and the methane slip, but it also boosts fuel efficiency, which directly impacts your operating costs.

00:07:07 KC Yost
So I'm an old guy, started working in the industry back in the mid-seventies and all of that. And it seemed to me, at least back then, and for the first 30 or 40 years of my career, it was a situation where if you wanted to deal with the environment and do something and be environmentally conscious, it cost you economically and you lost efficiencies and benefits. And what I'm hearing you say is this is the best of both worlds. You're helping the environment with reducing greenhouse gases, but you're also increasing the efficiency of the operation.

00:07:52 Steven Youssef
That's exactly right. Yeah because it really allows them to maintain their performance standards. And the other benefit to this is that it allows them to maximize their ROI, with their existing tier-two engines, they can keep pace with regulatory requirements as they continue to come along.

00:08:13 KC Yost
Super, super. So climate change is discussed regularly out on the internet, in the world and all of that. So climate-related goals are being incorporated in all drilling strategies. So how are they being applied to the individual drilling applications? Did I ask the question right? Does that make sense?

00:08:43 Steven Youssef
Yeah, yeah, yeah. And it's a good question. And we're seeing more and more these climate-related goals becoming part of their overall drilling strategies. It's longer just about meeting production targets or reducing operational costs. These drillers are under pressure to lower emissions. And to your point earlier, in today's capital-disciplined environment, they need to find these solutions that don't require a massive investment. And we're seeing these goals at the application level really starting to influence the types of equipment choices that they make, their drilling practices, and even the types of fuels that they use because of this drillers are more open to hybrid solutions and fuel displacement technologies like the Gen 2 DGB system.

00:09:40 KC Yost
Okay. All right. So you mentioned the DGB Gen 2 kit again. So let's get away from the big end of the funnel and start talking about the kit itself. How does it apply to a GHG emissions reduction effort?

00:10:02 Steven Youssef
Yeah, so I mean, the kit itself plays a pretty big role in reducing those GHG emissions, and it's mainly thanks to its precise port injection system for natural gas. Unlike traditional fumigated systems, this allows for a much more efficient and controlled burn, which cuts down on things like methane slip, which is typically found in your fumigated systems. Not only does it really help lower the emissions, but it also gives the drillers flexibility of fuel choices, giving them a bit more control of their environmental impact. And I think I mentioned earlier too, and one of the other advantages that the DGB Gen 2 kit is designed to work with their existing equipment. So this makes it a much more attractive option and more likely for drillers to incorporate this in their operations. So therefore, opening the door to help drive the overall GHG reduction effort even further. If it's something that they're more likely inclined to do, then it's a benefit to the overall cause.

00:11:14 KC Yost
So you and I talked earlier this week and had a visit and take you off subject here for a second, but dive down a little bit into those costs. Let's say I was going out and wanting to buy a new engine that had the DGB capability versus putting the Gen 2 kit on. Is it about a 50%, 25%, 75% savings? Generally speaking, rule of thumb, not to hold you to it, but just trying to get an idea of, I mean, you talk about economics and all that kind of stuff, it's got to be a big savings because you're just bolting on new equipment.

00:12:03 Steven Youssef
Yeah. I mean, you got two options, you got to adapt with all the new regulations and all the new sustainability goals that these drillers are starting to incorporate more and more into their overall strategies.

00:12:15 KC Yost
Gotcha.

00:12:16 Steven Youssef
So you either go buy a whole new fleet of equipment or you try to maximize your existing equipment. And the kit itself, it's significantly less expensive than going and buying a whole new piece of equipment, like a whole new natural gas engine. Basically for the price of typically rigs are consistent of four engines, and for the price of upgrading those four engines is basically the price of basically buying one new a hundred percent natural gas engine. So it gives you an idea. It's about a quarter of the price, really.

00:12:52 KC Yost
Dude, 75% savings just bolt this sucker on and it's good.

00:12:59 Steven Youssef
Yep, yep.

00:13:01 KC Yost
No, that's pretty sweet.

00:13:03 Steven Youssef
And what's great about it mean these drillers have been using these diesel engines for years. They're familiar with them, they know them inside and out. They know their maintenance habits, they have their maintenance supplies, their parts, everything is lined up already. So allowing them to keep that engine and just upgrade it to meet their new sustainability goals is a real comfort for the guys that are every day running these engines. They know them, they're familiar with them, and they perform.

00:13:37 KC Yost
Sure. There's a reason why Southwest Airlines only flies 737s, Familiarity.

00:13:44 Steven Youssef
Yep. Consistency, familiarity. Yep.

00:13:47 KC Yost
Yep. It and all inaudible.

00:13:48 Steven Youssef
It's critical to maintaining operational efficiency. Yep.

00:13:50 KC Yost
Good, good. So let's talk about fuel savings. Okay. Let's dive down into that a little bit. So what kind of fuel savings can the oilfield companies expect with the Gen 2 kit?

