Texas Commission Approves Permian Basin Reliability Plan

By Georgina McCartney

HOUSTON (Reuters) – A Texas commission unanimously approved the Permian Basin Reliability Plan on Thursday. This plan aims to expand power grid infrastructure in the United States’ largest oilfield to meet the rapidly growing demand from the oil and gas industry.

The Public Utility Commission of Texas (PUCT) tasked the Electric Reliability Council of Texas (ERCOT) with compiling the plan in December last year, following a report submitted by major oil companies including ConocoPhillips, ExxonMobil, Pioneer Natural Resources, Diamondback, Chevron, and Devon Energy. This report, in collaboration with financial information company S&P Global, warned of a significant increase in electric load demand in the Permian Basin in the upcoming years.

CONTEXT

Electrifying oilfield operations can lead to emission reductions and eliminate the pollution and noise associated with diesel-powered rigs and fracking equipment.

Texas has seen significant strain on its power grid, hosting some of the most energy-intensive industries, including data centers, cryptocurrency mining, and oilfield operations. Population growth and extreme heat have further exacerbated stress on Texas’ vulnerable electrical grid, pushing demand to a record high last month.

In a recent Dallas Fed Energy Survey, about 29% of respondents indicated that uncertainty about grid access posed a major challenge to electrifying their operations. Another quarter cited grid infrastructure issues as a significant obstacle.

BY THE NUMBERS

ERCOT, which manages power for 27 million customers in Texas, projects that electricity demand in the Permian Basin could surge to nearly 27 gigawatts by 2038. This figure is nearly one-third of the current summer demand for the entire ERCOT system. To accommodate this expected increase in demand, ERCOT estimates that necessary transmission upgrades could cost between $12.95 billion and $15.32 billion.

KEY QUOTE

“Ensuring the Permian Basin has the reliable electricity it needs to power Texas’ world-leading oil and gas industry is a top priority for the Commission, and we have taken swift action to direct ERCOT to develop a transmission infrastructure plan for the region,” said PUCT Commissioner Lori Cobos.