U.S. shale oil and gas executives are moving to electric rigs and fracking to reduce diesel emissions but grid infrastructure and cost challenges are hurdles, the Federal Reserve Bank of Dallas said on Wednesday in its quarterly energy survey.
The survey of Texas, Louisiana and New Mexico executives also revealed third-quarter oil and gas production was mixed, with data suggesting oil production increased while natural gas production decreased.
Nearly a fifth of oil and gas executives said they have fully converted to electric-powered drilling rigs and hydraulic fracturing, a way to cut pollution from diesel-powered equipment.
Another 6% said they aim to electrify their production operations, and a further 31% said they expect to partially electrify their operations.
In addition to reducing emissions, electrification can eliminate the pollution and noise of diesel-powered rigs and fracking equipment.
Around 29% of surveyed respondents with operations primarily in the Permian basin of west Texas and New Mexico said the top challenge to electrification was uncertainty about future access to the grid. Another quarter of those polled primarily cited grid infrastructure challenges.
Oilfield service executives criticized the permitting processes for slowing the industry’s move to electrifying operations. Some pointed to long lead times for equipment and the expense of electrifying production.
“Statutory requirements for utilities to approve grid interconnections have no teeth; what should take three months now takes 12 to 18 months,” one service executive commented.
The survey was carried out from Sept. 11 to 19 and covered 136 energy firms, of which 91 were exploration and production firms and 45 oilfield services firms. The Dallas Fed’s employment index was positive for the 15th consecutive quarter, but the low single-digit result suggested little to no overall hiring, according to the survey.
Costs for both E&P firms and oilfield service firms rose but at a slower pace compared with the second quarter, the survey said.
(Reporting by Georgina McCartney in Houston; Editing by David Gregorio)