00:14:10 Steven Youssef
Significant fuel savings. And as mentioned before, the DGB Gen 2 kit, drillers can experience an average of diesel displacement of 70% and as high as 85% under certain conditions. This high level of displacement is achieved with the industry's widest fuel flexibility. So allowing operations basically to run on everything from CNG gas to LNG gas to pipeline gas to field gas, which are all alternatives to diesel, and in most cases, considerably less expensive than diesel. So by reducing the overall consumption and the kit's new technology, the DGB Gen 2 can achieve pretty notable emissions reductions up to 40% GHG emissions and about an 80% reduction in methane slip when you compare it to the traditional fumigated systems.

00:15:08 KC Yost
Yeah, you had said the 85% earlier, I just wanted you to say it again because I'm astounded by that number. That's just totally remarkable. Now we get into the different kinds of fuels, and I really want to lock into this because I'm astounded. I'm old school where you had to change the tips of burner tips in order to run this kind of fuel versus that kind of fuel. So I'm really impressed with this discussion about the different kinds of fuel. Again, I'm an old guy and I'm used to worrying about BTU content of different kinds of gas streams, whether it be flare gas, whether it be propane, whether it be pipeline quality, gas, that type of thing. And worrying about the gas quality. You don't care. The Gen 2 kit doesn't care.

00:16:00 Steven Youssef
No. And it has its range, of course. I mean, you can't just pump propane in there, but it does allow for that flexibility to be able to use all those different types of gases and make the adjustments accordingly based on what's coming in.

00:16:15 KC Yost
Okay. So let's talk about the gas supply versus the diesel supply. One of the things I was impressed by was the fact that with the kit, the computer handles where the energy supply comes from, where the BTUs come from, whether it be the natural gas or the diesel, that there's no valves to switch or computer buttons to push or anything like that. The kit does his own thing.

00:16:43 Steven Youssef
It does it automatically, yeah. As long as you put the gas into the engine and the diesel and the gas is within the appropriate range, it will know how much to use, what's available. If for some reason, for example, let's say your gas supply cuts off well, it'll just kick onto a hundred percent diesel on its own. There's no knobs to switch or no nothing to do mechanically or anything like that. It basically understands that balance and then uses what's available and what isn't available. inaudible.

00:17:16 KC Yost
Sure. So yeah, when you go from site to site on this, does a technician stay out there for a little while to make sure that the computer is optimized or you just turn a switch and turn it on and it's pretty well set?

00:17:33 Steven Youssef
No, typically, whenever you install a new system like this, we will have a brief commissioning time where they'll help set it up, work with the driller to set it up. But once it's done, it's pretty automatic at that point.

00:17:52 KC Yost
Sweet. Even a civil engineer like me could handle that. That's pretty great. So now we talk a little bit about calculating potential fuel cost savings and all of that. You guys have a way for the drillers to do that calculation, but you also say that a lot of the drillers have their own calculation mechanisms. Can you talk about that?

00:18:23 Steven Youssef
Yeah. And it varies. It varies greatly. Right now, caterpillar does have a fuel calculator on our website, but we've found that a lot of these operators who are the ones generally supplying the fuel, have their own ways of doing that. They monitor obviously what comes on site and then how often that comes in and stuff like that. So it's a pretty, I guess, unique process dependent on each one. But they typically have a pretty robust way of determining how much at the end of the day, you can always just look at your monthly bill and see how much money you spent on diesel. That'll tell you right there.

00:19:05 KC Yost
Sure, sure. Absolutely. And I would suspect that if there were any issues to the claims, and I guess what I'm getting at is the 80, 85% peak displacement is not just your calculations, it's the calculations of the people that are using it out in the field.

00:19:26 Steven Youssef
Yeah, yeah. And one of the neat things about the DGB Gen 2 system is it's not just iron that goes on an engine. I think we touched a little bit on it before. It's got some pretty impressive software. And when you pair that with things like the Caterpillar Smart Engine Control system and a data subscription, I mean, we can pull these reports and we can provide these reports to the drillers, to the operators that will show you what your displacement percentage was by the day. It could show you missed opportunities. Basically, it didn't blend at 70% today because of gas supply pressure or there was a maintenance issue or something like that. So by having this level of information available to you, you can identify these issues much quicker and therefore fix them much quicker and be able to get back to blending at a high percentage rate. So it's more than just some iron that we slap on an engine, right? There is a pretty sophisticated software system that goes there, and like I said, when you pair it with the right controls, it's a great tool for these drillers to use to really maximize their displacement.

00:20:54 KC Yost
So your Gen 2 kits are talking to, if you will, a mothership downloading information, letting the mothership know how well they're operating, just like my wife's new car that is reporting into their mothership, and I get a weekly report on how my car is doing. Same thing.

00:21:24 Steven Youssef
Essentially. Yeah.

00:21:25 KC Yost
Same thing. Same thing. It doesn't matter whether you're in the Middle East or West Texas or North Dakota or wherever you have that capability.

00:21:38 Steven Youssef
And it's pretty neat when as an account manager, I've monitored some of these reports and it's pretty neat when I'll see something or our engineering or product support team lets me know of an issue and I can contact the driller first before they even realize there's something wrong. "Hey, your your gas supply was turned off. You might want to go find out why." So it's pretty neat to have that.

