Affordable, reliable power grid attracting companies to Oklahoma; mineral stockpile needed

Oklahoma is well-known as a major oil- and natural gas-producing state, is second in the US in wind power production and 50% of its power comes from renewables. But Oklahoma is also interested in facilitating a critical mineral strategic stockpile, Governor Kevin Stitt said April 25.

"Everybody probably thinks of Oklahoma as just an oil and gas state, and we are so proud of that industry, we are actually number six in the country in oil production, number five in natural gas, but we're also number two in wind energy production," Governor Stitt, a Republican, said at an event convened by the Council on Foreign Relations at its New York City headquarters.

The state has an affordable, reliable power grid which is causing manufacturers and companies involved in AI to look at setting up operations in Oklahoma. Google's largest data center is in the state, he said, with companies attracted to the fact that the state gets 50% of its power from renewables.

The state is a net exporter of power and its average retail price of electricity to the residential sector was 11.16 cents/kWh in January, according to the US Energy Information Administration. That is the ninth cheapest power by state with the most expensive being Hawaii at 44.28 cents/kWh and the second most expensive being Rhode Island at 31.22 cents/kWh.

"Every ambassador I talk to, every company in Europe, they all want to talk about energy reliability," Stitt said. "We believe we need more wind, and we need more hydrogen and more solar, but we cannot leave out of the conversation a baseload requirement of natural gas," he said.

For example, during the polar vortex in 2021, wind turbines froze in extremely low temperatures along with gas well freeze offs, so coal-fired power had to step up from about 10% of the generation fuel mix to about 50%, Stitt said, adding that he spoke with President Biden at the time and told him that without that resource diversity "people would have died."

Asked about the role of fossil fuels going forward, Stitt said he is a "free market person" and does not think that government has all the answers. "I don't believe there is an existential threat to humanity based on fossil fuels. In Oklahoma, for example, we have reduced our carbon footprint by 60% over the past two decades because of natural gas," he said.

To say that the country can get rid of natural gas and oil in the next decade "is not common sense and is not going to happen," he said.

In many areas of the country, trucks drive around filling residential tanks with heating oil and that seems weird in Oklahoma "where we have clean burning natural gas and pipelines that can deliver a much cleaner fuel than trucks driving around pumping heating oil into basements," Stitt said.

Major permitting reforms could help more gas pipelines get built and even significantly increasing wind power production will require more transmission lines to be built, he said.

Critical mineral stockpile

The pandemic exposed the fragility of supply chains and how such disruptions can make the US more dependent on adversaries for supplies of things like critical minerals.

A strategic stockpile of critical minerals like the Strategic Petroleum Reserve could be needed, Stitt said.

Oklahoma is attracting companies around the critical minerals industry. In 2022, USA Rare Earth selected Stillwater, Oklahoma as the site of the Americas' first rare earth metal and manufacturing facility, according to the state's commerce department. The company controls and operates the Round Top Heavy Rare Earth, Lithium and Critical Minerals Project in Hudspeth County, Texas.

"We don't have a lot of mining in Oklahoma, but we do need to have a conversation about authorizing mining in other parts of the country," he said. The Stillwater facility is a manufacturing plant that makes magnets and other specialty materials for wind turbines, electric vehicles, electronic devices, and military equipment.

Companies are looking for the right workforce and an affordable, reliable power grid along with a friendly regulatory regime, Stitt said, adding that the state has more companies looking into data centers all the time.

Asked about competition from China for critical minerals, Stitt said tariffs could be an option, along with building a strategic stockpile and possibly empowering part of the US government to set up relationships in Africa and South America with mine owners, which is something China is already doing.

"We need to be smart about that and that is why we are talking about a strategic stockpile here in the US and we need to develop those relationships," he said.