One dictionary defines “nexus” as “a connection or series of connections linking two or more things.” As a nation, we've long ignored or failed to fully comprehend the energy nexus and the cooperation needed to deal with it effectively. This has to change.
Superstorm Sandy provided a graphic lesson when millions were left without electricity because of damage to transportation and distribution systems. Without electricity, refineries shut down and even filling stations with fuel were unable to supply customers because the pumps didn't work. Backup generators that depended on gasoline or diesel ran out of fuel. Officials enacted a temporary moratorium on a law that had limited the number of fuel tankers in New York Harbor. Apparently they failed to understand that without an operable pipeline system, no way existed to unload and transport crude to refineries, or other fuels to delivery points to be loaded into tanker trucks, which in turn weren't running because there was no fuel.
In Oklahoma, we know it takes energy to make energy. For example, oil and gas producers developing the Mississippi play and other fields across northern Oklahoma need huge amounts of electricity for their drilling operations, but building the necessary infrastructure takes time. For all involved, time is literally money. Millions of dollars are at stake. The Corporation Commission facilitated meetings among all the stakeholders to develop the cooperation and consensus needed for all to have their needs and concerns met.
Moreover, Oklahoma doesn't operate in a vacuum when it comes to electricity infrastructure. It is part of the Southwest Power Pool (SPP), a regional transmission organization that manages the seven-state region's electricity grid. As vice president of the SPP Regional State Committee, I know firsthand the challenges we face in planning and providing critical electricity infrastructure in a way that balances the needs of and costs to all the member states' industries and consumers. As producers, electricity providers, transmission operators and regulators have all come to realize, this nexus of energy to develop energy is difficult to balance, and requires a collaborative effort from all involved.
The state has a vested interest in seeing this effort succeed. Oklahoma only uses about a third of the natural gas it produces. Natural gas-fired electric generation can be used by oil and gas producers to further develop Oklahoma's oil and natural gas supplies, another perfect example of the energy nexus. At the same time, utilities must have tools, such as long-term contracts, to manage their fuel needs in a cost-efficient manner. The commission's innovative rules for such contracts, crafted through the cooperation of various stakeholders, have garnered national attention.
As Albert Einstein observed, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” In Oklahoma, especially when it comes to the energy nexus and Oklahoma's role as an energy leader, we continue trying to solve problems with innovation and collaboration.
Murphy is a member of the Oklahoma Corporation Commission.