Four longtime oil industry executives are working together to put solar power generation within reach for independent oil players and other companies looking to lower emissions in the Permian Basin without sacrificing their budgets or getting lost in a sea of regulatory changes.

Founders of Roswell, New Mexico-based Blue Sierra Power are counting on their decades’ worth of experience in the upstream, midstream and utility sectors combined with the engineering, construction and tech prowess of Black & Veatch infrastructure development subsidiary Diode Ventures to deliver—with upfront financing.

“We all come from an oil and gas background, and for years we’ve known that price and reliability is what midstream, oil and gas upstream, are looking for,” said Frank Donnelly, one of Blue Sierra Power’s four managing members and president of Ally Global LLC. “But today it’s green and we can show them how to add green, without diminishing the reliability and the price.”

The push toward renewable energy—away from natural gas and other carbon-based electricity—comes amid a powerful ESG movement, regulatory changes and continued pressure from investors and activists to tackle climate change. Companies are tasked with finding sustainable ways to reduce emissions while meeting the world’s energy needs.

Many are rising to the challenge with initiatives underway to reach net-zero targets. Others lag their peers.

The pace of change has been rapid. With that comes some skepticism, said Jim Manatt, the managing member of Blue Sierra Power who also serves as CEO of Thrust Energy.

“Once you get below the level of the majors, a lot of the even larger independents still feel like a deer in the headlights,” said Manatt. “We don’t know what the rules are. We don’t know what the standards are. So, what do we do? What do we do meaningfully and substantively, while this plays out?”

Using solar energy to generate power is measurable and tangible in significantly reducing not only carbon emissions but also nitrogen oxides and sulfur oxides.

“Industry has an opportunity now to be proactive, get ahead of the curve by continuing to reduce our environmental footprint and continue to provide economic energy to drive the world’s most powerful economy: ours,” said Manatt. “Blue Sierra’s evolution is to put utility scale solar power, battery back-up also in the mix, in the oil field.”

Plus, solar costs have been falling, according to Paul Ksiazek, senior project director for Diode Ventures.

“It’s on par, as we say, with the levelized cost of energy. It’s got to a point through all the cost reductions of panels, trackers, inverters that we can actually generate it rather cheaply,” he said.

Solar Strategies

Powering oilfield operations using solar energy is already part of the climate strategies for some of the industry’s biggest energy companies in the U.S.

Occidental Petroleum Corp. in October 2019 started up its 120-acre Goldsmith field solar facility in Texas, becoming the first of its kind to directly power oil and gas operations. The Permian Basin field features 174,000 photovoltaic panels with a total capacity of 16 MW, according to Occidental’s website.

EOG Resources Inc. brought its 8-MW solar and natural gas hybrid electric power station online in third-quarter 2020 in Red Hills, New Mexico, to power electric motor-driven compressors.

Meanwhile, Chevron Corp. has been basking in California’s sunshine. Since April 2020, the 29 MW Lost Hills solar facility has been delivering low-carbon electricity to Chevron’s Lost Hills oil field in Kern County, California, working with commercial solar provider SunPower. The solar project was expected to provide 80% of the field’s power needs.

However, smaller companies—including independents and smaller midstream players—may need help making such moves, which is why the strategic partnership between Blue Sierra Power and Diode formed earlier this year.

The two aim to help companies lower their consumption of conventional power, costs for power and carbon emissions, while delivering 100% of the renewable energy credits to its clients to further lower costs.

“We will develop the project; we’ll finance the project; we’ll get the project built and we’ll manage the project,” Ksiazek said. “You don’t have to go out and be a general contractor and hire a bunch of subs. We are the single point of contact for the customer, for the oil and gas [companies], so they can really focus on their business.”

Blue Sierra brings its expertise and industry contacts, while Diode brings the ability to quickly scale renewable energy plants. Among the developer’s projects is the 140 MW, utility-scale Grizzly Ridge solar field near Fort Worth, Texas that was co-developed with RKB Energy LLC.

“We do greenfield development from right from scratch, where we secure the site through a long-term lease or a purchase option and then develop everything from there,” Ksiazek said. “But we also will develop brownfields. We will also look at early stage acquisitions.”

Diode’s parent company Black & Veatch is willing to invest equity into these projects, he added.

Breaking Barriers

For now, the partnership’s initial focus is on solar energy as it looks to “repower the patch,” as Manatt says, starting on the New Mexico side of the Permian Basin.

“New Mexico is one of the most generous states in terms regulatory latitude for utility scale renewable power projects,” Manatt said, noting state regulations and a long-standing Federal Energy Regulatory Commission exemption enable developers to significantly accelerate completion times in the state.

The partners are in talks with both upstream and midstream companies, Manatt said.

“We can start from scratch, evaluating in detail their specific current power consumption, costs and logistics,” he said.

After power needs are assessed field-by-field, engineering, design, land and transmission planning begins.

“Once a decision is made as to location and output, land acquisition and permitting steps are taken,” he said. “Finally, there is a construction and interconnection phase to complete the project and begin power delivery. Blue Sierra and Diode Ventures partners will either deliver the project to the client for operations or agree to operate the project on behalf of the client.”

Despite the benefits of solar in the oil patch, not everyone is sold on the idea.

“Renewables has an Achilles heel. … You don’t always get the power when you need it,” said Dale Williams, managing partner for Blue Sierra. But batteries are used for backup. “When we get the batteries perfected and we will, it’s going to change the way everybody consumes energy all around the world.”

Flow batteries are also capable are further extending energy output durations, Ksiazek added.

“Solar power has rapidly progressed in terms of both reliability an economy,” Manatt continued. “Five years ago, solar power was not nearly as economic or efficient as it has recently become thanks to rapid technology developments. It will become more so going forward.”

The “infamous technology adoption curve” might be a barrier for some companies; however, “being first or being an early adopter brings the reward of real, tangible, recognizable impact on what our industry is promising our investors we will do: reduce emissions, be more efficient, earn real REC’s, not greenwash, and make measurable ESG progress,” Manatt said.

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