Rural Electrification: Not Just for the Dust Bowl Anymore

But there may be a little irony in the details

Electrification appeals to Texas homeowners because electric appliances like heat pumps are cheaper to operate, use energy more efficiently, and don’t have the air and climate harming emissions of appliances powered by natural gas. Guess who else electrification appeals to? For many of the same reasons as Texas homeowners, oil and gas operators in the Permian Basin have sought to transition their equipment to electrical power.

Oil and gas equipment that runs in places too far away from an electric grid to connect to utility power run on diesel. Running pumps on diesel generators is more expensive than running them on electricity. Diesel generators release emissions like CO2, NOx, and VOCs, all of which are air pollutants.

On the west side of the Permian Basin, where a fracking boom has led to significant growth in oil and gas operations, available electrical power hasn’t kept up with demand. To bridge the gap, operators rely on locally produced electricity to power their equipment. This can be done with diesel generators, but in the past few years, electrification has been increasingly paired with renewable energy like wind and solar.

This has been a mutually beneficial arrangement that was supported financially by the Inflation Reduction Act. Some of these projects also included new equipment to capture excess methane gas, reducing or eliminating the need for flaring. These reductions in the carbon intensity of West Texas natural gas make it a more appealing product on the global market.

As operators continue to seek electrical power for Permian oil and gas fields, operators have turned to PUC and ERCOT, asking for a study on the feasibility of improving transmission infrastructure in the region. HB 5066 (88th Texas Legislature) called for an assessment of currently available transmission and projections of what additional transmission will be needed as Texas’s energy demand continues to grow.

The need for expanded transmission infrastructure in the Permian, and other parts of the state, was one subject of conversation at February 4th’s Senate Business and Commerce hearing.

There are several dynamics at play in this conversation.

One is the Texas Energy Fund, passed during the last session and voted in as a constitutional amendment that provides a fund from which low cost loans will be awarded to fund new electrical generation capacity. Where will those new facilities be located? How will this additional generation be transmitted to the parts of the state that need it? What types of generation can be supported by the Fund?

Another is the Inflation Reduction Act. Texas oil and gas operators benefited from IRA funds to make equipment improvements, improve carbon intensity, and improve the cost and efficiency of operations by electrifying their equipment. Existing improvements will remain in place, but remaining IRA funding has been impounded by the new presidential administration. Presumably, federal funding to support renewables, even renewables used to benefit the oil and gas industry, will no longer be an option after federal budget reconciliation is complete this spring.

Another is the global market for US natural gas. Just a week ago, the president of Columbia canceled a partnership between Columbian and US-based oil companies to import fracked natural gas, citing environmental concerns like air and water quality and climate change. The European Union has expressed similar concerns about the carbon intensity of natural gas imports.

If it seems ironic that oil and gas operators cite environmental concerns while lobbying PUC and ERCOT for transmission improvements so that they can make their business of sucking fossil fuels out of the ground cheaper and easier that’s because it is.

The Permian Basin is one of the most productive oil and gas production zones in the country. It occupies much of West Texas and the southeast corner of New Mexico. The oil and gas industry has grown rapidly in the area in the last decade because of the availability of natural gas that can be captured by fracking.

But while New Mexico has successfully regulated the industry in their portion of the Permian to limit climate-harming and air-polluting emissions, Texas continues to struggle and actively resist any effort to reduce emissions.

An ERCOT representative at the February 4 hearing acknowledged that Texas needs significant improvements in transmission infrastructure to meet the tremendous growth in demand expected in the coming decade. Much of that demand is from industrial customers that the state is working to attract to the state.

The conversation about what capacity transmission lines the state should install is important. But what is alsoneeded is a larger conversation about how we use the grid, how that is projected to change, the ways our energy portfolio is changing, and how we use those changes to our advantage.

Now is the time to think creatively about how we can channel new investment in the state in a way that expands and stabilizes our grid, rather than straining it. Creative solutions like requiring new industrial development to add onsite generation can leverage renewables, lowering operating costs and improving reliability while reducing emissions. Transmission improvements can be planned to benefit both industrial customers and new renewable investments so that grid capacity grows with the growing population.

The transition away from fossil fuels requires collaboration across coalitions. The Texas Legislature would be wise to foster that collaboration for the benefit of all Texans, present and future.