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Texas approves plan to boost oil and gas drillers’ power grid access

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FILE PHOTO: The sun sets behind power lines above the plains north of Amarillo, Texas, U.S., March 14, 2017. REUTERS/Lucas Jackson/File Photo
The sun sets behind power lines above the plains north of Amarillo, Texas, U.S., March 14, 2017. — REUTERS/Lucas Jackson/File Photo

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

The Public Utility Commission of Texas (PUCT) directed the Electric Reliability Council of Texas (ERCOT) to compile the plan in December last year, two months after ConocoPhillips, ExxonMobil, Pioneer Natural Resources (PXD.N), Diamondback, Chevron and Devon Energy submitted a report with financial information company S&P Global warning the commission of a significant increase in electric load demand in the Permian basin in the coming years.

CONTEXT

Electrifying oilfield operations can reduce emissions and eliminate pollution and noise associated with diesel-powered rigs and fracking equipment.

The Texas power grid has come under significant strain, with the state home to some of the most energy-intensive industries, including data centers, cryptocurrency mining and oilfield operations.

Surging population growth and sweltering heat have also increased stress on Texas’ vulnerable electrical grid, last month driving demand to a record high.

Around 29% of surveyed respondents who had participated in the latest Dallas Fed Energy Survey said uncertainty about grid access was a top challenge to electrifying their operations.

Another quarter of those polled primarily cited grid infrastructure challenges as a hurdle to electrification.

BY THE NUMBERS

ERCOT, which operates most of the state’s power grid for 27 million customers, forecasts electricity demand in the Permian Basin could grow to nearly 27 gigawatts by 2038, equal to almost a third of the current summer demand of the entire ERCOT system, according to ERCOT.

ERCOT estimates that the required transmission upgrades to meet the jump in demand could range 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,” PUCT Commissioner Lori Cobos said.

(Reporting by Georgina McCartney in Houston; Editing by Chizu Nomiyama)

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