If the fossil fuel industry does not act now, it could eventually die out. That’s because the global economy is aggressively shifting away from climate-changing fossil fuels toward cleaner alternatives. This shift is forcing oil and gas companies to find ways to clean up their act so they are part of the solution and not just contributing to the problem.
One of the measures that more and more energy companies are taking is to invest in renewable energy projects to help fuel their operations. This helps reduce emissions from the oil and gas they produce. This makes the industry more sustainable, potentially preventing its extinction and making it a much more viable long-term investment.
Teaming up to reduce costs and emissions
Leading oil and gas producer Pioneer of natural resources (PXD -1.36%) recently revealed its involvement in a few renewable energy projects. They will supply low-cost renewable energy to its operations in the Permian Basin and the Texas power grid.
It partners with the leading producer of renewable energy NextEra Energy (BORN 0.27%) build a 140 megawatt (MW) power plant wind energy production facility on land it owns in Midland County, Texas. Pioneer and its channel service partner Targa Resources (TRGP 0.19%) have entered into a power purchase agreement with NextEra to purchase the electricity produced by the facility which it will own and operate. This will help provide some of the electricity for their condominium natural gas infrastructure in the Midland Basin as well as some of Pioneer’s field operations when it comes online in 2024.
Pioneer is also participating in the 160 MW Concho Valley solar project through Targa’s power purchase agreement supporting this facility. It started supplying them with renewable energy last month.
The oil and gas producer is evaluating other potential wind and solar power developments on land it owns in the Permian Basin. These future projects could provide it with more renewable energy at low cost while further reducing its emissions profile.
Multiplication of renewable energies to reduce costs and increase sustainability
Many other energy companies have taken similar steps to self-power their operations with renewable energy to reduce costs and emissions. For example, the oil giant Chevron (CLC 0.73%) work with Algonquin Power & Utilities (AQN -0.90%) on a solar energy project to power its oil and gas operations in Texas and New Mexico. They are installing more than 56,000 solar panels on 120 acres, which should generate 20 MW of renewable energy that Chevron won’t need to draw from the grid. They will each hold a 50% interest in the field, which Algonquin will operate, with Chevron purchasing the power. This project will go live later this year.
Pipeline giant Energy transfer (AND -0.16%) signed two power purchase agreements to support solar power developments that will help self-power its operations. In 2020, it accepted its first-ever dedicated solar contract by anchoring the 28 MW Maplewood 2 project in West Texas, which came online last year. Meanwhile, he agreed to buy 120MW of power from a solar power facility in northeast Texas late last year. This project is expected to start producing in 2024. Thanks to these agreements, Energy Transfer will obtain approximately 20% of its electricity from renewable energies.
Pipeline Company Fellow williams (WMB 2.17%) invests in solar power projects to help self-power its operations. It currently has 10 projects underway that are expected to come online through 2024. Williams is investing about $100 million this year in several clean energy projects and could increase that amount to as much as $250 million annually as that commercially viable opportunities arise.
It’s a step in the right direction
The fossil fuel industry is working to transition its operations to become more sustainable. Energy companies are investing in wind and solar projects to power their operations and reduce costs and emissions. This helps reduce the carbon intensity of the industry’s oil and gas production, which could allow these fossil fuels to play a role in a low-carbon world, potentially preventing the sector from disappearing at all. term.
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