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APG licenses Trident natural gas liquid process, acquires operating technology; flare-to-fuels

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 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 E&P companies in the Bakken region.

Trident’s NGL processing configuration and proprietary NGL compression/refrigeration process meets the highest Bakken regulatory capture rate of 90%. 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.

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.

Currently, most mobile NGL processor technology can only capture 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 more than 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.

APG has created a Trident NGL Services Division that will launch in the Bakken region with expectations of expanding the “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.

The Bakken region of North Dakota is an area facing significant penalties and restrictions through the year 2020 associated with the flaring of their wellhead 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 wellhead 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.

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.

—Lyle Jensen, CEO of American Power Group

American Power Group’s alternative energy subsidiary, American Power Group, Inc., provides a cost-effective patented Turbocharged Natural Gas conversion technology for vehicular, stationary and off-road mobile diesel engines. American Power Group's dual fuel technology is a non-invasive energy enhancement system that converts existing diesel engines into more efficient and environmentally friendly engines that have the flexibility to run on: (1) diesel fuel and liquefied natural gas; (2) diesel fuel and compressed natural gas; (3) diesel fuel and pipeline or well-head gas; and (4) diesel fuel and bio-methane, with the flexibility to return to 100% diesel fuel operation at any time.

The technology displaces up to 75% of the normal diesel fuel consumption with the average displacement ranging from 40% to 65%. The energized fuel balance is maintained with a proprietary read-only electronic controller system ensuring the engines operate at original equipment manufacturers’ specified temperatures and pressures. Installation on a wide variety of engine models and end-market applications require no engine modifications.


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