Texas energy transition leaders praise progress, call for continued efforts at conference

overheard at SUper dug

At the annual, SUPER DUG Conference & Exhibition 2024 in Fort Worth last week, Texas energy executives weighed in on the progress of the energy transition. Photo by Lindsey Ferrell

Woven in between reflections on the most active consolidation market in recent history, an underlying theme emerged from Hart Energy’s SUPER DUG Conference & Exhibition 2024 in Fort Worth last week. Executives, investors, and analysts conveyed admiration for the emissions reductions achieved across the shales while continuing to meet the growing demand for natural gas.

However, concern for continued investment echoed this praise, as many expressed the need for increased investment to support a world of flourishing population, economics, and technology.

Marshall Adkins, head of energy for Raymond James, shared an analogy demonstrating the energy demand impact from advancements in technology, most notably those sprouting from the widespread adoption of artificial intelligence. Adkins explained that a minimal whole-home generator consumes about 8,500 watts of power; to keep air conditioning, the washing machine, and garage door working results in a pull of approximately 14,000 watts. One single chip from NVIDIA requires that same 14,000 watts plus another 150 percent power for cooling, totaling approximately 35,000 watts — about the same as would completely power an average home as if there were no disruption in supply.

While this volume of power consumption seems hefty, consider that NVIDIA sold over half a million chips in a single quarter last year, and the effect starts to multiply exponentially. And while development of solar and wind power sources will replace most, if not all, of the current energy produced from coal, the stability of the power grid relies predominantly on the continuous stream of natural gas. That is, if the stream of investment into developing and expanding natural gas continues to grow in parallel.

Reflecting on the expectation from public and private investors, as well as upcoming talent, to embrace meaningful advancements in ESG, Will Van Loh, CEO of Quantum Energy Partners, shared the business benefit of greener practices.

“Switching your frac fleet from running diesel to natural gas, we saved one of our companies in the Haynesville half a million dollars per well and reduced GHG by 70 percent. Make a bunch of money and do good for the environment – (that’s a) pretty good deal,” Van Loh told Hart Energy’s editor-in-chief for Oil & Gas Investor, Deon Daugherty.

For decades, the industry has pursued increasingly eco-friendly habits, but the requirements of ESG reporting make it more visible to the rest of the world. Permian Operators, which produce almost half of all US daily oil volume, cited specific strides made in reducing emissions and operating more cleanly during their respective presentations:

Leadership from Diamondback Energy spoke about adopting the use of clear drilling fluids in lieu of oil-based mud, resulting in faster drilling times and cleaner operations. The technique came along with the acquisition of QEP Resources in 2021 and reflects the company’s commitment to remaining humble in its pursuit of more efficient and more environmentally beneficial methodologies.
Nick McKenna, vice president of the Midland Basin for ConocoPhillips praised their Lower48 team for reducing gas flaring by 80 percent since 2019 while also increasing the use of recycled water over 3x in that same 5-year horizon.
Clark Edwards, senior vice president of Development for BPX, cited achieving 95 percent electrification of their Permian well set as of the end of 2023. Building and installing their own microgrid – a practice repeated by numerous operators throughout the Basin, where public infrastructure lags far behind private entity needs – added enough megawatts to their operation to allow BPX to run drilling rigs completely independent of an already strained public grid.

In addition to reducing diesel usage, flaring, and dependence on the public grid for electricity, water management stays a top economic and ecological concern for shale operators all over the United States. While a compelling case of "have and have-not" dominated the shale water business over the last decade-plus, savvy operators increasingly embrace a mindset that water disposal should remain a choice of last resort. Companies like WaterBridge, a Joint Venture with Devon Energy, and Deep Blue, a joint venture with Diamondback Energy, help bring clean and recycled water to areas with shortages, both in and outside of the industry.

As Kaes Van’t Hof, president and CFO of Diamondback Energy, said, “The Midland Basin is now recycling as much water as it possibly can. Eventually it’s going to be about, ‘Water going downhole into a disposal well is the last option.’ Can you recycle it? Can you bring it somewhere else, evaporate it? We’re starting start some early de-sal[ination] tests in the Spanish Trail near the airport. Eventually, can we tell the story that we sell freshwater back to water the golf courses of Midland?”

The Energy Transition steams ahead, but pragmatic observations remind us that oil and gas make up approximately 60 percent of the energy supply today – a volume not easily replaced by any other source completely in the next few years. However, the overwhelming support for delivering the best barrel with the lowest carbon intensity possible permeated Hart Energy’s SUPER DUG Conference & Exhibition 2024.

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Telsa eyes Houston area for $10 billion solar manufacturing plant

under review

Electric vehicle and clean energy company Tesla is considering building a new $10.1 billion solar cell manufacturing facility in Fort Bend County, according to documents filed with the Texas Comptroller’s Office.

If approved, the plant, called Project Sun City, would be located on a 3,050-acre site off FM 762 and FM 1994 in Richmond, Texas. Tesla aims to finish construction in 2028, with the plant being operational by early 2029.

The plant will manufacture photovoltaic (PV) solar cells and modules that can convert sunlight into electricity. PV Magazine reports that the facility is "the largest single manufacturing investment Tesla has proposed on paper."

Advisory and consulting firm Kroll submitted the documents to the Texas Comptroller of Public Accounts and noted if an agreement regarding tax incentives isn't reached, the project will exit Texas.

