Basin Permian Renewable Energy

Texas has the potential to lead the nation in renewable energy. First, it has to reduce its commitment to fossil fuels and improve generation and distribution system reliability.

Texas is in the news for blackouts related to a severe winter storm. Some are blaming Texas’ use of wind and solar to produce some of the state’s electricity. It’s more likely that the problem was equipment failures and a shortage of natural gas. The state did not learn from a similar storm ten years ago and implement changes needed to avoid today’s problems.

The fact is that we will have to produce our electricity using renewables if we are to eliminate the use of fossil fuels and stop global warming. We don’t have an alternative.

Fortunately, Texas is a renewable energy powerhouse. It leads the country in wind power and is second only to California in solar power.

The Permian Basin is a large oil formation in West Texas and New Mexico. It is about 300 miles long and 250 miles wide, covering about 86,000 square miles. This is the size of Minnesota, the twelfth largest state and almost half the size of California. The Permian basin employs an estimated 87,000 people.

Basin It is the largest petroleum-producing basin in the United States and has been in production for 100 years, since the 1920s. It has produced a cumulative 30 billion barrels of oil and 75 trillion cubic feet of gas.

In 2020, the basin produced 4.3 million barrels of oil and 15.0 billion cubic feet of natural gas per day. This is about 40% of U.S. oil production and 15% of natural gas production. As impressive as this is, the Permian Basin is also becoming a powerhouse for renewable energy as well. Its potential to produce electricity from solar and wind farms could exceed the energy equivalent of its oil and gas production.

Based upon the authors’ estimates, the Permian Basin with its strong winds and sunny skies has the potential to produce more energy from wind or solar farms than is presently being produced by its oil and gas wells. The land area is large enough that the basin should be able to produce oil and gas, as well as renewable energy from both wind and solar farms, all at the same time.

The basin’s oil and gas reserves are finite and will eventually be depleted. However, its wind and solar energy potential will last forever.

In 2020, Texas had an installed capacity of 29,000 MW of wind power, more than any other state. This is enough electricity to power over 6 million homes. The state produced almost 25 percent of its electricity from wind, more than from coal. There are an estimated 15,000 wind turbines in operation in Texas.

About 15 years ago, ERCOT made the decision to invest in transmission lines to connect west Texas where the Permian Basin area is located with load centers in the eastern and southern parts of the state where most of the population is. This investment was an estimated $7.0 billion. This created a market for renewable energy projects in west Texas, enabling access to areas with large electricity demand.

On the one hand, Texas is now the country’s largest deregulated market for electricity. Texas deregulated its power system so that electricity providers have to compete for customers’ business. This competition forces suppliers to pass on declining electricity costs to customers. So far, most of the price reduction is due to the displacement of coal by lower-cost natural gas for electricity production. In the future, cost reductions could be due to the declining cost of electricity from wind and solar.

In 2020, the national average retail price of electricity according to the U.S. Energy Information Agency is 10.5 cents/kWh. The average retail price in Texas is less, 8.6 cents/kWh. In highly regulated California, the price is 16.9 cents/kWh, about twice the rate in Texas.

The oil fields require large amounts of electric power to run pumps and other oil field equipment. Solar and wind farms with battery storage will provide an increasing share of the electricity needed to maintain the state’s oil and gas production.

On the other hand, recent events have shown that Texas’ drive for deregulation led to blunders. Needed investments in power plant and distribution system weatherization were not made. Interties with neighboring states were not made to avoid federal regulations. The combined result of these two decisions was a system that failed and had no backup from other states. The city of El Paso was an exception, having implemented both of these measures and weathered the crisis.

Texas has the potential to become a model for renewable energy. It has demonstrated the value of thinking big by developing the transmission lines needed to carry renewable electricity from where it’s best produced in west Texas to where it’s needed. If Texas can send renewable energy from west Texas to Dallas, why not to Chicago? At the same time, to realize its full potential, Texas needs to invest in system reliability and backup measures.