Natural Gas Services Group commits to electrification

Natural Gas Services Group (NGS) plans to convert up to 100 compressor packages from combustible gas engines to electric motors over the next three to six months.

The initial conversions will focus on repurposing existing compression packages in the 200-250 horsepower range where the company believes there is significant demand for electric units.

“Not only does this initial electrification commitment stand in support of our commitment of reducing our carbon footprint by reducing greenhouse emissions, it also addresses growing demand from our clients for electric compression options,” said NGS interim president and CEO John Chisholm. “It also allows us to reinvent and redeploy equipment on terms that we believe will provide a meaningful contribution to revenue, EBITDA, and cash flow.”

According to an August 2020 study prepared by the Southwest Energy Efficiency Project (SWEEP) and the Colorado Energy Office, there are several advantages of choosing electric drives over gas engine compressor drives. Electric drives cost less to install, and they reduce annual operating costs significantly.

Electric-driven natural gas compressors are also more energy-efficient and reduce methane emissions and net CO2 emissions compared to natural gas engine-driven compressors, the company said, citing a study from the Southwest Energy Efficiency Project & the Colorado Energy Office.

Data indicate a 200hp compressor powered by a combustion engine emits significant levels of CO2 over the course of a year, versus only negligible direct emissions from a similar compressor powered by an electric motor. In addition, the operating and maintenance costs of an electric compressor can be more than 25% below that of a comparable gas-fired engine-driven compressor, NGS said.

While electric compression requires the presence of stable, reliable electricity on location – something not available in all hydrocarbon producing fields – availability of power continues to improve across key basins and will continue to spread as operators demand more electric applications, the company said.

The electrification of a current combustion engine compressor (200-250hp) is expected to cost approximately $45,000 - $60,000 and take up to one month to complete. Funding for the conversions will come from cash on hand.

“Our commitment to this phase of compression electrification is just the first step in a series of strategic initiatives NGS is considering to address the demands of our clients, solidify our position as a leader in the energy transition, improve our equipment utilization through reinvention and reapplication, and demonstrate our commitment to finding ways to continuously improve our commitment to environmental stewardship,” said Chisholm.

The company will provide an update on the progress of the electrification program on its second quarter earnings call to be scheduled for mid-August.

NGS provides natural gas compression technology and services to the energy industry. The company manufactures, fabricates, rents, sells, and maintains natural gas compression technology for oil and natural gas upstream providers and midstream facilities.