Energy Stakeholders Meet in New Mexico to Address Key Permian Basin Issues
Last month, stakeholders from across the energy sector gathered in New Mexico to tackle the pressing issues facing the Permian Basin. Among the wide-ranging discussions, three key themes emerged: the electrification of the basin, potential and challenges for production growth, and the environmental and political risks tied to ongoing operations. Below are some key takeaways.
Electrification
During a polling session, the majority of attendees highlighted power grid reliability as the top priority for infrastructure development in the Permian, closely followed by pipeline expansion.
Question: Which area of infrastructure development in the Permian Basin should be prioritized to support future growth?
Power grid limitations have long been a challenge, but the increasing focus on energy transition, especially the growing demand from data centers, has pushed this issue to the forefront. Operators, who already contend with common oilfield downtime, and data center stakeholders, who demand even more reliable power, are both pressing for improvements.
According to Enverus Intelligence® Research (EIR), power demand in the Permian is projected to more than double by 2040, with an average annual load growth of 5.74% if 65% electrification is achieved by 2050. The urgency for new grid infrastructure and power generation investments was palpable among those in attendance. Without these upgrades, significant strain on grid reliability is expected. A managing partner from a private equity firm cleverly dubbed this challenge “midstream by wire,” comparing it to the infrastructure hurdles faced by the midstream sector.
Question: What is the primary barrier to widespread electrification of energy operations in the Permian Basin?
Production Growth
Another focus of discussion was the imminent resource expansion, particularly in the secondary zones and edges of the Delaware. EIR estimates that top operators in the basin have about eight years of Tier 1 inventory remaining. While not immediate, plans for future growth are already in motion. Technology advances, such as longer lateral lengths, have already boosted production, and these innovations are expected to help operators unlock Tier 2 acreage as well.
Question: As operators focus on resource expansion to increase inventory life, where will they be most successful?
However, midstream infrastructure will need to catch up to sustain this growth. The Blackcomb pipeline is expected to support production for several years, but a potential mismatch in timing looms with five FID pipeline projects still in development. If not addressed, there could be a bottleneck in takeaway capacity before the decade’s end. Panelists emphasized the need for stronger alignment between operators and midstream stakeholders to ensure growth continues smoothly.
Question: What is the single most significant challenge for maintaining or increasing gas production in the Permian Basin over the next five years?
Environmental and Political Risks
Environmental and political risks were a hot topic, with many attendees identifying these as the biggest challenges facing the Permian. Unlike infrastructure problems, these issues can’t be solved with more capital. There is a growing concern that private capital is hesitant to invest due to the increasing regulatory pressures and environmental risks.
Question: What is the biggest challenge facing operators in the Permian Basin today?
Produced water regulations and new setback requirements are among the issues slowing down operations. EIR data also highlights the Permian’s high super-emitter incident rate (0.95%), significantly exceeding other regions like the DJ Basin and Marcellus/Utica.
Question: What is the most pressing environmental concern in the Permian Basin today?
The Environmental Protection Agency and producers are actively addressing this with advanced monitoring technologies, but more work is needed.
Question: Which emission reduction strategy do you believe will have the greatest impact in the Permian Basin?
Conclusion
Over two days of discussions in Santa Fe, it became clear that the industry faces significant hurdles, but solutions are already in the works. Infrastructure for electrification, production growth, and environmental challenges will all require collaboration between operators, regulators and investors. Events like Energy Dialogues provide a critical platform for sharing successes and finding common ground to tackle these shared challenges.
About Enverus Intelligence® | Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. See additional disclosures here.
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