• 53 mins Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 7 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 7 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
Alt Text

India’s Urban Explosion Boosts Oil Demand

As India sees incredible growth…

Alt Text

The Approaching U.S. Energy-Economic Crisis

The connection between energy and…

Alt Text

Oil Quality Issues Could Bankrupt Venezuela

Falling Venezuelan oil quality could…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Texan Wind Is Blowing Away The Competition

Texan Wind Is Blowing Away The Competition

You have to hand it to Texas. The state that is perhaps most closely identified with oil production is now doing a good job of diversifying its investments and positioning itself well for the future, and it’s starting to show. Texas has long been a champion producer of convention energy sources, but thanks to its natural landscape and sage investments by the state government, Texas also appears poised to be one of the dominant producers of wind power in the future.

Despite Texas’ long history of success in the oil fields, the state has not rested on its laurels. Texas was the second state after Iowa to pass a renewable portfolio standard requiring a certain amount of electricity come from renewable sources. Texas has also invested billions in developing the infrastructure to support that renewable portfolio including putting up high voltage power lines to link cities like Austin with windy west Texas. That investment is paying off big for Texas – for instance, last December 20th, Texas windfarms set a new all-time record for energy produced from wind power with wind providing 45 percent of the state’s total energy needs at its peak. That amounted to 13.9 gigawatts of power. Related: Oil Prices in 2016 Will Be Determined By These 6 Factors

Texas wind farms are actually generating so much power that the state leads the country in wind production despite competition from green friendly states like California. Amazingly, Texas utilities are generating so much power from wind energy that some utilities in the state are literally giving power away to consumers for free. The free electricity is limited of course – it only runs from 9pm to 6am and it is offered by TXU Energy to customers coupled with slightly higher rates for power during the daytime.

For investors this leading position in wind energy underlines a stark reality – Texas’ leadership in energy is not going away anytime soon. Transmitting electricity is very different than transmitting oil of course, but investors who have traditionally thought about investing mostly in oil companies in Texas might want to start thinking about diversifying. Investments like utility companies offer the opportunity to benefit from either a rebound in oil eventually or continued growth in Texas’ alternative energy portfolio. Related: Do Canadians Want To Stay In The Oil Business?

Texas’ wind farms are efficient enough that they should be able to survive even as government subsidies in the space slowly start to disappear. That does not mean that wind farm operators or consumers will be happy about that reality, but Texas has the geography and now the infrastructure that wind power should be an enduring reality in the state. Texas’ wind power also makes the company likely to be an attractive market for Tesla’s new Powerwall batteries. Wind power blows most strongly at night which is part of why utilities are willing to give it away since costs for the electricity are cheapest at that time just as demand happens to be lowest.  

Tesla and eventually competitor battery systems could offer a way to take some of that overnight power production and save it until it is needed the next day. With electricity essentially free at night for utilities, any power that can be held over and saved until being sold the next day using an energy storage system would be extremely high margin. Related:Confusion On Saudi Proposed Production Cut See Oil Prices Spike

Ironically the group that could be the most hurt by Texas’ success in wind power is the group many might least expect; environmentalists. If Texas is successful in meeting more and more of its own electricity needs from wind power, that will give it the opportunity to sell more conventional fuels like natural gas and oil to other states that are less prepared. That won’t make environmentalists in places like the northeast happy of course, but then economics is not a morality play.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Lissa Magel on February 01 2016 said:
    This is probably not news to anyone except Mr. McDonald, but Texas has been #1 in US wind since 2006, when it surpassed California. In 2015, wind power blew by nuclear's 11.3% to provide 11.7% of electricity in ERCOT (the ISO that manages about 90% of Texas' electric load).

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News