The easy way: a worker directs a sideboom operator to lay a new 42-inch piece of pipe into a trench ... [+]
Essential infrastructure spending and regulation is on the agenda of the upcoming biennial session of the Texas legislature. Some believe that there are competing interests are at play—wind and solar energy versus oil and gas producers. Both are competing for infrastructure spending and favorable regulations. It’s a big state. Here’s how both can win.
Texas is the nation’s largest producer of electricity from wind power—more than 27 gigawatts of installed capacity—and solar is growing. Years ago, the Texas legislature enabled the growth of the industry by facilitating the construction of long-distance transmission lines from wind farms in West Texas to consuming regions of the state. Consumers, also known as voters, have paid for these transmission assets in their monthly electricity bills. A recent poll by University of Houston researchers shows that Texans, along with voters across the nation, strongly favor increasing supplies of renewable energy. No one is naïve. It will require concerted effort and investments by the state and industry to bring the new supplies into the grid as wind and solar developments continue in West Texas and kick off along the Texas coastline.
Texas is the nation’s largest producer of oil and gas even as the world suffers through the pandemic recession and OPEC’s price war. The loss of tens of thousands of jobs and billions of revenues have had an impact across the state of as much as $30 billion in lost annual GDP—billions in lost wages and lost tax revenues. This economic reality imposes a very real fiscal constraint on what the legislature can fund. The legislature can work to counter these lost revenues by encouraging further infrastructure development.
A clean and safe source of energy around the globe
The first challenge in the West Texas oilfields is the amount of natural gas that is produced with the oil wells, associated gas. The oilfields developed faster than the infrastructure. Producers absorbed the expensive costs and less safe means of transport by truck and rail until oil pipelines were completed and provided takeaway capacity. Still in catchup mode is the necessary network of natural gas pipelines and this is necessary to reduce the wasteful flaring of gas in the region which, by some counts, is enough to power entire states. The strain has been relieved lately by the commissioning of the Permian Highway pipeline to the coastal and global LNG markets, and the Wahalajara system taking gas to Mexico. These exports benefit the national balance of trade. The commissioning of new LNG exporting facilities on the coast will expand the market.
The export markets will expand. Hundreds of millions of energy impoverished people are joining the 21st Century with their need for healthcare, cellphones and internet. LNG is a less expensive fuel for them than oil and much cleaner than coal. Countries like India with a population of 1.3 billion and rising recognize the need for natural gas and it’s benefits versus coal and have initiated strategies to begin a transition. It is a battle for market share, and Texas gas producers are competitive on the world market.
More can be done.
Inexpensively produced natural gas in West Texas is increasingly used for electricity production during peak summer days when electricity prices soar, and the wind farms are in their daily down cycle. The lesson of the California electricity markets debacle of August 2020—an echo of the 2000 and 2001 California crises—is fresh. The much larger electricity market in Texas cannot afford such a shortfall. Insurance against such a shortfall is cheap while the alternative of throttling back on pipelines can disadvantage the state’s consumers and producers. Building out the infrastructure provides the most economic access to markets.
