Adrian Hedden | Carlsbad Current-Argus
A major Permian Basin oil and gas producer planned to use renewable energy to power its operations in New Mexico and West Texas and around the globe.
Chevron USA announced a deal with renewable energy producer Algonquin Power and Utilities Corp. to co-develop renewable power projects to provide electricity to Chevron’s operations.
The four-year agreement was expected to generate more than 500 megawatts of Chevron’s present and future electricity demands, per a news release.
Construction was expected to begin in 2021 and was focused on Chevron’s assets in the Permian Basin, along with Argentina, Kazakhstan and western Australia, the release read.
The developed facilities would be co-owned by Chevron and Algonquin, with Algonquin leading the decision and construction while Chevron would purchase the power agreements.
President of Chevron Pipeline and Power Allen Satterwhite said the agreement was intended to improve the oil and gas giant’s commitment to reducing its carbon emissions.
“Chevron intends to lead in the future of energy by developing affordable, reliable and ever-cleaner energy,” he said. “This agreement advances Chevron’s commitment to lower our carbon footprint by investing in renewable power solutions that are reliable, scalable, cost efficient, and directly support our core business.”
Chief Executive Officer of Algonquin Arun Banksota said the projects would help offer more efficient energy supplies to customers and pursue the energy industry’s growing agenda for utilizing more renewable sources such as wind and solar.
“Continuing to invest in renewable energy solutions is fundamental to our business strategy,” Banksota said. “By working with sustainability champions like Chevron, we maximize the positive impact of the low carbon technologies we offer to communities across the U.S. and Canada, and internationally.”
Last year, shareholder advocacy group As You Sow filed shareholder proposals with ExxonMobil and Chevron, calling on the major oil and gas producers to align with the Paris Agreement and curb pollution.
A study from Carbon Tracker reported 55 percent of Exxon’s production planned through 2040 was outside of the Paris Agreement, while Chevron had 35 percent.
While the companies have worked to cut some carbon emissions, As You Sow President Danielle Fugere said they weren’t going far enough.
“Reducing greenhouse gas emissions at the margins, while continuing business as usual as Exxon and Chevron are doing, is not a successful long-term business plan, especially when competitor companies are implementing new paths to thrive in a low-carbon economy,” she said.
And during declines in the oil and gas markets led by the COVID-19 pandemic, one of the nation’s most active oil and gas fields could become a hot spot for renewables.
A Monday report from the Institute for Energy Economics and Financial Analysis (IEEFA) showed that West Texas could soon become a leading region in wind energy.
The report pointed to Nolan County, near Abilene in West Texas which recently saw economic declines as the oil and gas industry struggled, but saw some economic resurgence, the report read, through increases in wind energy production.
Today, the wind energy accounts of 11 of the top 20 tax payers in Nolan County, read the report.
“Nolan County is no isolated example, surrounded as it is by thousands of megawatts of new wind projects coming online now through January 2022,” the report read. “Considering the health and momentum of the wind industry alongside the state’s up-and-coming utility-scale solar project pipeline, growth in the Texas energy industry stands to be driven more by renewables than by gas and oil production.
“The Nolan County example can and will be replicated elsewhere.”
And that shift could be coming as the market for crude continued to suffer despite some recovered from April’s historic drop below $0 per barrel.
As of Monday, the Chicago Mercantile Exchange showed domestic crude trading at about $42 per barrel as it continued to sit in the lower $40s through the summer, well below pre-pandemic levels of between $55 and $60 in early 2020.
The Energy Information Administration (EIA) reported on Aug. 5 that crude oil demands saw a slight increase in May as many states eased stay-at-home orders related to the pandemic, while production decreased.
And in a report from Rystad Energy said hydraulic fracturing in the Permian could be on the rise, as 125 fracking jobs were identified in the region last month.
Rystad head of Shale Research Artem Abramov said many producers could adjust and increase their operations for the $40 per barrel price range, causing wells to see some increase as operations are consolidated and costs are cut.
“We anticipate nationwide horizontal oil drilling will remain relatively flat in the next few weeks, as some operators continue to implement modest downward adjustments, while others have started restoring drilling operations in the current $40 price environment,” he said.