EQT seeks smart technology for a spin around the block - Pittsburgh Post-Gazette

Within eight minutes of seeing Jeremy Frank for the first time, David Ross knew how Mr. Frank could save him money.

Their partnership began just as the organizers of the Shale Gas Innovation Contest had intended. Mr. Frank, founder of a smart sensor firm in State College, made his pitch to a group of gas company executives last year and it sang to David Ross, then the newly named vice president of innovation at Downtown oil and gas firm EQT.

The pilot would begin in January but first EQT had to convince its fracking company, FTS International, to buy into the experiment. It would be FTS’s frack pumps that would benefit most from the sensors made by Mr. Frank’s company, KCF Technologies Inc.

For EQT, fewer breakdowns on its well site would mean less downtime and fewer safety and environmental hazards. It would be a triple win, if it worked.

The sensors — little black boxes that attach to different components of a pump — monitor vibration and crunch the data to predict when something is about to go wrong, sending out a warning before the equipment malfunctions.

FTS was reluctant.

David Ross, vice president of innovation at EQT

The Texas-based company gets hundreds of pitches for new technologies each year. It picks about 10 percent to pilot and of those, one or two get implemented, said Bryan Dickson, FTS’s Northeast engineering and operations associate.

The math is similar at EQT, according to Mr. Ross, and likely at many oil and gas firms. The potential for new technology to improve efficiency, cut costs, force more gas out of the well, and do it safer and greener is tremendous. It has attracted a steady stream of entrepreneurs promising the next best mousetrap.

But low natural gas prices have forced the industry into a slump over the past few years. Budgets have been cut. The appetite for technologies that would give firms a leg up in this competitive environment is as great as companies’ caution about throwing money at something unproven.

Mr. Ross understood that. So he told FTS that EQT would foot the bill if the pilot didn’t work.

It wasn’t FTS’s first introduction to KCF’s sensors. Mr. Dickson met Mr. Frank in much the same way as Mr. Ross. He heard the entrepreneur speak at an industry conference and saw the potential. A few years ago, he had invited Mr. Frank to the company’s equipment yard in Eighty Four and slapped a few sensors on a simulator. It was the first time KCF sensors touched a frack pump. 

“We saw some information that was pretty promising,” Mr. Dickson said. “But we’re bombarded with new technologies all the time. Trying to decide which ones to pursue and which ones not to pursue, we opted to not be a guinea pig on this one.”

But with EQT’s nudge and its promise to pick up the tab if things didn’t work out, Mr. Dickson gave the go-ahead.

For two months earlier this year, 72 sensors were mounted on pumps that sent water and sand down a well in Greene County. They buzzed their health stats into the cloud. And at the end of it, FTS was sold.

It contracted with KCF to outfit one of its frack fleets operating in the Haynesville Shale in Louisiana, and then another. Today, FTS is in the process of installing the sensors on all 16 of its North American fleets.

“We describe (KCF’s) technology as a remote ear,” Mr. Dickson said. “We can hear things in areas that we typically wouldn’t be able to put a human. We need to hear these things to try to predict failures.”

A pump can run anywhere from $50,000 to $100,000 and is usually replaced every three to six months, Mr. Frank said. 

“Listening” to its pumps, FTS was able to cut the wear and tear on its equipment by more than 50 percent, Mr. Dickson said, by diagnosing a problem and making a fix before the equipment breaks.

Mr. Ross’s first full pilot since being crowned innovation guru could not have gone better.

‘It’s Darwinism’

Mr. Ross has a long history of scrounging for cool new technology at EQT.

Back in the days when Equitable Natural Gas, a natural gas utility in Pittsburgh, was EQT’s bread and butter, he spearheaded an automated reader project that made it possible for a company car to drive down a street and scoop up information from the meters along the way.

Mr. Ross led the launch of EQT’s compressed natural gas station in the Strip District and pushed EQT’s drilling and fracking vendors to run on natural gas instead of diesel.

Last year, as natural gas prices continued to fall, he was asked to turn his attention to new technology in oil and gas exploration and production.

“It's Darwinism,” he said. “It's the folks that are adaptable to change that survive.”

“Prices change. Your competitors are changing too and evolving.The regulatory environment is changing. So you have to kind of keep pace of all those things and adapt or you die.”

‘Tribal knowledge’

Working in oil and gas is a double-edge sword, Mr. Frank said. On the one hand, technology is everywhere and it’s quickly evolving. On the other, there’s what he calls “tribal knowledge.”

“They’ve seen everything come and go and they don’t need somebody to tell them how to do it better.”

The companies that stand apart in terms of innovation are those that have a champion in the top ranks, he said.

With a small staff and a small annual budget — he declined to quantify — Mr. Ross goes to innovation conferences, talks to universities and looks across the globe for the next big thing.

At the moment, he’s got half a dozen pilots in progress. Mr. Ross wouldn’t say which companies are involved.

One is another “internet of things” technology, which draws data from remote instruments and culls it for intelligence. Another is something meant to save diesel fuel and lower emissions on drilling rigs, he said. Something else is in the works to make it easier for the company to sort through legal documents.

Moving up the risk curve

EQT is not in the venture capital business, Mr. Ross said. Unlike Shell or Chevron, the company doesn’t have a fund to buy intellectual property.

It just wants to be a consumer. But he has talked to a lot of venture capitalists, Mr. Ross said, and he’s noticed all of them moving up the risk curve.

“Venture capitalists are really interested in funding companies that have revenue,” he said, and are less willing to nurture an idea from scratch. 

For EQT, that means some of the smaller firms that need funding to get off the ground never make it onto the company’s radar. 

“It’s a sign of the times,” he said.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

Join the conversation:

http://news.google.com/news/url?sa=t&fd=R&ct2=us&usg=AFQjCNGPohSWZ8L6AYBjMLDX4dusWyW58A&clid=c3a7d30bb8a4878e06b80cf16b898331&ei=NBskWMCQOZWDqQLo2LOIAg&url=http://powersource.post-gazette.com/powersource/companies/2016/11/10/EQT-seeks-smart-technology-innovation-for-a-spin-around-the-block/stories/201611080005