00:22:04 KC Yost
So you guys have operating parameters that you look at, and then whenever the parameters go outside that good range, if you will, it flags something for you to take a look at to, as you said, analyze it and let the operator know before they could very well know about the issue. So it actually literally becomes proactive in your operation to tweak this or tweak that in order to keep things running efficiently.

00:22:37 Steven Youssef
Absolutely.

00:22:38 KC Yost
Very cool. Very cool. So there are other advantages to having fuel flexibility on site, so can you elaborate on that?

00:22:51 Steven Youssef
Yeah, yeah. I mean, fuel flexibility is a pretty big advantage in itself, but especially when it comes to managing your cost. But another big advantage, and probably considerably important to most drillers out there, is that it does help lower your total cost of ownership. Basically, we touched on this earlier. Basically, instead of going and investing on a new equipment, you can upgrade your existing diesel engine with a Cat DGB Gen 2 kit. I've mentioned before, basically for to upgrade all four engines on one rig, it could pretty much come close to one new gas engine. So you're extending the life of your current assets without breaking the bank.

00:23:42 KC Yost
And the spare parts that you have for those engines still remain the spare parts for those engines. The maintenance schedules remain the same, so you don't have to worry about increasing maintenance staff or decreasing maintenance staff or whatever the case may be. Things run smoothly. You just go ahead and stick with your plan.

00:24:03 Steven Youssef
Yep, yep.

00:24:04 KC Yost
Yeah, great.

00:24:06 Steven Youssef
And they know this helps really continue them to drive that operational efficiency so they don't have to go learn a whole new system or a whole new engine or a whole new supply line for new parts and that kind of stuff.

00:24:19 KC Yost
Sure, sure. I totally get that. Totally get that. And in this day of looking at supply chain efficiencies, that adds a great deal of value to the operation, I'm sure. So that's outstanding. Outstanding. Again, I'm new to drilling and production and all of that. I'm sure I've missed some things that we may want to talk about. Do you have any other points that you want to get across that our listeners might be interested in?

00:24:54 Steven Youssef
Sure. Yeah, no, I know we talked about really the high level of displacement that these kits can achieve getting an average of about 70% and as high as 85%, reducing the emission significantly, 40% GHG and up to 80% methane slip when you compare it to old fumigated kits. But we touched on it a little bit where the software part of this is a big part of it as well. It's next level and at Caterpillar, when you pair that with our Smart engine controls, it really allows you to be able to use any configuration of engines that you need for your goals. In other words, what I'm saying is you can have four DGB Gen 2 kits on an engine, I mean, four engines, if you have grid tie power available, the smart engine management control system can allow you to use that grid tie along with your engines. If you already have a Cat G 35 12, a hundred percent natural gas engine, you can incorporate that into the setup. So it's really plug and play type of idea to really be able to work all together in different setups to achieve the overall goal of being able to produce power for the rig. So a lot of flexibility and it's a true customizable solution for our drillers. That's the Cat philosophy, is that we listened, we heard them out, and we understood their pain points and what their goals were, and we wanted to be able to provide as many options for them as possible, and they all have to work together in harmony. You can't have one fight in the other. So that's a great advantage of the Cat software Smart Engine management system.

00:27:03 KC Yost
So flexibility, put it anywhere, anytime. It's compatible and you can make it fit wherever you're talking about, and whatever you're trying to accomplish. So flexibility, cost savings, efficiency. Increases efficiency significantly by you said, up to 85%, and it cuts down on greenhouse gas emissions as well, which is great for the environment and makes things work out. What could be better.

00:27:39 Steven Youssef
I mean, we're pretty excited about this new Gen 2 kit, and we're hoping to see more of our drillers incorporate this and really be able to give them that best of both worlds, be able to balance it out and still meet their operational efficiency goals and their sustainability goals, and all the while still running the reliable Cat engine.

00:28:05 KC Yost
Dude, what a great visit this been. I am just really impressed that you've got the flexibility, the cost savings and working on the environment all at the same time. Your RND department's going to have a tough time topping this, I suspect. That's really, really impressive and plug and play. Plug and play. You connect up the natural gas, you connect up the electric or whatever the case may be, and it takes care of everything for you. Amazing. Really impressed. Really impressed. Thanks so much. I'm tickled that you took the time to visit with us today, Steven. It's been a great conversation. So thanks very much. If anyone would like to learn more about Caterpillars Dynamic Gas Blending capabilities, you can find them on the web at cat. com and search for Dynamic Gas blending. Sound like a good place to start, Steven?

00:29:03 Steven Youssef
Absolutely, absolutely.

00:29:05 KC Yost
All right, super deal. Thanks to all of you for joining into this episode of The Energy Pipeline Podcast sponsored by Caterpillar Oil and Gas. If you have any questions, comments, or ideas for podcast topics, feel free to email me at kc.yost@oggn.com. I also want to thank my producer, Anastasia Willison-Duff and everyone at the Oil and Gas Global Network for making this podcast possible. Find out more about other OGGN podcasts at oggn.com. This is KC Yost saying goodbye for now. Have a great week and keep that energy flowing through the pipeline.

00:29:42 Speaker 5
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