Page 6 - NorthAmOil Week 45

NorthAmOil COMMENTARY NorthAmOil
Permian players turning to renewable power
Drillers in the prolific Permian Basin are increasingly turning to renewable energy to power their operations
PERMIAN BASIN
WHAT:
More Permian producers are looking to renewables to power their operations in the basin.
WHY:
It is comparatively cheap and easy to build solar farms in Texas.
WHAT NEXT:
Oil producers are looking at a variety of different ways to demonstrate their environmental credentials.
DESPITE recent concerns over a slowdown, the Permian Basin continues to drive US oil produc- tion with output across the region – including both conventional and unconventional opera- tions – now estimated to be above 4.5mn barrels per day (bpd). This has led to a surge in demand for power in the area. Faced with the need to keep costs down, boost access to power and, increasingly, showcase their environmental cre- dentials, more and more producers are turning to renewables such as wind and solar power.
This can involve striking long-term supply deals with renewable energy producers, or alter- natively, drillers may opt to develop on-field wind or solar farms.
Powering up
Occidental Petroleum is prominent among the companies involved in the adoption of renew- able power. In October, the company started up a solar farm for powering an enhanced oil recovery (EOR) operation in the Permian. Speaking on the company’s third-quarter earn- ings call last week, Occidental’s president and CEO, Vicki Hollub, said this was the largest solar facility in Texas that directly supports oil and gas operations.
An Occidental unit has also recently signed a 12-year power purchase agreement (PPA) with a joint venture comprising Macquarie’s Green Investment Group (GIG) and Core Solar. Under
the deal, Occidental will buy 109 MW of solar power from 2021.
Occidental said in a statement at the time that using solar power was expected to reduce both the costs and the carbon intensity of its opera- tions. The company estimates that the initiative will allow it to eliminate 160,000 tons (145,150 tonnes) per year of carbon dioxide (CO2) emissions.
The switch to renewable power can take time, and operators are likely to start by adding renew- ables to a mix of power sources that involves nat- ural gas as well. Among these is Apache, which uses a mix of solar power, natural gas and diesel to power those of its Permian operations that are not connected to the natural gas grid.
The shift towards renewable energy is not limited to the independents, however, and both ExxonMobil and Royal Dutch Shell have started using solar to power some of their Permian operations.
ExxonMobil announced last year that it had struck 12-year agreements to buy 500 MW of solar and wind power from Denmark’s Orsted in the Permian. The deal was the largest renewa- ble contract signed to date by an oil and gas pro- ducer, according to Bloomberg NEF.
A company spokesperson said at the time that ExxonMobil was always looking at ways of diversifying its power supply and ensuring com- petitive costs.
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w w w . N E W S B A S E . c o m Week 45 13•November•2019