Texas Approves Plan to Enhance Oil and Gas Drill Operators’ Access to Power Grid, According to Reuters

By Georgina McCartney

HOUSTON (Reuters) – A Texas commission has unanimously approved the Permian Basin Reliability Plan, aimed at enhancing power grid infrastructure in the United States’ largest oilfield to meet the rapidly increasing demand from the oil and gas sector.

The Public Utility Commission of Texas (PUCT) instructed the Electric Reliability Council of Texas (ERCOT) to develop this plan in December, following a report from major oil companies including ConocoPhillips, ExxonMobil, Pioneer Natural Resources, Diamondback, Chevron, and Devon Energy. The report, prepared by S&P Global, warned of a significant rise in electric load demand in the Permian Basin in the years ahead.

CONTEXT

Transitioning to electric power for oilfield operations can help lower emissions and eliminate the pollution and noise associated with diesel-powered rigs and fracking equipment.

Recently, Texas’ power grid has faced considerable pressure, as the state hosts some of the most energy-demanding industries, including data centers, cryptocurrency mining, and oilfield operations. Rapid population growth and extreme heat have further strained Texas’ electrical grid, contributing to record-high demand last month.

In the latest Dallas Fed Energy Survey, about 29% of participants identified uncertainty regarding grid access as a leading challenge to electrifying their operations. Additionally, another quarter pointed to infrastructure issues as a primary obstacle to electrification.

BY THE NUMBERS

ERCOT, which manages the majority of the state’s power grid for 27 million customers, expects electricity demand in the Permian Basin to reach nearly 27 gigawatts by 2038. This is nearly one-third of the current summer demand for the entire ERCOT system.

To accommodate this anticipated surge in demand, ERCOT estimates that required transmission upgrades may cost between $12.95 billion and $15.32 billion.

KEY QUOTE

“Ensuring the Permian Basin has the reliable electricity it needs to support Texas’ world-leading oil and gas industry is a top priority for the Commission. We have acted swiftly to direct ERCOT to create a transmission infrastructure plan for the region,” stated PUCT Commissioner Lori Cobos.