fracking

Texas set a new US record for wind power generation last week, and the surge in output demonstrates how quickly the US domestic energy landscape is shifting. Just a few years ago, word was that shale formations  in North America held enough natural gas reserves to last for decades. Today, shale drillers face a perfect storm of economic challenges, environmental headaches, and stiff competition from the wind sector and other forms of renewable energy.

Sure, yesterday’s rosy predictions about shale gas could bear out in terms of  years, but the high cost of shale drilling, the rapid rate of well depletion, and increased gas exports will translate into higher domestic prices.

In the context of surging renewable energy development, natural gas will become an expensive, marginalized fuel in the US domestic market, and Texas is a perfect example of how and why that will come about sooner rather than later.

Toast by Maik Meid.

The Texas Wind Power Beast Roars

Check out any old John Wayne western and you can see the seeds of the Texas wind power revolution in the iconic wind mills cranking away over the watering trough.

Aside from a technology leap of epic proportions aided by federal research labs, the difference today is a hefty dose of support from federal taxpayers and a tweaking of state laws.

From the federal taxpayer side, we have the much-maligned (well, by the usual suspects) federal production tax credit for wind. Despite the naysaying, the tax credit basically provides the wind industry with the same consideration as conventional energy, in terms of supporting domestic production of a vital resource for the sake of the greater good.

The state law tweak is where things really get interesting for Texas. Last year, we noted that Texas was on the verge of completing a $7 billion transmission project designed to bring wind power from remote areas of West Texas to population centers in Dallas and elsewhere, in addition to supporting West Texas consumers.

The 3600 miles of new transmission lines have a capacity of 18,500 MW and we’re already crediting them with pushing back on additional nuclear development in the state.

The transmission boom was set in motion by the Texas legislature in 2008, which designated five zones called CREZ (Competitive Renewable Energy Zones) for new wind power development. The same legislation also restructured the electricity industry to enable Transmission Service Providers to offer transmission services to other utilities throughout Texas.

The goal was to ramp the state’s wind generation capacity up to 18,456 MW. By way of comparison, the installed capacity of Texas wind power just five years ago, in 2007, was only 4,296 MW.

Keep in mind that the wind will keep blowing over a wind turbine site long after a typical shale gas well has reached the end of its useful lifespan, and you can see why some shale investors, notably Shell, are beginning to pull back.

Texas Sets US Wind Power Generation Record

Getting back to that record-setting event, let’s note up front that available output generally runs lower than instantaneous output, which is the data frame for the new record.

With that in mind, the main Texas grid operator ERCOT (Electric Reliability Council of Texas) reported that it had achieved an instantaneous output of 10,296 MW for wind power at 8:48 on the night of March 26.

That beat ERCOT’s previous record, set just last month, by a good 600 MW.

It also established a new record for wind power generation by any power system in the US, according to the American Wind Energy Association.

To show what a difference the new CREZ and transmission lines are making, most of the record-setting generation (8,863 MW) came from West Texas.

All together, wind accounted for an impressive 29 percent of electricity on the ERCOT grid at the time the record was set.

Record-setting aside, wind power already accounts for a nice chunk of ERCOT’s grid.  It accounted for 9.2 percent of the total energy used by ERCOT consumers in 2012, and bumped up to 9.9 percent in 2013.

As for that initial goal of 18,459 MW set back in 2008, ERCOT notes that it already has a commercial wind power capacity of 11,000 MW. Another 8,000 MW are in development currently, and 26,700 MW are under study.

Last Hurrah For Shale Gas

While all that new wind development activity naturally brings up the NIMBY issue, all things being equal the advantage of wind power is that once a site is established, it will continue to harvest energy indefinitely.

For that matter, the same site could easily grab more energy in the long run, not less, as earlier technology reaches the end of its lifecycle and is replaced with more efficient equipment.

Contrast that with shale gas, which as previously mentioned has earned a reputation for rapid well depletion. The consequence is that thousands of new wells must be drilled in the US alone just to maintain production.

That doesn’t even account for increased domestic demand and expansion of the export market.

While some gas and oil giants are pulling back from shale investments in order to reduce “stranded asset” exposure, it’s worth noting that the shale gas giant ExxonMobil has been doubling down on shale gas, possibly with an eye toward supplying the gas-to-plastics market rather than the energy market.

Diverting more gas from the domestic energy market would exert even more upward pressure on fuel gas prices, and with gas prices on the rise you’re going to start setting more pushback from consumers and less support for fracking (short for hydrofracturing), the shale drilling method that has been causing so many problems in local communities.

When even a top ExxonMobil executive starts complaining about the impacts of fracking, you know that shale gas is on shaky ground.

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