Energy Recovery Lands $125M Deal With Schlumberger
HOUSTON, Oct 19 (Reuters) - Silicon Valley's Energy Recovery Inc on Monday said it has signed a $125 million deal with a unit of Schlumberger NV that provides exclusive use of technology that cuts the number of pumps needed on a frac job by up to 75 percent.
Under the 15-year deal, Schlumberger will have sole access to Energy Recovery's VorTeq technology that will allow companies to avoid having to run the thick mixture of sand, water and chemicals used for hydraulic fracturing through pumps.
Instead, the VorTeq will transfer energy from pressurized fresh water into low-pressure frac fluid. That means companies will be able to stimulate new shale oil wells without damaging their pumps with sand, and reducing wear and tear on equipment.
Oilfield service firms, including industry leader Schlumberger, have been hit especially hard by the more than 50 percent drop in crude as their customers press for lower prices. So the companies are seeking out any means to cut their costs.
Fresh water, not the typical slurry of "peanut butter and sand", will run through the pumps, significantly reducing the need for replacement parts and the number of pumps needed on a frac job, Joel Gay, Energy Recovery's chief executive officer, said in an interview.
"From an economic standpoint we and our partner Schlumberger believe that we can materially reduce the cost per barrel to frac a well by virtue of going from the existing pump model to the new pump model," said the executive.
Those savings for the product, which has been tested in the oilfield but is not yet ready for commercial deployment, could be as high at $5 a barrel. VorTeq will also cut the number of pumps needed for a frac job to as few as four from 20, he said.
Energy Recovery will be paid a royalty depending one the number of VorTeqs deployed. Its technology utilizes an efficient energy exchange to reroute frac fluid away from the centrifugal pumps.
The core of the technology is already used in desalination, with over 16,000 devices in use globally.
(Reporting by Anna Driver and Terry Wade in Houston; Editing by Diane Craft)
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