[CAT® OIL & GAS] Displacement vs. Substitution

Chris Berrie: Hi, I'm Chris Berrie, a sales manager here at Caterpillar. Welcome to Cat® Power Podcast, a series of podcasts focused on various subjects within oil and gas. Today, we are chatting with Jason Herlehy, a Cat oil and gas product definition manager, about the 3512E tier four final dynamic gas blending engine. Jason was in the team that brought the DGB solution to market. Hi, Jason. Welcome to the call.

Jason Herlehy: Hi Chris. Thanks for having me today.

Chris Berrie: Pleasure. Can you start off by telling me and the listeners a little bit more about the 3512E tier four final DGB engine?

Jason Herlehy: Absolutely. Yeah, we're really excited about this product. It's very disruptive. It's the world's first tier four final non road, mobile certified dual fuel engine of its kind. And it's designed to be able to displace up to 85% of the diesel consumed traditionally with gas.

Chris Berrie: Thanks, Jason. Sounds like a very exciting technology. I like to start off with a subject of displacement versus substitution. When we talk about our 3512E tier four final dynamic gas blending engines, we say they have a maximum diesel displacement rate of 85%. Is displacement the same thing as substitution?

Jason Herlehy: No, it's not. Substitution refers more to the energy that's been offset, whereas displacement is more volume based.

Chris Berrie: Can you explain that a little further for me? What exactly does diesel substitution measure?

Jason Herlehy: So diesel substitution comprises all of the energy that is gone or supplied into the engine and combusted in order to produce the power. So whether it's a high energy gas, or low energy gas, it's going to burn a certain amount of energy to produce the power that is being requested to the engine.

Chris Berrie: Conversely, what does displacement measure?

Jason Herlehy: Displacement is much more tangible. It's how much actual volume of diesel has been offset from a system that does not have dual fuel to a system that is running partially on gas and mixing in diesel as needed. The difference between those two is how much diesel is displaced.

Chris Berrie: But then why is displacement a better way to calculate how much fuel you'll burn?

Jason Herlehy: The displacement is A more tangible and easier to understand, but at the same time, it's also much more directly related to the bottom line that our customers are going to pay for their fuel costs.

Chris Berrie: In that case, can you give me an example of how this translates to customer value?

Jason Herlehy: Absolutely. This new Cat DGB engine is capable of running off of compressed natural gas, liquified natural gas, field gas, or diesel. And the key value is being able to offset the diesel volume that's consumed with a cheaper gas. If today you're running a frack engine and it's burning at 100 gallons an hour of diesel. Each of those gallons is going to cost you $2 to $2.50. With Cat DGB being able to perform up to about 85% diesel displacement. That means you've turned that 100 gallons an hour into potentially 15 gallons an hour of diesel burn. Instead you're offsetting it with a lower cost fuel. That being the CNG, LNG or field gas, which will often run anywhere from 30 cents per diesel gallon equivalent to about $1.50 per diesel gallon equivalent. So overall your net fuel cost to produce that power is lower.

Chris Berrie: In that case, is there an easy way for customers to calculate displacement for their fleets?

Jason Herlehy: Absolutely. Caterpillar's developed a tool to actually allow a user to define the conditions and operating profile of an engine, and then estimate for that customer what the value of the system would be to them in terms of fuel savings. And it's called the DGB Fuel Cost Estimator. It's available on our website and it's based on a lot of data and experience that we have in dual fuel engines.

Chris Berrie: Jason, thanks for your time today, talking about displacement versus substitution on our new you tier four final 3512E DGB engine. For more information about the DGB engine, please visit cat.com/oilandgas, and follow us on LinkedIn or Facebook at Cat Oil and Gas. Thanks again, Jason, and see you soon.

Jason Herlehy: Thanks again, Chris.