Wall Street Journal
At Center of Oil Boom, Electricity Costs Soar

Tuesday, July 23, 2013

Heavy Energy Use From Drilling in West Texas Strains Power Grid, Leading to Surcharges

An oil-production boom is delivering prosperity to pockets of the U.S., but in West Texas, the epicenter of activity, it is also bringing trouble in the form of surging electricity prices.

Many municipalities and businesses are bracing for big surcharges this year, after having been hit hard last summer, as energy use by oil drilling and production equipment outpaces the capacity of the region's power grid. State regulations largely shield residential customers from the added power costs.

Oil production in the Permian Basin in West Texas—driven by higher prices and advances in drilling and production technology—has grown about 35% since 2008, from 260 million barrels to 353 million in 2012, according to data from Bentek Energy, an analysis firm. Drilling for and pumping all that oil requires a lot of machinery—and a lot of electricity. Energy use in the region has risen almost 23% since 2009, to about 13 million megawatt-hours, according to the operator of the electric grid, although the rate of growth has slowed in the past year.

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