* Electricity needs for oil, gas production strain grid
* Wind lines near completion as West Texas oil activity
* New wind lines designed for more wind-farm development
By Eileen O'Grady
HOUSTON, Oct 25 High-voltage transmission lines
being built to carry electricity from wind farms in West Texas
to the state's major cities are instead helping power the boom
in oil exploration and production in the Permian Basin,
according to a company serving the region.
Owing to the use of hydraulic fracturing and horizontal
drilling to unlock oil and natural gas resources, electric
demand in the prolific Permian Basin - which stretches from West
Texas into New Mexico - has been growing 5 to 6 percent a year,
said officials with Oncor, the Dallas-based transmission company
that serves much of the Texas Permian.
That's more than twice the growth rate for electricity seen
across Oncor's north Texas system that includes Dallas and Fort
Worth, said Jim Greer, Oncor's chief operating officer.
In addition to having a long history as one of the country's
largest oil and gas producing regions, West Texas has seen a
surge in wind generation that propelled the state to No. 1 in
the nation with 10,570 megawatts of wind capacity. Texas is also
the top power producer and consumer in the United States.
The growth of wind farms initially created congestion on the
existing power grid as electricity was unable to move to
power-hungry cities like Dallas, Austin and San Antonio.
That led state regulators in 2008 to approve plans to
construct thousands of miles of new high-voltage power lines to
tap wind resources and to support another 8,000 MW of wind-farm
Transmission built under that program, called Competitive
Renewable Energy Zones, or CREZ, will be in service by the end
of the year.
Congestion on the older West Texas power grid became acute
in 2012 as oil production surged past 1.2 million barrels per
day, creating a surge in wholesale power prices in the region.
Now oil companies are embracing the new power lines to solve
power issues in the bustling oil patch.
"We've been able to utilize the transmission lines being
built for wind," Oncor's Greer said. "They are now able to
support this high-growth area."
LOOKING AT OTHER OIL FIELDS
Periods of economic boom and bust are not new to West Texas,
where oil was discovered in Mitchell County, 350 miles (563 km)
west of Dallas, in the early 1920s.
Since then, the Permian Basin has produced 29 billion
barrels of oil, according to Texas regulators, enough to supply
the nation's current appetite for oil for four years.
A new boom is now under way as oil companies like Apache
Corp, EOG Resources and Pioneer Natural
Resources use fracking technology to extract oil from
geologic zones previously thought too expensive to produce.
"The formations have been so well-researched over the
years," Greer said. Companies "know where the oil is and now
that they have the technology, it's how fast can you move."
The need for more electricity to serve oil and gas
infrastructure and fast-growing towns spurred Oncor to find ways
to better pinpoint oil company needs and to propose more than
$200 million in grid upgrades.
"We had a fairly good handle on load growth, but you
couldn't have picked a weaker spot on our system," said Greer.
"We were used to serving rural, traditional oil fields, not the
compression and related equipment needed now" to meet oil
Electric infrastructure has also been a problem for energy
companies operating in the Eagle Ford shale of South Texas where
American Electric Power has been busy expanding energy
company connections to the grid.
In West Texas, some upgrades will take a year to install so
the nearly finished wind lines offered a quicker solution.
By year-end, Oncor and 11 other power companies will have
energized more than 3,500 miles of new 345-kilovolt transmission
lines as part of the CREZ program at a cost of $6.8 billion.
Oncor built the largest share of CREZ projects - more than
1,000 miles at a cost of $1.9 billion, according to grid
Oncor is a unit of Energy Future Holdings which is owned by
a group of private equity firms, including Kohlberg Kravis
Roberts & Co.
Other companies building CREZ lines include American
Electric's joint venture Electric Transmission Texas, privately
held Sharyland Utilities, LS Power Group and affiliates of
NextEra Energy and Spanish-based Isolux Corsan.
AEP and Oncor officials say lessons learned in the Eagle
Ford and Permian Basin will help solve potential power supply
issues in the Spraberry, Wolfcamp and Cline formations of West
Texas, areas some analysts predict may be the largest oil find
in the United States.