Case Background: XYZ has been awarded a Compressed Natural Gas (CNG) contract with a major oil and gas client to provide gas supply for an E-Frac (electric fracturing) job in Pennsylvania. This is a

Case Background:  

XYZ has been awarded a Compressed Natural Gas (CNG) contract with a major oil and gas client to provide gas supply for an E-Frac (electric fracturing) job in Pennsylvania. This is a 3month springtime contract to supply CNG directly to a turbine that will then supply electricity to the electric frac fleet. This fleet will be 100% dependent on CNG and will have no diesel backup for the turbine. The delivery point will be on a congested and tight lease. We will be required to deliver between 3,000 and 4,000 MCF per twenty-four-hour period. We are required to maintain a constant supply of gas to the client. There is a staging pad near the delivery site. There will be two supply points for gas supply (compressor sites). One in Pennsylvania and one in Ohio. 

Assumptions:  

•  All supply and delivery sites are open twenty-four hours a day. 

•  You can pre-stage CNG trailers at the compressor site ahead of the job. 

•  Truck drivers are required to run within FMCSA Hours of Service regulations. 

•  CNG trailers (Titans) are readily available for this project. 

•  Each CNG Titan will be able to deliver 260 MCF of gas. 

•  E-Frac delivery point: 40.084278, -80.378111 o There are 4 trailers connect to the e-frac. Two trailers on side one. Two trailers on side two. 

o   The e-frac burns two CNG trailers at the same time.  o There are 6 spaces for trailers onsite. 4 trailers connected to the job. 

o   A spot for 2 trailers to park while switching an empty trailer.  o Consumption fluctuates dependent on if the site is fracking or on idle.

See appendix for a graph showing CNG flow rates over a twenty-four-hour period. 

Daily demand averages between 3000-4000 MCF. 

•  Staging pad: Claysville, PA (direct access to I-70) o There is room to stage up to 8 trailers on this site with tractors if needed. 

•  Compression sites: 

o  PA: 40.164694, -79.944389  o Ohio: 40.009396, -81.080559 

o  There is one compressor on each site, and each compressor can compress 3000 MCF/day.  o Each compressor takes two (2) hours to fill a trailer and fills one (1) trailer at a time. 

o  There must be an empty CNG trailer on site for the compressor to be running. No gas storage exists on site. Gas is compressed into the Titan trailers and transported to the efrac site. 

o  Up to four trailers can fit on each compressor site. 

Problems:  

1) Create and present a twenty-four-hour transportation plan to effectively deliver gas from the supply point(s) to the delivery point. Some items you should consider (but not limited to) are:

(30 Points)

a.  How many drivers would you require? What would be their shift schedule times? 

b.  CNG delivery schedule (Only looking for a proposed delivery schedule)

b. How many CNG trailers should XYZ allocate to this job in total to effectively run this job? 

2)             A driver working for XYZ has contacted you at a pullout area on I-70. He is an experienced driver and has indicated that it has just started raining heavily and a severe weather statement has been issued for the area. The driver indicates that he can continue but it would be extremely risky due to adverse road conditions. (40 points)

a.  How do you handle the conversation with the driver? What do you recommend as a course of action? Explain.

b.  How would you manage XYZ’ and client expectations during this situation? Explain.

c.  If the weather was estimated to last approximately four hours how would that change your transportation plan?

3)             What type of a business model does XYZ have and how does it capture value? What type of problems can this company expect related to its business model and what solutions would you recommend them? (30 points)