American Oil and Gas Reporter - September 2022 - 24

Solar Developers Seek Oil Field Allies
By Chris Noonan
Electricity changes lives. Through heating and air conditioning,
it lets people turn their homes into shelters from blistering heat
and biting winds. In hospitals, it powers equipment that keeps
patients alive and enables doctors to diagnose issues quickly
and accurately. And in offices and factories, it runs everything
from desktop computers and phone systems to extremely precise
mills and lathes.
Many people outside the industry never stop to wonder
where electricity comes from when they flip a light switch or
charge their smart phone. When they do think about energy, it is
often with the false assumption that hydrocarbon producers and
renewable energy developers must have rivalries as enduring as
the ones between Coke and Pepsi or the Oklahoma Sooners and
Texas Longhorns.
Of course, small solar panels have a long history of powering
equipment on remote well pads as well as pipeline rights-ofway.
And today, utility-scale solar offers a compelling opportunity
for oil and gas producers and other industry entities to simultaneously
improve their bottom lines.
Utility-scale solar facilities generate solar power that is fed
directly into the utility grid (in contrast to " behind the meter
solar, " which powers a specific end-user). Like oil and gas companies,
these projects' developers are working to deliver energy
with reduced environmental impacts. They believe utility-scale
solar can be a valuable component of the fight for energy independence,
a goal that has become top of mind for many, given
global turmoil and fuel price shocks.
But for solar to come close to achieving the policy goals being
considered in government and academia, it needs land. Princeton
University's Net-Zero America Project estimates that to generate
more than 60% of its primary power with renewable energy by
2050, the United States would need at least 8.6 million acres in
use for solar. Even if renewables only generated a third of the
United States' primary power, a more realistic scenario at a federally-regulated
level, solar would still need 3.2 million acres of
installed capacity. Today, it only has half a million.
That is partly because land can be difficult to find and
acquire. Much like oil and gas operators and pipeline companies,
utility-scale solar developers face challenges when securing approvals
and constructing energy generation sites. Community
members may support renewable energy or oil and gas projects
in theory only to push back when a project is proposed nearby.
Sometimes, after significant investments in planning and permitting,
a lawsuit or lack of local community support can derail
an otherwise compelling project.
There is an enormous-and profitable-opportunity for the oil
and gas industry to support solar growth through land it already
owns and operates on.
24 THE AMERICAN OIL & GAS REPORTER
The Opportunity
The U.S. oil and gas industry can take advantage of the
expanding potential of energy land use by leveraging company-owned
surface acreage and partnering with utility-scale
solar developers who are racing to secure more land throughout
the country.
Recent booms in oil and natural gas production across the
states have led to a land rush, with many operators purchasing
key landholdings outright to simplify access to leased minerals,
regionalize market share and lower acquisition costs relative to
leasing. In addition to providing strategic value for traditional
energy operations, these holdings can be integrated with
renewable energy to earn additional revenue. Such integration
helps address renewable solar energy's critical need for extensive
acreage that can fulfill multiple usage roles.
" Of course, small solar panels have a long
history of powering equipment on remote well
pads as well as pipeline rights-of-way. And
today, utility-scale solar offers a compelling
opportunity for oil and gas producers and other
industry entities to simultaneously improve
their bottom lines. "
Oil and gas fields contain a substantial amount of land that
can be suitable for concurrent renewable energy development.
A land data search within Texas alone reveals approximately
1.2 million surface acres held by companies involved in energy
production, representing independents, majors, midstream
firms and service companies. This ownership trend repeats
itself throughout the energy-producing states where solar is
focused on growth. Add in the other top oil-producing states-
California, Colorado, Louisiana, Oklahoma, New Mexico and
Utah-and that number grows to 2.1 million surface acres.
These oil producing states happen to be ones where many
solar developers are looking to acquire land. For producers,
service companies and pipeline operators, partnering with solar
developers can deliver remarkable economic benefits.
On the economic side, leasing surface acreage for solar development
can offer predictable, competitive, long-term rental
income that will grow as the project matures. This increase in
cash flow from each acre can reenergize underutilized land
holdings while reducing liability costs for asset holdings.
Solar projects also support energy stability and independence
for the region of operation and reduce emissions of greenhouse
gases such as carbon dioxide, nitrogen oxides and particulates.
Long-term exposure to these gasses can exacerbate or cause
asthma and other respiratory issues, particularly among children
and the elderly.
American Oil and Gas Reporter - September 2022

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