Somerset firm sees unused natural gas wells as electricity source

Somerset company has developed a way to generate electricity from unused natural gas sites

bestep@herald-leader.comJuly 4, 2011 

If David Weddle's idea works, natural gas from unused wells will play a growing role in meeting Kentucky's electricity needs.

Weddle is president and chief executive of Wellhead Energy Systems, which has developed a way to convert natural gas to electricity at the well and feed it into the power grid.

The Somerset company's plan involves tapping so-called "stranded" gas wells to generate electricity. Stranded wells have been drilled but aren't producing. Wells can end up stranded for various reasons. For instance, a company might drill a well to preserve a lease, but it isn't connected to a pipeline to transport the gas.

The electrical grid is much more extensive than the network of pipelines to gather and transport natural gas, creating an opportunity to convert the gas to electricity and feed it into the grid through lines that pass the site, Weddle said.

"There are thousands of stranded assets in Kentucky, and we really want to put them to work," Weddle said of the wells.

Weddle said the idea would create income from a gas well that's not producing any cash now and provide electricity at competitive prices from a source that burns more cleanly than coal. Coal-fired power plants now provide more than 90 percent of Kentucky's electricity.

Wellhead's plan includes providing the conversion box at sites and selling the electricity, or selling the stations themselves. If a customer buys one of the stations, the deal will include continued maintenance by Wellhead to keep it running well and looking good, said Weddle, who doesn't want rusting boxes dotting the state.

The idea to convert gas to electricity could also create an opportunity to drill wells in places where there are known reserves of gas but no pipeline access to move it, said Marvin Combs, assistant director of the Kentucky Division of Oil and Gas. "It opens up another outlet," Combs said. The idea could benefit small operators in particular, he said.

Wellhead is marketing its system under the name GridFox Smart Energy Conversion. The company has one working station in place, near McKee in Jackson County.

The station, which looks something like a train boxcar, has three sections. The first has a unit to clean the incoming natural gas of impurities, such as sulfur, and compress the gas. The impurities drain to a tank, to be picked up by a disposal service.

The second section has an engine powered by the gas to drive a generator, and the third area is a control room with electronics that constantly monitor things such as the engine temperature and power output.

The station can be monitored and controlled remotely. An engineer in San Diego, Calif., for instance, made software updates from his office last week.

Weddle said that there is no patented technology in the station, but that the company will apply for a patent on some of the processes.

Enerfab, a Cincinnati company that provides services to the electrical-power industry, invested $1.5 million in the project last year, and the Kentucky New Energy Ventures Fund gave Wellhead a $500,000 grant.

The station in Jackson County produces enough electricity for an estimated 250 to 300 homes. But the plan for the next units, which will cost $1.2 million to build, is to generate one megawatt of power. That's enough for about 800 homes, Weddle said.

Wellhead installed the first station in Jackson County because Jackson Energy, a rural electric cooperative, has worked closely with the company, Weddle said.

The Jackson County station is connected to a gas pipeline, not a stranded well. The initial plan was to use some wells in the county with no pipeline access, but that fell through because the operator ran out of money to finish them, Weddle said.

So Weddle and his partner, Don Moss, who has been involved in the insurance and the oil and gas businesses, decided to use the pipeline supply in order to fulfill a responsibility to Jackson Energy and get a station to demonstrate the technology.

Wellhead plans to begin using some stranded wells to produce electricity in the next few months.

There are wells that won't work for the process because they don't supply enough gas or the gas has too many impurities, Weddle said.

Some locations might work with only one well, but others might need several to provide enough gas, he said.

The current project has been a success for Jackson Energy, which provides power to 51,000 homes and businesses in 15 counties, said Karen Combs, director of public relations. It normally buys electricity from East Kentucky Power, of which it is one of 16 member co-ops, but wanted to investigate the possibilities of Wellhead Energy's idea.

"I think we have a responsibility to try to explore new technology for our customers," Combs said.

The project has created a viable source to supplement what Jackson Energy buys from East Kentucky Power and has proven that the technology can work, Combs said. The co-op pays a little less to buy electricity from Wellhead than from East Kentucky. Combs said she could not disclose the difference because of contract limitations.

The power that the co-op gets from Wellhead is now a fraction of what it needs, but there is an opportunity to put more of the generating stations in place, Combs said.

Wellhead had an open house at its Jackson County station recently to kick off its campaign to sell more of the units. Weddle anticipates that most of his customers would be utilities, but he also is targeting businesses that use large amounts of electricity.

Weddle said he has heard interest in the stations from a number of potential customers, including other Kentucky co-ops, and he has met with representatives of the Tennessee Valley Authority and an Indiana utility.

A houseboat company in Somerset, Sharpe Houseboats, built Wellhead's first conversion station, and Weddle said he hopes to have stations to fill future orders built at home as well.

"What we're trying to do is create Kentucky jobs if we can," he said.

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