Power line shortage in Oklahoma hampers oil production
Producers have found a large amount of oil in northern and northwestern Oklahoma, but a shortage of power lines has threatened to slow development of the area.
Producers typically buy three-year land leases. If they do not drill and produce from a well on the land within that three-year window, the lease expires and the company loses its investment.
Oklahoma Corporation Commissioner Dana Murphy is a member of the Southwest Power Pool's Regional State Committee and has led efforts to speed up the power line planning and construction process.
“Things have improved somewhat, but we're still having issues with some of the things that need to be approved by the SPP,” Murphy said. “We're trying to find a better way to streamline the information from the producers up through the utilities and to the SPP.”
Oklahoma City-based SandRidge Energy Inc. is one of the largest players in the Mississippi Lime formation and one of the first companies to develop the area.
To address the electricity infrastructure shortage, SandRidge has built its own substations and distribution lines that connect to the cooperatives' existing transmission lines or will connect to planned transmission lines.
“Building our own electrical substations and power grids allows us to develop the Mississippian play at the lowest cost and most efficient manner,” said Matt Grubb, SandRidge's president and chief operating officer. “Reliable electricity in rural areas is key to success, as we need it to run our equipment with minimum down time and quick turnaround times enabling us to maximize production.”
By taking on the construction projects themselves, producers can speed up the process.
While the large companies can afford to pay for the infrastructure upgrades that can run as much as $400,000 per mile for high-capacity power lines, smaller companies often have a tighter budget and fewer wells to justify such a large investment.
The answer, Slawson said, is cooperation.
“These operators need to talk to their neighbors,” he said. “If I'm drilling 10 acres here and you're drilling six acres there, let's go in together. But in many cases, the operators still aren't talking to each other.”
Smaller operators can install substation meters to ensure that they each are paying the proper amount for the power, said Gary Alison, CEO of Oklahoma City-based Tri-State Industrial Group, which provides power line construction and other services for the energy industry.
“If there were peace in the kingdom, smaller companies could easily co-op together,” Alison said.
“You can easily meter the specific usage per client,” he said.