Profit generator
Generators power wells throughout the country
Oklahoma City oilman Tom Poteet has helped develop and market a series of generators that run on wellhead gas — the raw, unprocessed natural gas produced at wells throughout the country.
After a career of connecting power lines to oil and natural gas well sites, Tom Poteet now is encouraging operators to get off the grid.
Chief technology officer at Mesa Natural Gas Solutions, the Oklahoma City oilman has helped develop and market a series of generators that run on wellhead gas — the raw, unprocessed natural gas produced at wells throughout the country.
Some of the generators Poteet has leased in recent months have been for the same wells he worked to connect to the power grid in his previous positions.
“My daily drum beat used to be ‘Get rid of these diesel generators and get us on with the utilities,’” Poteet said. “Now it’s ‘Get on to natural gas generators.’”
Supplying power to pumps and other oil field equipment is a sizable expense for well operators. Connecting to an existing electric system often has been seen as the preferred option, eliminating the need to supply fuel for generators and ensuring consistent, reliable power.
Still, there are many reasons why companies would use generators, including extreme weather and a lack of access to utilities. In some cases, an oil field expands faster than the local utility can keep up.
In those cases, diesel generators often have been used, in part because many natural gas generators have been unable to use raw fuel from the well, Poteet said.
But with updated technology and new payment structures, natural gas generators can be competitive with other options, including an existing power grid, he said.
“The BTU value of wellhead gas is highly variable,” Poteet said. “The secret sauce is that these engines you can get now run on BTU values from about 700 BTUs up to about 2,500 BTUs, which is the same as propane.”
Generators on wells with lower-quality natural gas require more fuel to operate, but they generate the same, steady stream of electricity, he said.
Besides working with oil and natural gas wells throughout the state and country, Mesa also is exploring applications with other commercial power users, Poteet said.
Imperfect timing?
Mesa was created in 2014, just months before oil and natural gas prices tumbled, leading to the deepest industry downturn in at least three decades. Oil field equipment providers were among the hardest hit, but Mesa has used the opportunity to produce, develop and market its generators.
“We’ve been fortunate that even in the downturn, we’ve been increasing our market share,” Poteet said.
Backed by Oklahoma oilman Boone Pickens and his BP Capital, Mesa had the cash flow it needed to grow during the downturn, Poteet said.
“We’ve been careful not to overbuild our organization,” he said. “We don’t have to go through a leaning process, because we started out lean and are staying lean.”
Based in Casper, Wyo., Mesa has about 40 employees. Poteet, who offices in downtown Oklahoma City, joined the company in April. Mesa executives contacted him in February, the day he and about 1,000 others were laid off at Oklahoma Citybased Devon Energy Corp.
Before joining Devon as manager of power systems, Poteet worked for Vinita-based KAMO Electric Cooperative.
Power options
With thousands of wells throughout Oklahoma, and many thousands more in oil fields throughout the region and country, producers are exploring many different options for supplying the power they need to pump product from deep below the surface and to separate it out for distribution and processing.
Utilities have expanded to meet that need, said David Swank, CEO of Stillwater-based Central Electric Cooperative.
“Over the past five to 10 years, not just Central, but also a lot of utilities in the state have invested in facilities, including generators, transmission, distribution and substations to facilitate a lot of that growth that has happened,” he said. “We’re in a very good position to service growth as it occurs.”
Operators in Oklahoma have distinct advantages for connecting to the state’s power grid, he said.
“In Oklahoma, we’re very fortunate to have some of the lowest power costs in the country,” Swank said. “Another advantage is that we provide high levels of reliability. The grid in Oklahoma is very robust and efficient, providing high reliability to the oil and gas producers.”
Drilling boomed in northwest Oklahoma’s Mississippi Lime several years ago, leaving Central and other utilities working to keep up.
“We grew extremely quickly over the last three or four years with the oil and gas industry,” Swank said. “A large part of our load always has come from oil and gas at some level. We serve 350 oil pad sites in the Mississippi Lime.”
Still, the oil industry slowdown did not catch the utility by surprise, he said.
“As a utility that serves oil and gas, we planned for that,” Swank said. “We made plans and provisions for downturn. We’ve done a lot of things from the point of operations to make it through the downturn.”