Austin, Texas — Fast-growing power demand in West Texas' Permian Basin is creating challenges for wires and generation projects, industry officials said Wednesday, but grid planners, regulators and industry officials are working to expedite planning and construction, which could reduce large power congestion costs in the region.
During a Gulf Coast Power Association panel discussion, Stephen Robertson, Permian Basin Petroleum Association executive vice president, noted that the Permian Basin, where the first oil well was drilled in 1920, is now producing five times as much oil and gas as it did a decade ago.
On Tuesday, DeAnn Walker, who chairs the Public Utility Commission of Texas, said that in her discussions with oil and gas producers in West Texas and the transmission and distribution utilities that serve the area, "it became very apparent to me that the two industries don't match up" in terms of the schedules needed to accomplish their work. Oil and gas project demands move much more quickly than power projects, she said.
"My goals for the rest of the year and 2020 ... include getting services to the Permian Basin in a more timely fashion," Walker said. "That is now the economic driver in Texas, and we need to get service to them."
Ellen Buck, vice president for business and operations services at Oncor, Texas' largest transmission and distribution utility, said the biggest challenge is "the difference in timing between oil and gas development and transmission development."
Johnny Carlock, Pioneer Natural Resources power engineering services supervisor, said the lack of transmission, and the resulting congestion, sometimes result in a large transmission congestion bill that "really disrupts an operation ... with some serious sticker shock."
Woody Rickerson, Electric Reliability Council of Texas vice president for grid planning and operations, said, "A lot of that congestion was made worse because utilities were trying to fix those problems while they were occuring."
LOAD FORECASTING AT ISSUE
Carlock said grid planners "have a hard time forecasting our load."
Oil and gas developers have firm information about their power needs "24 months at the outside" into the future, but by the time wires companies can respond by providing service, typically after four to six years, more load has appeared, and "there's not enough capacity."
Rickerson said, "It's really a four- to five-year process from the time need and seen to the time the system is engineered to serve the load."
Last Christmas, Carlock said Pioneer set up a temporary generator to serve a site, but, "We don't want to put a capital expense into a power generator that we are not forced to."
ERCOT is working to shorten the process, eliminating studies that do not need to be done more than once and "being more creative in the load forecasting."
Carlock said planners may be looking at the wrong metrics to determine how much load is coming.
"You can't always look at historical models," he said.
For example, the drilling rig count may be decreasing, but production may be increasing, because the region has a number of drilled but uncompleted wells, Carlock said.
Similarly, if oil and gas production declines temporarily, power demand may remain strong because producers must still pump large amounts of water, Carlock said.
And as oil output decreases in a producing well, a facility is likely to produce more natural gas, for which power is needed for gas processing facilities, he said, adding, "For our purposes, that's a 50-MW load."
Oncor's Buck said the vastness of the territory involved is another factor that shows wires companies' response to West Texas power demand growth.
"ERCOT's Far West weather zone is about 6% of the energy in ERCOT, but a significantly larger amount of real estate," Buck said.
COMPETING REAL ESTATE INTERESTS
On the other hand, limits on real estate can slow development of generation near West Texas loads, said Spivey Paup, development director of Recurrent Energy, which develops solar projects.
"There's a ton of solar projects in West Texas, in particular, trying to get built," Paup said. "You want to take a piece of land and blanket it with solar panels, but there's not a square foot of land that is not either being operated on [by oil and gas companies] or at least eligible to be operated on."
These limitations impede the ability of developers to get title insurance for the surface area being considered for solar projects, Paup said. "It can be a pretty big challenge in some places."
Nevertheless, solar projects can be established in fairly quick order - about three years, in all - and Paup advocated its ability to energize the Permian Basin.
"No generation is perfect," Paup said. "Solar has its issues. ... [But] all of the generation coming online is going to be renewable. I would submit that energy storage is going to be a big part of that."
-- Mark Watson, firstname.lastname@example.org
-- Edited by Gail Roberts, email@example.com