If the fossil fuels industry doesn't act now, it could eventually become extinct. That's because the global economy is aggressively pivoting away from climate-change-causing fossil fuels to cleaner alternatives. This shift is forcing oil and gas companies to find ways to clean up their act so that they're part of the solution and not only contributing to the problem.
One of the steps more energy companies are taking is investing in renewable energy projects to help power their operations. It's helping reduce the emissions of the oil and gas they produce. That 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 Natural Resources (PXD -2.28%) recently revealed its participation in a couple of renewable energy projects. They'll supply low-cost, renewable power to its operations in the Permian Basin and the Texas electricity grid.
It's teaming up with leading renewable energy producer NextEra Energy (NEE -1.36%) to build a 140 megawatt (MW) wind energy generation facility on land it owns in Midland County, Texas. Pioneer and its midstream service partner Targa Resources (TRGP -0.70%) have agreed to a power purchase agreement with NextEra to buy electricity generated by the facility it will own and operate. That will help supply some of the power for their jointly owned 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 that facility. It started delivering renewable energy to them last month.
The oil and gas producer is evaluating other potential wind and solar energy developments on the land it owns in the Permian Basin. Those future projects could supply it with more low-cost renewable energy while further reducing its emissions profile.
Layering in renewables to reduce costs and increase sustainability
Many other energy companies have made similar moves to self-power their operations with renewable energy to reduce costs and emissions. For example, oil giant Chevron (CVX 0.37%) is working with Algonquin Power & Utilities (AQN -0.81%) on a solar energy project to power its oil and gas operations in Texas and New Mexico. They're installing more than 56,000 solar panels across 120 acres, which should generate 20 MW of renewable energy that Chevron won't need to pull from the grid. They'll each hold a 50% stake in the field, which Algonquin will operate, with Chevron purchasing the power. That project will come online later this year.
Pipeline giant Energy Transfer (ET 0.12%) has signed two power purchase agreements to support solar energy developments that will help self-power its operations. In 2020, it agreed to its first-ever dedicated solar contract by anchoring the 28 MW Maplewood 2 project in West Texas, which came online last year. Meanwhile, it agreed to purchase 120 MW of electricity from a solar energy facility in Northeast Texas late last year. That project should start producing in 2024. With these agreements, Energy Transfer will get about 20% of its electricity from renewable energy.
Fellow pipeline company Williams (WMB -0.48%) is investing in solar energy projects to help self-power its operations. It currently has 10 projects under way that should come online through 2024. Williams is investing about $100 million this year on several clean energy projects and could scale that up to $250 million per year as more commercially viable opportunities arise.
This a step in the right direction
The fossil fuels industry is working to transition its operations to become more sustainable. One step energy companies are taking is investing in wind and solar projects to help power their operations and reduce costs and emissions. That's helping reduce the carbon intensity of the industry's oil and gas production, which could enable those fossil fuels to have a role in a lower-carbon world, potentially preventing the sector from eventually going extinct.