Tesla has requested credits under the Jobs, Energy, Technology, and Innovation (JETI) Act. The incentive program aims to attract large, capital-intensive economic development projects by lowering the property taxes an entity must pay over 10 years if it meets requirements related to job creation and investment. For example, pharmaceutical giant Bristol Myers Squibb Co. recently announced that its forthcoming $2.3 billion Houston-area manufacturing site is a qualified project under the JETI program.

Kroll predicts that the facility would create 9,712 new full-time jobs, over 1,100 construction jobs and billions of dollars in future property tax revenue, the documents show. Additionally, it says the project will spur $1.1 billion in local business expenditures and that Texas would increase its GDP by approximately $107 billion as a result of the project activities.

Tesla opened its $200 million Megafactory in Brookshire, Texas, last year. The company is continuing its goal to deploy 100 gigawatts of solar manufacturing in the U.S before the end of 2028. According to the U.S. Energy Information Administration, 100 gigawatts is equal to about 8 percent of the country's power grid capacity.

Houston researchers land $10M grant to study how climate change drives disease threats

climate health research

Researchers from Rice University, Baylor College of Medicine and the University of Texas School of Public Health have received a $10 million grant to support research and public education on how climate change is linked to public health.

The funding comes from North Carolina-based Burroughs Wellcome Fund and is known as the organization’s Climate + Health Excellence (CHEX) award. It will be used over the next five years to launch the new FORECAST initiative, led by Rice professors and co-investigators Sylvia Dee and Joseph Campan.

FORECAST will “study how a rapidly changing environment and weather drive the emergence and expansion of deadly pathogens in human populations,” according to a release from Rice.

“This grant supports novel research linking climate change projections to health care solutions while simultaneously ensuring the next generation of scientists, leaders and policymakers have the training to assess and respond to the climate change risks that we already know are increasing every year,” Dee said in the release.

The funding will go toward a variety of new initiatives and centers.

At Rice, the funding will help launch the new Center for Climate and Environmental Health, as well as cross-campus multidisciplinary collaborations, seed grants, postdoctoral and graduate positions, and more, according to the university.

The grant will also support the statewide “Middle to Medical” climate-health educational program for youth. The program will focus on teaching how pathogens spread and how climate change plays a role in the process.

“FORECAST will prepare youth across Texas to make informed health decisions that protect themselves and their families and communities from extreme weather and disease-related risks,” Nancy Moreno, a professor of education, innovation and technology at Baylor College of Medicine and co-investigator on this grant, added in the release.

Anthony Maresso, professor of molecular virology and microbiology at Baylor College of Medicine, will share expertise in viral pathogen sewage detection that was developed during the COVID-19 pandemic; while Eric Boerwinkle, dean of the UT School of Public Health, will share insights from the Texas Wastewater Environmental Biomonitoring Network, which tracks disease-causing viruses and bacteria by testing wastewater weekly at Texas sites.

“Hotter days, bigger storms, new disease threats — Texas’s future demands preparation,” Boerwinkle added in the release. “With support from the Burroughs Wellcome Fund, the FORECAST team is helping Texas detect threats earlier and respond faster, saving lives and strengthening our economy.”

EV surge could shutter 40 refineries by 2040, Wood Mackenzie report warns

ev outlook

The rise of electric vehicles could spell trouble for Houston’s oil and gas sector, a new report suggests. But the oil and gas industry stands to benefit from potential sluggishness in U.S. adoption of EVs.

If worldwide EV adoption rises as expected, global oil demand could fall by five million barrels per day by 2040, accelerating the closure of about 40 oil refineries, says the report, published by energy research and consulting firm Wood Mackenzie. The firm’s North American hub is in Houston.

Those closures might spell trouble for refinery operators with a sizable Houston-area presence, including BP, ExxonMobil, Marathon, Saudi Aramco, and Valero. In 2025, the five companies collectively earned roughly $33 billion from downstream operations, including refineries. One caveat: Each company assigns a different definition to “downstream.”

Refineries in Organization for Economic Co-operation and Development (OECD) countries, including the U.S. but excluding Middle Eastern heavyweights, “are most at risk due to their high energy costs and carbon prices,” the Wood Mackenzie report says.

On the flip side, an abundant U.S. oil supply means American drivers have less of an incentive to switch from traditional cars to electric vehicles, despite stubbornly high fuel prices, according to the report.

Wood Mackenzie predicts EVs will account for 20 percent of the U.S. personal and commercial vehicle fleet in 2040, up from three percent in 2025. That compares with a global forecast of 25 percent in 2040, up from 4 percent last year.

Another U.S. roadblock to EV adoption cited in the report: the country’s relative lack of advanced battery manufacturing.

“Without advanced battery technologies, the U.S. auto sector is at risk of ceding its home market to non-Chinese EVs and falling behind competitors internationally,” the report says.

Furthermore, according to the report, Chinese investment in EV manufacturing in the U.S. probably will remain a no-go and tariffs on Chinese EV imports likely won’t be lifted, even if Democrats resurrected EV incentives following a White House win in 2028.

“Competition among EV manufacturers in international markets will only intensify,” the report notes. “Companies that can offer competitive products in high-growth markets will be best positioned for long-term success.”

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