After three years of research, Farley found the market they wanted to target. The actual technology used in the skids has existed since 2002. AmericaCNG found the technology when it started hunting for a solution to the company's plans to supply CNG to a concrete company. The price for the local distribution center (LDC) price was too high and killed the deal, Farley said.
"The biggest problem we found exploration and production companies have is that there aren't enough lines to capture production," said Farley.
It can take between 1.5 to two years after a field is proven before pipeline infrastructure is put into place, and a massive delay appears to be occurring in new wellhead connections. The lack of gathering systems in some places means producers must flare gas. In some cases, producers must continue to produce condensate gas to maintain leases and to comply with held-by-production lease requirements.
Despite a shift away from natural gas drilling, production of associated gas with unconventional oil continues to rise, and in many cases, this gas has nowhere to go due to infrastructure constraints. To cope with this issue, some companies have been flaring natural gas or shutting-in wells. In some cases, a company will flare gas for 30 days and then shut-in production. By doing so, the company takes a chance that some reserves may be lost. Producers typically are limited to flaring gas for a one-year period from the start of oil production.
The problem of natural gas flaring has become significant enough in North Dakota that legislators in the state have proposed legislation that would offer North Dakota oil drillers tax breaks if they stop burning and wasting natural gas.
The lines that are available inside city limits through LDCs are also ridiculously expensive, incredibly slow and inefficient, Farley noted.
"They have been the only game in town for years and they know it. It's more a monopoly than anything else."
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